Category Archive: 4.) Marc to Market

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Is that Buzzing Sound Helicopter Money?

2016-03-24

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2016-03-24

Helicopter money is the rage.  Central banks are talking about it.  Economists are debating it.  The media is rife with coverage.     While it sounds important, it is not precisely clear what helicopter money means. It appears to have originated with Milton Friedman.  In 1969, he wrote: "Let us suppose now that one day a helicopter … Continue reading »

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ECB, Corporate Bonds, and Credibility

2016-03-23

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2016-03-23

The euro's rallied shortly after the ECB announced numerous monetary measures that in their totality were more than expected.  Many saw this as proof that monetary policy had lost its effectiveness, and central banks have lost credibility.    R...

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Great Graphic: Brexit Fears Boost Sterling Put Buying

2016-03-23

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2016-03-23

The UK referendum is three months away.   Three-month options are a common benchmark for various market segments; from speculators, to fund managers to corporations.  Events over the past week have raised the risks that the UK votes to leave the EU. The market has responded forcefully today, and even if you only follow the spot …

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Brexit Risks Rising

2016-03-22

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2016-03-22

  Many banks suggested that Swiss Franc long is the trade to hedge against the Brexit risk.Therefore this text by Marc Chandler is quite important for Switzerland. An ill-conceived strategy undermined by mismanagement and bad fortune is increasing the risks that the UK votes to leave the EU in June.    Nearly everything that could, has …

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Great Graphic: 10-Year Break-Evens and Oil

2016-03-22

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2016-03-22

Until last September, the Federal Reserve seems to play down the market-based measures of inflation expectations, preferring the surveys that showed views were anchored.    At the September 2015 FOMC meeting where the Fed had been expected to tighten until the August turmoil, officials cited among other considerations, the decline in market-based measures of inflation expectations. …

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FX Daily, March 22: Terrorist Strike in Brussels Causes Market Angst

2016-03-22

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2016-03-22

A series of attacks at Brussels airport and metro casts a pall over the market.  The attacks come as Europe prepares what for many will be a long holiday weekend.  Gold, the dollar and yen seem to have been the beneficiaries.   Bonds are generally firmer and equities lower.   However, in late morning activity in London, …

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FX Daily: When a Quarter is Two Halves

2016-03-20

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2016-03-20

The year started off poorly, to say the least. Equity markets plunged from the get-go.  The Nikkei, DAX and S&P 500 gapped lower on the first trading day of the year.   Emerging markets and commodities were smashed.   Many economists blamed the Federal Reserve for hiking rates in mid-December.   Pundits warned that the seven-year bull … Continue...

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Weekly Speculative Positions: Pile into Sterling and Take Profits on Long Aussie

2016-03-19

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2016-03-19

After a relatively quiet period into the run-up to the ECB, speculative activity markedly increased in the CFTC reporting week ending the day prior to the conclusion of the FOMC meeting. Two speculative gross currency position adjustments stand out.  First, speculators appeared to have bought a record amount of sterling contracts.  The gross long position more …

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FX Daily, 03/19: Greenback Remains Technically Vulnerable

2016-03-19

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2016-03-19

The US dollar had a difficult week.  The price action after the ECB meeting had undermined the technical tone, and the dollar took another leg down after the FOMC moved closer to the market expectation by reducing the number of rate hikes the median official thinks will be appropriate this year from four to two. … Continue...

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Thoughts on Conspiracy Theories of the Dollar’s Losses

2016-03-18

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2016-03-18

In our work, we have argued that the dollar is having its third significant rally since the end of Bretton Woods.   The first rally was associated with Reagan though it began under Carter and followed 100 bp hike by a new Federal Reserve Chairman...

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FX Daily 03/18: Dollar Trims Losses Ahead of the Weekend

2016-03-18

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2016-03-18

The US dollar is firmer against most major and emerging market currencies to pare this week's decline.  There are three notable exceptions, and they are all in Asia.  For all practical purposes, the dollar is flat against the Japanese yen near JP...

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FX Daily 03/17: When Doves Cry: Imprudently Cautious

2016-03-17

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2016-03-17

If there was one word Yellen emphasized yesterday it was caution.  The dot plot reflected that as well.  Can one ask if the Fed is being too cautious? Yellen acknowledged that the Fed's assessment of the US economy had not changed much from December.  There is little reason it should.  However, it is difficult to … Continue reading...

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The Morning Edge With Blake Morrow – SPECIAL – Marc Chandler along with Chris Bayer – 03/17/16

2016-03-17

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Blake (@PipCzar) interviews Marc Chandler. Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master’s degrees from …

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Great Graphic: Dollar Index Retracement, Too Soon To Say Top is In

2016-03-17

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2016-03-17

The cry that the dollar has peaked is gaining ground.  We are not convinced.  The macro-fundamental case remains intact.  Divergence between the US and other high income countries continues, even if at a more gradual pace than the Federal Reserve expected a few months ago. This Great Graphic of the Dollar Index, created on Bloomberg, …

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FX Daily 03/17: Dollar Drop Extends Post-Fed, Stocks, Bonds and Commodities Rally

2016-03-17

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2016-03-17

The Federal Reserve's cautiousness has sent the dollar reeling.  The Fed's backtracking to two hikes this year from four is still met with skepticism by the market.  It previously had a June hike nearly discounted but has not pushed that out unti...

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FX Daily 03/16: Fed Pulls Back to Two Hikes, Dollar Drops and Stocks Rally

2016-03-16

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2016-03-16

The Federal Reserve halved the number of rate hikes it anticipates this year from four to two.  The market has been moving toward this as well after having thought the would be no hikes this year.  The dollar sold off.  The dollar-bloc currencies and emerging market currencies are have rallied sharply. Risk assets in general …

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Brexit, Cyprus and the EU Summit

2016-03-16

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2016-03-16

The EU leaders summit on refugees begins tomorrow.   A conclusive agreement will likely be elusive.   There are three main obstacles.  First, the effort to reinforce the external borders to allow free internal movement requires Turkey's cooperation, but it won't be represented.  Second, that is important because Cyprus is demanding more concessions by Turkey.  Third, others …

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Dollar Firm Ahead of the FOMC, UK Budget Looms

2016-03-16

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2016-03-16

Since the Federal Reserve hiked rates in December, both the European Central Bank and the Bank of Japan have eased policy further.  The idea that because they cut rates means that the Fed cannot raise rates is a not a particularly helpful way to ...

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Anticipation of Osborne’s Budget Weighs on Sterling

2016-03-15

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2016-03-15

If UK Chancellor of the Exchequer Osborne wants to position himself to be the next Prime Minister, the budget to be unveiled tomorrow may not be particularly helpful.  There is little room to relax fiscal policy, given the self-imposed constraints. The deficit for the current fiscal year was projected to be GBP73.5 bln, but through …

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Before the FOMC, Another Look at the ECB’s Actions

2016-03-15

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2016-03-15

The market's focus has shifted to the two-day FOMC meeting that begins today.  The Federal Reserve should be pleased with recent developments.  Labor market slack continues to be absorbed.  Core inflation measures continue to edge higher. Market-based measures of inflation expectations have risen, and the 10-year breakeven is a little above levels that prevailed before …

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