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Category Archive: 4.) Marc to Market

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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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Kuroda Surprises, Introduces Negative Rates in Japan, Sinks Yen

2016-01-29

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2016-01-29

The Bank of Japan surprised the market.  It did not expand its asset purchase plan, which was the main focus of many market participants, including ourselves.  Instead, following a rash of disappointing data, the BOJ introduced negative interes...

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Implications of Amari’s Resignation

2016-01-28

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2016-01-28

We had been tracking the budding scandal that implicated the office of Japan's Economic Minister Amari.  We had expressed our concern earlier this week that the scandal could sap Amari's office strength and be a distraction.  However, the situation unraveled quicker than we anticipated and Amari resigned earlier today. He is the fourth ministerial resignation …

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Dollar-Bloc Currencies Advance, Sterling Too

2016-01-28

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2016-01-28

There is a mixed tone in the global capital markets today.  Asian shares were mixed with declines in the Nikkei (-.07%) and Shanghai (-2.9%) being offset by modest gains elsewhere.  European bourses are also mixed and the Dow Jones Stoxx 600 is o...

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Cool Video: Bloomberg TV Interview–Italian Banks and FOMC

2016-01-28

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2016-01-28

I was a guest on "What'd You Miss" on Bloomberg TV this afternoon, shortly after the markets closed.  Alix Steel, Joe Weisenthal, and Scarlet Fu, and I discussed two main issues.    Click here to see the seven minute clip.   The first was the EU's approval, finally, of the establishment of a "bad bank" in … Continue reading...

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Fed Says Little and Does Less

2016-01-27

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2016-01-27

The Federal Reserve tweaked its economic assessment, but generally kept the underlying message the same.  It sees slack in the labor market continuing to be absorbed and believes the economic conditions warrant a gradual increase in rates.  The market was looking for a more dovish statement, but the message is little changed from December. The … Continue...

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Central Bank Credibility: What Does it Mean?

2016-01-27

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2016-01-27

For at least a couple of years before the Great Financial Crisis, policymakers often cautioned that investors were mispricing risk.  Through the crisis, investors became painfully aware of many risks, including counterparty risk and reputation risk.  Now many observers are highlighting a new risk, what they call the credibility of central banks. The issue is …

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Mixed Dollar as Eyes Turn to FOMC

2016-01-27

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2016-01-27

The US dollar is broadly mixed as attention turns to the FOMC statement later today.   The most important development has been the unexpectedly large oil inventory build reported by the API ahead of today's government estimate.   The 11.4 mln barrel build is the largest in nearly two decades.  To put the rise in perspective, consider …

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Great Graphic: World Equities and Oil

2016-01-27

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2016-01-27

Equities and oil continue to be moving in the same direction. During the first few weeks, they were moving down together and now up together.   It is frustrating for asset managers.   Large cap and small cap stocks moving together as if everything is being tarred with the same brush. We continue to try to tease … Continue reading...

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Getting a Handle on Italy’s Banks

2016-01-26

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2016-01-26

Reports indicating that Italy is close to establishing a bad bank prompted one wag to ask if  Italy does not already have enough.  The country may be better served by setting up a good bank. The sharp sell-of in shares of Italian banks this year is an important driver of G7-leading 12.4% slide in the … Continue reading »

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It may Feel Bad, but Its Different

2016-01-26

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2016-01-26

With equities sliding and oil pushing back below $30, it may feel like the resumption of moves in the first two and half weeks of the year, but it is different.  It is considerably more orderly.  The contagion from the equity and oil slide is mo...

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BOJ and TPP

2016-01-25

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2016-01-25

The Bank of Japan meets later this week.  We do not think that it will expand its already aggressive monetary policy stance.   Given the largely operational adjustments announced last month, it seems premature to expect substantive adjustment no...

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