Tag Archives: newsletter

The US dollar traded higher before the weekend with the help a fairly robust jobs report.   Although the jobs growth itself was somewhat disappointing, the details were constructive:  More people working a longer work week and earning more.   The participation rate rose, and the unemployment rate (U-3) fell.  The Atlanta Fed GDPNow tracker increased to 2.2% in Q1 16 from 1.2% at the start of the week.  Despite the pre-weekend gains, the greenback lost ground against all the major...

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves.   China's reserves stood at $3.81 trillion in January 2015.  They are expected to stand near $3.21 trillion as of the end of last month.    This draw down, coupled with its trade surplus and the pressure on the currency have led many to express concerns about...

In the spring of 2015 we showed something unexpected: one of the biggest buyers, and holders, of AAPL stock was none other than the already quite troubled – in the aftermath of its disastrous Swiss Franc peg which ended up costing it tens of billions in losses – largest hedge fund in Switzerland, its central bank, the Swiss National Bank. What is curious is that unlike the Fed, the hedge fund also known as the Swiss National Bank not only proudly admits it purchases stocks, ETFs and...

When looking at the current state of the Chinese economy it is important to note what happened leading up the ongoing predicament. By managing the USD/CNY exchange rate the Chinese factory worker was essentially funding excess consumption in the United States. One of the many perks enjoyed by global reserve issuer. The factory worker obviously did not do this out of his own volition; on the contrary, he was duped into it by swallowing the propaganda spewed out by party apparatchiks in...

The US created fewer jobs than anticipated and the December gain was revised lower.  However, the other details were favorable--better than expected.  The unemployment rate ticked down to 4.9%, a new cyclical low, despite the rise in the participation rate (62.7% from 62.6%).   Average hourly earnings were stronger than expected at 2.5%.  The consensus expected a 2.2% year-over-year pace.  The December pace was revised to 2.7% from 2.5%.  The average weekly hours also ticked up to 34.6...

Keynes and others may have referred to gold as a barbarous relic, but many investors continue to track it.  In early January, we warned that gold appeared to be breaking out of a short-term bottoming pattern.It had taken out a three-month downtrend line, which we suggested was part of a triangle pattern.  Gold also traced out a double bottom pattern.  The triangle pattern pointed to a move toward $1110 and the double bottom projected to around $1135.   The yellow metal poked through $1157...

Sterling has neared the 50% retracement of the 11.5 cent decline since mid-December.  It is found near $1.4660.  After easing ahead of the BOE announcement, sterling was sold to $1.4530 on the initial headlines that showed the BOE was cutting its growth, inflation, and wage forecasts.    However, the short-sterling futures had already largely discounted the rates being low for longer, and UK debt instruments also sold off, and after the initial flurry, sterling stabilized and recovered...

The US dollar remains under broad pressure after yesterday's sharp decline.  Neither dovish comments by ECB President Draghi, nor the Reserve Bank of New Zealand have managed to reverse the gains of their respective currencies.   Similar, the rise in US yields and firm equities have failed to push the yen lower.  Investors and policymakers are trying to link news developments to the price action, but it seems to be a bit of a stretch.  It is true that NY Fed President Dudley, who had...

The Bank of Japan surprised investors by introducing negative rates last week.  Leave aside the fact that the negative rates do not go into effect for more than another week, and even when in effect, will apply to a relatively small amount of deposits at the central bank.  The important point is that it is another central bank to introduce negative rates. Moreover, the yields of Japanese bonds through eight-year maturities have turned negative.    In comparison, German yields are...

The US dollar is sporting a softer profile today as the global capital markets are trying to stabilize.  Oil prices have steadied, with WTI back above $30.   Bond markets are narrowly mixed though the 10-year US Treasury is steady near 1.85%.  Asian and European equities followed US markets lower, but American equities have stabilized, and ahead of the ADP employment estimate and the ISM for non-manufacturing, S&P 500 is set to open slightly higher. The dollar continued to shed the...