Tag Archives: trade

According to legend, the person who unraveled the Gordian Knot would rule the world. No one succeeded until Alexandar the Great took his mighty sword and sliced the knot in half. A young boy saw him afterward, crying on the steps of the Temple of Apollo. “Why are you crying?” the boy asked, “you just conquered the world. “Yes'” Alexander wept, ” now there is nothing else for me to do.” Investors are not as cursed as...

Some historians give Adlai Stevenson credit for inventing the word “brinkmanship” as part of his criticism of US foreign policy under Dulles, who said that “if you are scared of going to the brink, you lost.” But surely we can agree that the tactic is as old as civilization.   The idea is you take the issue to the very edge, risking a significant confrontation, to force a deal, is the way it may seem. The Cuban Missile...

Eurozone Last week the focus was on Europe. Prospects of a delay in Brexit helped extend sterling’s gains to 11-week highs. Disappointing flash PMI for the eurozone and a dovish Draghi pushed the euro below $1.13 for the first time since mid-December. Speculation that the Reserve Bank of Australia would be forced to cut interest rates saw the Australian dollar punch through $0.7100. For its part, the yen was...

The S&P 500 fell more than 12% in a few weeks. The 10-year Treasury yield fell nearly 40 bp. There were cries that the sky was falling. A recession is imminent, we are warned by prognosticators. The Fed went ahead and raised interest rates on March 21, 2018, and the S&P 500 proceeded to gap lower the next day and continued to sell-off the following day. Investors did not like the unanimous decision. Yet far from...

People do not just disagree on what should and will happen, but they disagree on what has happened. As William Faulkner instructed: “The past is not dead. Actually, it’s not even past. This is clear in the narratives about the sharp drop in equity markets. It seems that the most common explanation places the onus on the Federal Reserve. Fed Chair Powell’s was seemingly hawkishness in early October (during a time when...

The last FOMC meeting of 2018 is at hand. After hiking rates three times in 2017, the Fed signaled that four hikes were likely this year and with a widely expected move on December 20, it would have fully delivered, though many steps along the way, skeptical investors had to be led by the nose, as it were, to minimize the element of surprise. The famous dot plot of the Summary of Economic Projections has long shown that...

I was on Fox Business today. Stuart Varney introduced me by asking me about my forecast for a Santa Claus rally–a year-end recovery in equities. From a technical perspective, I liked the fact that the S&P 500 successfully retested last month’s lows last week. I liked that the price action made last Friday’s price action into an island bottom, with a gap lower opening followed by Monday’s gap higher opening. In terms...

Often, and apparently wrongly attributed to Mark Twain is the observation that it is not what we know that gets into trouble, but “what we know that just ain’t so.” Now though, investors suffer from a different problem. Several processes are in motion, and there is little confidence in their outcomes. Among these are Brexit, US-China trade, the trajectory of Fed policy, and the EC’s efforts to enforce the agreed-upon...

Last month’s downdraft in equities spooked investors. The fear that is often expressed is that the end of the business cycle may coincide with the end of a credit cycle and a return to 2008-2009 crisis. It seems like an increasing number of economists agree with the sentiment expressed by President Trump that the Fed is too aggressive. Of course, they do not think the president should comment on Fed policy, but they...

Swiss Franc The Euro has risen by 0.11% at 1.1429 EUR/CHF and USD/CHF, October 05(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates The US dollar is firmer against most of the major and emerging market currencies. The yen and sterling are resisting the pressure, while the South African rand and Russian rouble are paring some of this week’s declines. US equity losses...