Category Archive: 4.) Marc to Market

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Weekly Speculative Positions: Small Changes

2016-02-27

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2016-02-27

The position adjustment among speculators in the currency futures market were minor in the reporting week that ended February 23.  There was only one gross adjustment we regard as significant (more than 10k contracts).  The Mexican officials sprung a bear trap and forced speculators to cover.  There were 15.8k gross short peso in speculative hands that …

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FX Daily, 02/27: Are the Dollar Bulls Retaking the Initiative?

2016-02-27

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2016-02-27

As systemic anxiety eased, the US dollar got better traction. The dollar-bloc currencies managed to hold their own as cross positions were unwound.    Major bourses posted gains for the second consecutive week.  With the recent advance, several markets, including the S&P 500, FTSE and Sweden, China, Korea, and Taiwan are now positive on the month.    …

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Weekly Emerging Markets: What has Changed?

2016-02-26

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2016-02-26

(from my colleague Dr. Win Thin)

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Liberty and the 500 Euro Note

2016-02-26

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2016-02-26

The internecine pitch battle between ECB President Draghi and the man who may very well be his successor, Bundesbank President Weidmann opened a new front this week.  It is over the future of the 500 euro note.   Practically, every initiative by Draghi has been resisted by the Bundesbank.  Sometimes it puts the Bundesbank at odds with …

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FX Daily, 02/26: Global Markets Trying to End Week on Upbeat

2016-02-26

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2016-02-26

The US S&P 500 closed above 1950 for the first time since January 6.  Global equity markets are broadly higher in response.  At the same time, ahead of the G20 meeting, the world's second and third-largest economies have signaled additional...

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G20 Meeting is no Jedi Council

2016-02-25

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2016-02-25

The G20 finance ministers and central bankers will meet in Shanghai starting tomorrow.   From some quarters, there is a sense of urgency.  The IMF, for example, is likely to cut its world GDP forecast of 3.4% this year.  That forecast is not even two months old.  The tightening of global financial conditions, exemplified by the sharp … Continue...

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FX Daily, 02/25: Market Anxiety Heightened, Oil and Stocks Head Lower, Sterling Can’t Catch a Bid

2016-02-25

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2016-02-25

A confluence of factors are raising anxiety levels among investors, and it is being expressed in heightened volatility. The S&P 500 was turned back yesterday from the key 1945 level, and global equities are falling today.   The over-productio...

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FX Daily, 02/24: Dollar is Little Changed, US Leadership Awaited

2016-02-25

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2016-02-25

The foreign exchange market is unusually calm.  The US dollar is little changed against currencies.  While the selling pressure that took sterling below $1.39 and the euro below $1.10 has subsided, neither has been able sustain upticks.  The e...

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The Return of Moral Economy?

2016-02-25

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2016-02-25

The concept of moral economy was first used by 18th-century thinkers trying to make sense of the rising capitalist values.  In feudal society, a "fair price" was preferred over a free price especially for the necessities of the day.   The reci...

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Great Graphic: Trade-Weighted Look at Major Currencies

2016-02-24

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2016-02-24

When considering the impact of changing currency prices on an economy, trade-weighted measures are appropriate.  The Federal Reserve has cited the dollar's appreciation as a headwind on the economy and a depressant on prices. Given the moves in...

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Sovereignty and Brexit

2016-02-22

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2016-02-22

As the European Union grew, the unanimity in decision-making increasingly gave way to qualified majority voting.  This development took away an important weapon the UK deployed to pursue its national interest.  It use often to frustrate the collectivist decision-making in Brussels and exert its will for a broad union that preserved national sovereignty. National sovereignty is …

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Thoughts about the Price Action

2016-02-22

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2016-02-22

The US dollar has begun the week with a strong advance against sterling and the euro. Sterling's drop, the most in several years, is not a function of macroeconomic policy.  It is a function of Brexit and its endorsement by London Mayor Johnson....

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FX Daily, 02/22: Sterling is Pounded and Eurozone PMI Disappoints

2016-02-22

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2016-02-22

Global equities are beginning the last week of February on a firm note.  The MSCI Asia Pacific Index rose 0.75%, with China's markets gaining more than 2%, leading the way. European shares have followed suit.  The Dow Jones Stoxx 600 is up 1.7%...

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Re-Emergence of Divergence Helps Stabilize Markets

2016-02-21

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2016-02-21

The main driver of the investment climate is not so much the incremental economic data as the capital markets themselves. The market turmoil contributed to the tightening of financial conditions, which in turn heightened risks, which monetary of...

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Weekly Speculative Position: Dollar Bullish Speculators Still Hesitant

2016-02-21

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2016-02-21

The CFTC Commitment of Traders reporting week ending February 16 was short due to the US holiday.  This may have contributed to the small adjustments to speculative positioning in the currency futures.  It also may reflect the lack of convictio...

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Investor: Heal Thyself

2016-02-21

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2016-02-21

After a terrible first several weeks of the year, global capital markets stabilized in the past week.  Chinese markets re-opened after the extended Lunar New Year holiday and proved not to be disruptive.   Chinese equities did not decline to catch-up to the performance of global markets in its absence and instead gained 3% on … Continue...

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The World is not Ending (Yet), Panic To Subside

2016-02-14

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2016-02-14

Investors have become unhinged. The increased volatility and dramatic market moves challenge even the most robust investment strategies. This sets off a chain reaction of money and risk management that further amplifies the price action, like an...

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Weekly Speculative Positions: Speculators Continue to Press

2016-02-13

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2016-02-13

There are two broad developments in speculative positioning in the Commitment of Traders report in the week ending February 9.  First, the market turbulence saw speculators reduce exposure.  Of the 16 gross positions we track, 11 were reducing ...

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Daily FX, 02/13: Market Chaos Subsiding? Dollar Correction Over?

2016-02-13

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2016-02-13

The outlook for the dollar in the week ahead is not about economic data or the FOMC and ECB minutes.  It is about the stability of the global capital markets.  Many are looking for an event or official action that will stop the rout that is of historic proportions to start the year.   We too … Continue reading...

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Don’t Forget the Golden Rule: He with the Gold Makes the Rules

2016-02-12

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2016-02-12

In response to the global crisis, central banks have adopted unorthodox policies.  They expanded their balance sheets and broken the zero bound of interest rates.  Many investors have been critical of the central bank action on principle, but what has changed recently is that market developments have provided fodder for the ineffectiveness in practice. Asset …

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