Monthly Archive: June 2016

FX Daily, June 20: Brexit not the main Swiss Franc Driver

2016-06-20

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2016-06-20

Recently I enumerated the different drivers for the continuing strength of the franc. Most commentators mentioned Brexit fears, but I insisted on the low rate and yield environment in the United States after the last Non-Farm Payroll report and the FOMC. Today's jump in sterling confirmed my view. This anticipation of an Anti-Brexit vote was not followed by a franc decline against USD. This also implies that a Brexit will not entrench a huge...

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If Sterling has Not Peaked, It has Come Pretty Close

2016-06-20

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2016-06-20

Today's sterling rally is the largest since 2008. The rally began with the murder of UK MP Cox. Risk-reward favors a near-term pullback.

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Bullard’s New Paradigm and the Federal Reserve

2016-06-20

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2016-06-20

There is much to like in Bullard's new paradigm. The problem is that it does not reflect the Federal Reserve's view or approach. Policy emanates from the Fed's leadership, but be confused by the noise.

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Gold and Brexit

2016-06-20

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2016-06-20

The pain of negative yields and social chaos will be very long lasting and very good for gold. So, gold must go up, but Brexit is not one of the reasons why it should. This tells me that in the short term there will likely be a correction in the gold price, creating an opportunity to trade

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A Market Ready to Blow and the Flag of the Conquerors

2016-06-20

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2016-06-20

The U.S. is too big, too varied, too much of everything. You can’t fix a single view of it, even in your mind. But now our problems, challenges, and discontents are big. They are national and international. We cannot see them. We cannot understand them. Instead, we draw their measure from the news media – based on a flag that flutters and sags, depending on which way the wind is blowing.

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How the Welfare State Dies

2016-06-19

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2016-06-19

People have become used to the idea that the State is their sugar daddy. Many apparently believe that it has some undisclosed, infinite stash of resources at its disposal which it can shower them with at will. The reality is unfortunately different.

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Down Go the Hopes and Dreams of Three Generations

2016-06-19

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2016-06-19

On Wednesday, Janet Yellen pressed on the broken buttons again. After the two day FOMC meeting, the Fed Chair announced they’d continue pressing the federal funds rate down to just a ¼ to ½ percent – effectively zero. What type of insanity is this? If she keeps it up, and whole thing doesn’t implode, the yield on the 10-Year Treasury note could also slip below zero…along with the hopes and dreams of three generations of retirees.

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FX Weekly Preview: It is All about Europe

2016-06-19

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2016-06-19

Major data this week: German Constitutional Court ruling on OMT. UK referendum. EMU flash PMI. ECB TLTRO II launch. Yellen testifies before Congress, RBI Rajan to step down in early Sept.

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Weekly Speculative Postion: After Jo Cox Speculators Bought Sterling Futures with Both Hands

2016-06-18

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2016-06-18

In the days ahead of the murder of Jo Cox, a UK member of parliament, apparently for her support for remaining in the EU, speculators in the futures market scooped up sterling. While last week, speculators took long dollar positions against CHF, this barometer shifted this week towards long CHF.

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FX Review Week till June 17: Jo Cox’s death supports Sterling, negative for CHF

2016-06-18

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2016-06-18

Two main events that drove the foreign exchange market. The first iare some post-FOMC meeting movements and the assassination of Jo Cox, that might be positive for the Anti-Brexit camp . The EUR/CHF has fallen down to 1.0774 and recovered.

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Dumbest monetary experimental end game in history (including Havenstein and Gono’s)

2016-06-18

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2016-06-18

The Greatest Keynesian monetary experiment is not sustainable. It will not continue ad infinitum. Our money masters are just postponing the inevitable bust that will eventually correct these imbalances through worldwide capital re-allocation. Bawerk shows 3 graphs how investment growth gets slower and slower since the End of Bretton, how debt is increasing and how cheap dollar fuel debt-driven growth.

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Switzerland Withdraws Application To Join EU: Only “Lunatics May Want To Join Now”

2016-06-17

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2016-06-17

Resentment toward the EU hit a new high yesterday when the upper house of the Swiss parliament on Wednesday followed in the footsteps of Iceland, and voted to invalidate its 1992 application to join the European Union, backing an earlier decision by ...

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FX Daily, June 17: Martyrdom of Cox Acts as Catharsis

2016-06-17

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2016-06-17

The assassination of Jo Cox, a member of the UK parliament is a personal and political tragedy.  Her needless death provided an inflection point.  The suspension of the referendum campaigns and a steady stream of reports and speech...

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How Germany Could Upset Europe before UK Referendum

2016-06-17

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2016-06-17

The assassination of the Jo Cox has broken the powerful momentum in the markets.  Investors recognize that the tragedy potentially injects a new element into consideration for the outcome of next week’s referendum.   The campaigns will be resume over the weekend, and new polls will be available.  Investors will place more weight on polls conducted …

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US Negative Interest Rate Bets Surge To Record Highs

2016-06-17

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2016-06-17

As the "deflationary supernova" sweeps across the world, dragging bond yields to zero-and-beyond, even the almighty omniscent Federal Reserve has been forced to capitulate as the 'cheapness' of Treasury bonds lures the world's yield-hunters dragging ...

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FX Daily, June 16: Markets are Anxious, Yen Soars

2016-06-16

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2016-06-16

The US dollar is higher against the major currencies but the Japanese yen and the New Zealand dollar.  The dollar fell to new two-year lows against the yen to JPY103.55 before bouncing in the European morning back to JPY104.40.  The...

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Macro Thinking: FOMC, USD, and EU

2016-06-16

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2016-06-16

The Federal Reserve modified its stance yesterday without changing rates.  It is not just about how fast the Fed sees itself normalizing monetary policy but also where the level of the equilibrium rate. The FOMC statement, but especially the officials’ forecasts (dot plots) effective unwound the impact of the earlier Fed talk of the likely …

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KOF Economic Forecasts for Switzerland

2016-06-16

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2016-06-16

KOF Swiss Economic Institute calculates and presents updated macroeconomic forecasts for the Swiss economy in March, June, September, and December.

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Monetary policy assessment of 16 June 2016

2016-06-16

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2016-06-16

conditional inflation forecast of june 2016
The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%. At the same time, the SNB will remain active in the foreign exchange market, as neces sary. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market are intended to make Swiss franc...

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JPMorgan CIO Crushes Cameron’s Scaremongery: Brexit “Hardly The Stuff Of Economic Calamity”

2016-06-16

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2016-06-16

First The Telegraph, then The Sun, and today The Spectator all came out on the "Leave" side of the Brexit debate. However, perhaps even more shocking to the establishment is the CIO of a major bank's asset management arm dismissing the apparent carna...

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