Monthly Archive: April 2016

More Thoughts about the Yen

2016-04-12

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2016-04-12

Every so often there is a market move that appears inexplicable.  The conundrum now is the yen's strength.  Of course, there are numerous attempts to shed light on the yen's rise, but many, like ourselves, are not very satisfied.   Perhaps par...

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Great Graphic: Beware of Sophistry about the Yen and Nikkei

2016-04-12

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2016-04-12

There is a common ploy used by many analysts and reporters that often simply does not stand up to close scrutiny, and would in fact be mocked in the university.   The ploy is to take two time series and put them on the same chart but use different scales. Such a ploy often is used … Continue reading »

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FX Daily, April12: Higher Inflation Lifts Sterling, Yen Stabilizes

2016-04-12

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2016-04-12

There are three highlights to the foreign exchange market today.  First, the yen is marginally softer.  The yen's strength this month has been the main development.  After making a marginal new high yesterday, some semblance of stability emerge...

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Revisiting the CRB Index

2016-04-11

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2016-04-11

The CRB Index is building on last Friday's gains, when it gapped higher.  That gap marked the end of the down move we anticipated on March 28.   The index fell through the two supports we identified (171.30 and 169.50), before bottoming on April...

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Gold Stocks Break Out

2016-04-11

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2016-04-11

  No Correction Yet Late last week the HUI Index broke out to new highs for the move, and so did the XAU (albeit barely, so it did not really confirm the HUI’s breakout as of Friday). Given that gold itself has not yet broken out to a new high for th...

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In Memoriam: Dr. Tibor Machan

2016-04-11

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2016-04-11

  A Rara Avis – The World Is Poorer Without Him In It Our friend Dr. Tibor Machan, a greatly valued contributor to this site, has passed away on March 24.   Dr. Tibor Machan, libertarian philosopher   Unfortunately, we haven’t known Tibor for very lo...

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ZIRP, NIRP, QE, Bank Collapse and Helicopters Coming Too Late – The Lehman Effect Hits Europe – Hard!

2016-04-11

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2016-04-11

It's official, I'm calling a banking crisis in Europe. Things didn't go well the last time I did this. Of course, many will say, "But the rating agencies have learned their collective lessons. They would most assuredely warn us if the European banks...

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FX Daily, April11: Is the Dollar Bottoming against the Yen?

2016-04-11

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2016-04-11

The yen's surge may be easing.  It made a new marginal high in Asia, but has not been able to sustain it   Technically, a hammer candlestick pattern may be traced out by the greenback's recovery today. Supporting the greenback is the movement in interest rate differentials.  The US 10-year premium over Japan has widened by … Continue...

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Great Graphic: Nonperforming Loans, Another Divergence

2016-04-11

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2016-04-11

   Early in the financial crisis, the US forced all large banks to take an infusion of capital.  This helped put a floor under the US financial system.  Regulators and stakeholders encouraged US banks to address the significant nonperforming loan problem. The eurozone banking woes persist.  Before the weekend, the shares of the one the …

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The Precious Metals Conspiracy

2016-04-11

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2016-04-11

  Tricky and Dangerous Assumptions For at least a few weeks now, we have noticed a growing drumbeat from a growing corps of analysts. Gold is going to thousands of dollars. And silver is going to outperform. Reasons given are myriad. Goldman Sachs ap...

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A Fatal Flaw in the System

2016-04-11

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2016-04-11

  The Hard Rocks of Real Life BALTIMORE – The Dow dropped 174 points on Thursday, the biggest fall in six weeks. Not the end of the world. Maybe not even the end of this year’s bounce-back bull run. As you’ll recall, stocks sold off at the beginning ...

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Sterling Shines Temporarily in Choppy Start for Foreign Exchange

2016-04-11

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2016-04-11

In an unusual development, sterling is outperforming today.   It rose to a four-day high near $1.4230 on what appears to be mostly modest position adjustment in relatively subdued turnover.  The $1.40 area held on repeated tests in the second ha...

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Emerging Markets: Preview of the Week Ahead

2016-04-11

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2016-04-11

(from my colleague Dr. Win Thin) Some dovish signals from the Fed and a bounce in oil prices helped EM end last week on a firm note.  This week, the US retail sales report could be important, and the same goes for CPI and PPI data too.  The Fed?...

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FX Daily, April 10: Same Drivers, Different Direction

2016-04-10

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2016-04-10

Over the past three months and the past month, the dollar has fallen against all the major currencies but the British pound.  Sterling's underperformance can largely be explained by uncertainty created by the Tory government's sponsored referendum on continued EU membership.   Most of the polls show those wanting to remain hold on to a slight …

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Weekly Speculative Position: Switch to Net Long Canadian Dollar and Set New Record Gross Long Yen

2016-04-09

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2016-04-09

Speculators in the futures market were not particularly active in Commitment of Traders reporting week ending April 5.  There was only one gross position adjustment which we regard as significant (defined as a 10k contract change), and that was in the yen.   Yen bulls extended their gross long position by 13.3k contract to new record …

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FX Daily: Little Technical Evidence that Greenback’s Slump is Over

2016-04-09

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2016-04-09

Although there is no convincing technical evidence that dollar's retreat in Q1 is over, we suspect it is nearly complete.  We will be especially sensitive to reversal patterns, divergences with technical indicators, and other signs that the move is exhausted. The fundamental economic driver of our medium term constructive outlook for the US dollar, the …

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Gold – The Best Defense Strategy

2016-04-08

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2016-04-08

  The War on Cash is on! If you are used to making visits to your bank to make your credit card payments, you may find this no longer an option in the future. Some banks are no longer accepting (or limiting their acceptance) of cash deposits. The war...

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Gold: Still Misunderstood

2016-04-08

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2016-04-08

  Myths That Just Won’t Die Gold just had its best quarter in 30 years. Not surprisingly, gold bears are coming out of the woodwork en masse in the mainstream media and the analyst community (see e.g. this recent write-up by Mish on the Goldman Sachs...

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Weekly Emerging Markets: What has Changed

2016-04-08

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2016-04-08

Bank Indonesia signaled it may pause its easing cycle.  Senior Deputy Governor Adityaswara said “We want to see the impact on growth and inflation before we do the next cut.”  Elsewhere, Governor Martowardojo said that the central bank must be carefu...

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Denmark Peg Under Pressure, but Won’t be Abandoned

2016-04-08

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2016-04-08

In the first quarter, there was some speculation that currency pegs either in the Middle East or Hong Kong were going to give way.  We argued that the pegs would in fact hold, and hold they have.  In fact, pressure on the Saudi and Hong Kong pegs have dissipated.  Since the end of last month, … Continue reading »

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