Category Archive: 4.) Marc to Market

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Germany–A Hegemonic Challenge for the Heartland

2016-02-08

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2016-02-08

[unable to retrieve full-text content](co-authored with Matt Dabrowski) The great British geographer Halford Mackinder invented the term “geopolitics” over 100 years ago. He painted a grand vision of international relations that revolved around one f...

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Falling Stocks and Yields Drag Dollar Lower

2016-02-08

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2016-02-08

Many markets are closed in Asia, and although Tokyo managed posted equity gain, most other markets in the region that were open fell.  And the selling pace picked up in Europe.  The Dow Jones Stoxx 600 is off 2.3%, led by information technology, industrials, and consumer discretionary.     It is trading at new lows … Continue...

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Easing of US Recession Fears will Likely Lend Dollar Support

2016-02-07

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2016-02-07

With many equity markets having fallen 20% from their peaks, meeting a common definition of a bear market, investors, analysts, and journalists understandably seek a narrative that gives it meaning.  At the very start of the year, the culprit singled out was drop in Chinese shares and the yuan.  However, the yuan has stabilized as the …

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Weekly Speculative Positions: Big Position Adjustment for Euro, Smaller for Yen

2016-02-07

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2016-02-07

The latest Commitment of Traders report covers the week ending February 2 that included the FOMC meeting and the BOJ's surprise cut.  There was also speculation of a potential deal between Russia and OPEC to cut output.  Speculative position adjustment in the futures market was more limited than one might have expected. Speculators cut 10.5k gross …

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Dollar Beaten Back but Cynicism is Unwarranted

2016-02-06

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2016-02-06

From a technical perspective, the dollar's pullback has been largely corrective in nature. Leaving aside the yen, against the other major currencies, the dollar is correcting a run-up that began in mid-October.  The chief exception is sterling, which...

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Brief Thoughts on Chinese Capital Flows Ahead of the Year of the Monkey

2016-02-05

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2016-02-05

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves. China's reserves stood at $3.81 trillion in January 2015.  They are expected to stand near $3.21 trillion as …

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Employment Details Better than the Headlines

2016-02-05

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2016-02-05

The US created fewer jobs than anticipated and the December gain was revised lower.  However, the other details were favorable--better than expected.  The unemployment rate ticked down to 4.9%, a new cyclical low, despite the rise in the participation rate (62.7% from 62.6%). Average hourly earnings were stronger than expected at 2.5%.  The consensus expected …

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It is Not All About U.S. Jobs

2016-02-05

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2016-02-05

The US nonfarm payroll report typically dominates the first Friday a new month.  In recent years, it has become among the most important economic reports globally.  Not today.   The market's focus has shifted from Chinese stocks and yuan that dominated the first week or so, then oil, and now it is heightened concern about a … Continue reading...

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Pessimistic BOE Shakes but Doesn’t Break Sterling

2016-02-04

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2016-02-04

Sterling has neared the 50% retracement of the 11.5 cent decline since mid-December.  It is found near $1.4660.  After easing ahead of the BOE announcement, sterling was sold to $1.4530 on the initial headlines that showed the BOE was cutting its...

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Dollar Retreat Extends

2016-02-04

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2016-02-04

The US dollar remains under broad pressure after yesterday's sharp decline.  Neither dovish comments by ECB President Draghi, nor the Reserve Bank of New Zealand have managed to reverse the gains of their respective currencies.   Similar, the rise in US yields and firm equities have failed to push the yen lower.  Investors and policymakers are …

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When Irish Eyes are Smiling

2016-02-04

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2016-02-04

Apparently, when Irish eyes are smiling, it’s time to call an election. And that is what Prime Minister Kenny has done.  The election will be held on February 26.  The polls suggest that the governing coalition (Fine Gael and Labour) may struggle to secure a majority.   In some ways, Kenny is making the same bet … Continue reading...

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Dollar Edges Lower, Markets Trying to Stabilize

2016-02-03

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2016-02-03

The US dollar is sporting a softer profile today as the global capital markets are trying to stabilize.  Oil prices have steadied, with WTI back above $30.   Bond markets are narrowly mixed though the 10-year US Treasury is steady near 1.85%.  Asian and European equities followed US markets lower, but American equities have stabilized, and …

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Great Graphic: Falling Equities and US Treasuries Blunt Impact of BOJ’s Surprise

2016-02-03

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2016-02-03

The yen is the strongest currency today.  Many are still referring to it as a safe haven.  However, this strikes us as a misuse of the concept.  Investors are not flocking to the yen to find quiet place to ride out the storm.  Rather the yen's strength is a reflection of the turmoil. As we … Continue reading »

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Cameron vs Brexit: Mission Accomplished

2016-02-02

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2016-02-02

  The EC draft proposals in response to the UK’s demands have been enthusiastically embraced by Prime Minister Cameron.  The wires quote Cameron as saying "I would opt in to EU membership on these good terms." The proposals presented by European Council President Tusk are weak on details that are still to be decided, though … Continue...

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Familiar Patterns Return to Capital Markets

2016-02-02

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2016-02-02

The decline in oil and equities are lifting European bonds and Treasuries.  The US dollar is firmer against most major and emerging market currencies.   We never put much stock in last week's seemingly euphoric speculation of a deal between Russia and OPEC to support oil prices.  As the speculation is unwound, anticipation of another large …

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Dollar Mixed to Start the Week

2016-02-01

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2016-02-01

Investors continue wrestling with the implications of last week's surprise rate cut by the Bank of Japan. . The yen is little changed against the dollar, near its 200-day moving average (~JPY121.50).  The euro moved from the upper end of its two-cent range last Thursday to the lower end on before the week.  The absence … Continue reading »

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New Month, Same Drivers

2016-01-31

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2016-01-31

On the very first trading day of the year, the Nikkei, DAX, and S&P 500 gapped lower, setting the tone to a particularly challenging month for investors.The last week and a half has been better, and this will likely carry over into the start of the new month.  Before January could slip into the history … Continue reading »

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Weekly Speculative Positions: Speculators Added to Long Yen Position Ahead of BOJ

2016-01-30

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2016-01-30

The latest CFTC Commitment of Traders report covers the five sessions through January 26, the day before the FOMC concluded its two-day meeting and three days before the BOJ's announcement.  Speculators hardly changed their positioning during th...

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The Dollar: Now What?

2016-01-30

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2016-01-30

The US dollar turned in a mixed performance last week.  Firmer oil and commodity prices more generally helped lift the Australian and Canadian dollars, and many emerging market currencies.  These currencies initially extended their  gains ahead of the weekend in response to the Bank of Japan's surprise 20 bp cut on some excess reserves ( to …

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Emerging Markets: What has Changed

2016-01-29

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2016-01-29

1) Korea’s Financial Services Commission will introduce a so-called “omnibus account” for foreigners investing in local stocks 2) Malaysian Attorney General Apandi Ali closed the investigation into transfers of foreign money into Prime Minister Najib Razak’s personal bank accounts 3) The South African Reserve Bank increased the pace of its tightening 4) The Egyptian central bank …

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