Category Archive: 4.) Marc to Market

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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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Greece is Still in a Hot Spot

2016-01-25

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2016-01-25

Greek Prime Minister Tsipras is celebrating the one-year anniversary of this election.  He offered Greek voters an opportunity to replace him last summer, but they stuck with him. Many economic issues remain unresolved. Pension reform promises to be a flashpoint between the Tsipras government and the official creditors.    Although the G10 has eleven members, official …

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Recovery Pauses in Europe

2016-01-25

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2016-01-25

[unable to retrieve full-text content] Asia followed suit, extending the recovery seen in the last couple of sessions to end last week.  Equities rose as did oil prices.   The MSCI Asia-Pacific Index rose 1.2%, and the Nikkei posted its first back-to...

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Week Ahead: Picking Up the Pieces

2016-01-24

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2016-01-24

Whatever force had gripped the global capital markets since the start of the year has been broken.   This simple characterization is rich.  It is not clear if or what macroeconomic considerations were driving the markets.  The markets had taken the unsurprising Fed rate hike in mid-December in stride. The dramatic moves in the market did not …

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Weekly Speculative Positioning before the Reversal

2016-01-23

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2016-01-23

The latest Commitment of Traders report that covers the four sessions through January 19 saw speculators anticipating the continuation of the current moves.  Of the sixteen gross positions we track, only five were in reducing exposures.  Last week there was only six increased exposures. With the benefit of hindsight, we know that something changed a day …

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FX Outlook: New Phase has Begun

2016-01-23

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2016-01-23

The first two and a half weeks of the new year saw persistent selling of equities, commodities, and emerging markets.  In the foreign exchange market, the dollar-bloc and sterling were crushed.  The yen was the single biggest beneficiary, and spe...

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Europe’s Third Challenge

2016-01-23

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2016-01-23

ECB President Draghi made clear at yesterday's press conference that new risks have materialized and the central bank's job to reach its mandate is far from over. Current efforts may not suffice to achieve its legal prescribed mandate. Monetary policy will be reviewed and reassessed at the next meeting in March, when new staff forecasts … Continue...

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Emerging Markets: What has Changed

2016-01-22

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2016-01-22

In the EM equity space, Russia (+5.9%), Colombia (+2.0%), and Thailand (+1.8%) have outperformed this week, while Qatar (-6.8%), UAE (-5.1%), and the Philippines (-3.7%) have underperformed.  To put this in better context, MSCI EM rose 0.1% this week...

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Collective Sigh of Relief Ahead of the Weekend

2016-01-22

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2016-01-22

Like a car ignition that finally catches after several attempts, the global markets are building on the recovery seen in North America yesterday.   Asian stocks rallied, with the Nikkei leading the way with a 5.9% rally.  More modest 1.25% gain...

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