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In a recent article by Kessler Companies (hat tip Zerohedge) they correctly point out that inflation, as measured by the consumer price index, have a tendency to accelerate as the US economy moves into a recession. Contrary to popular belief, the beginning of a recession is not deflationary but the exact opposite. As can be seen from the chart, consumer prices do indeed move higher into recessions as represented by the shaded areas. Why? The most obvious explanation is simply that the...

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has grown, more decisions are made by a qualified majority.  Previously decision required unanimity.  The shift weakens the power of a UK veto.    The UK Prime Minister has called for a national referendum on continued UK membership of the EU.  When...

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has grown, more decisions are made by a qualified majority.  Previously decision required unanimity.  The shift weakens the power of a UK veto.    The UK Prime Minister has called for a national referendum on continued UK membership of the EU.  When...

EM ended last week on a soft note, due to a variety of both external and internal factors.  Firm US data continue to support our call for resumed Fed tightening, and this gave the dollar a bit of a bid.  With the dollar gaining against the majors, this spilled over into generalized dollar gains vs. EM as well.  Weak data out of China this week poses a risk to EM, though we suspect that how China markets react will set the tone for the wider EM.Idiosyncratic EM risk remains in play too. ...

EM ended last week on a soft note, due to a variety of both external and internal factors.  Firm US data continue to support our call for resumed Fed tightening, and this gave the dollar a bit of a bid.  With the dollar gaining against the majors, this spilled over into generalized dollar gains vs. EM as well.  Weak data out of China this week poses a risk to EM, though we suspect that how China markets react will set the tone for the wider EM.Idiosyncratic EM risk remains in play too. ...

The gold to silver ratio moved up very sharply this week, +4.2%. How did this happen? It was not because of a move in the price of gold, which barely budged this week. It was due entirely to silver being repriced 66 cents lower. This ratio is now 83.2. It takes 83.2 ounces of silver to buy an ounce of gold. Conversely, it takes 1/83.2oz (about 0.37 grams) of gold to buy an ounce of silver. This ratio is now within a hair’s breadth of breaking out past the high set on Oct 17, 2008. See the...

The gold to silver ratio moved up very sharply this week, +4.2%. How did this happen? It was not because of a move in the price of gold, which barely budged this week. It was due entirely to silver being repriced 66 cents lower. This ratio is now 83.2. It takes 83.2 ounces of silver to buy an ounce of gold. Conversely, it takes 1/83.2oz (about 0.37 grams) of gold to buy an ounce of silver. This ratio is now within a hair’s breadth of breaking out past the high set on Oct 17, 2008. See the...

Submitted by JP Koning via Moneyness blog, Negative interests rates are the shiny new thing that everyone wants to talk about. I hate to ruin a good plot line, but they're actually kind of boring; just conventional monetary policy except in negative rate space. Same old tool, different sign. What about the tiering mechanisms that have been introduced by the Bank of Japan, Swiss National Bank, and Danmarks Nationalbank? Aren't they new? The SNB, for instance, provides an exemption...

Submitted by JP Koning via Moneyness blog, Negative interests rates are the shiny new thing that everyone wants to talk about. I hate to ruin a good plot line, but they're actually kind of boring; just conventional monetary policy except in negative rate space. Same old tool, different sign. What about the tiering mechanisms that have been introduced by the Bank of Japan, Swiss National Bank, and Danmarks Nationalbank? Aren't they new? The SNB, for instance, provides an exemption...

The year has begun on a tumultuous note.  The Nikkei, DAX and S&P 500 all gapped lower the first day of the year. However, heightened anxiety has calmed as the fire appears to have burnt itself out, and equities have moved higher over the past two week.    Three sources of stress have eased.  Investors are no longer taking their cues by what happens to Chinese stocks. Nevertheless, both the Shanghai and Shenzhen Composites are posting small gains for the month of February, unlike...