Category Archive: 4.) Marc to Market

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BOE and Brexit

2016-04-14

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2016-04-14

No one can feign surprise that the Bank of England kept policy steady.  Nor was the 9-0 vote truly surprising, though there had been some speculation of a couple of dovish dissents.  Nevertheless, there are two important takeaways for investors. First, the BOE recognized what many in the market have already accepted; namely that the … Continue...

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Great Graphic:Is that a Head and Shoulders Top in Gold?

2016-04-14

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2016-04-14

This Great Graphic, created on Bloomberg shows the price of gold over the last six months.  The price peaked a month ago near $1285.  It seems a distribution top is being formed.   Specifically, it looks like a potential head and shoulders to...

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FX Daily, 04/14: Greenback Steadies Against Majors, but Firmer vs EM After MAS Surprise

2016-04-14

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2016-04-14

After initially extending its recent recovery gains against the major currencies, the US dollar began consolidating in the European morning.  An unexpected shift by the Monetary Authority of Singapore, replacing a modest and gradual currency appr...

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Expectation for Doha may be Inflated

2016-04-14

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2016-04-14

The weekend meeting between many OPEC and non-OPEC producers has helped spur the recent gains in the price of oil.  We are concerned that market may be getting ahead of itself. First, the freeze in output that had previously been agreed by Russia, Saudi Arabia, and a few other countries was conditional on participation by … Continue reading...

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Dueling Fed GDP Trackers

2016-04-13

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2016-04-13

The decentralized nature of the Federal Reserve lends itself to both a division of labor and competitive analysis.  Some Federal Reserve branches have alternative inflation measures and trade-weighted indices of the dollar.  On the whole, this seems beneficial for investors and policymakers. One tool developed by the Atlanta Fed has been widely embraced.  It is …

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FX Daily, April 13: US Dollar Comes Back Bid

2016-04-13

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2016-04-13

The US dollar is well bid in the Europe and is poised to start the North American session with the wind to its back.  Despite firmer equity and industrial metal prices, most emerging market currencies are also succumbing to the rebounding greenback. The euro has yet to convincingly breakout of the range that has confined … Continue reading »

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More Thoughts about the Yen

2016-04-12

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2016-04-12

Every so often there is a market move that appears inexplicable.  The conundrum now is the yen's strength.  Of course, there are numerous attempts to shed light on the yen's rise, but many, like ourselves, are not very satisfied.   Perhaps par...

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Great Graphic: Beware of Sophistry about the Yen and Nikkei

2016-04-12

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2016-04-12

There is a common ploy used by many analysts and reporters that often simply does not stand up to close scrutiny, and would in fact be mocked in the university.   The ploy is to take two time series and put them on the same chart but use different scales. Such a ploy often is used … Continue reading »

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FX Daily, April12: Higher Inflation Lifts Sterling, Yen Stabilizes

2016-04-12

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2016-04-12

There are three highlights to the foreign exchange market today.  First, the yen is marginally softer.  The yen's strength this month has been the main development.  After making a marginal new high yesterday, some semblance of stability emerge...

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Revisiting the CRB Index

2016-04-11

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2016-04-11

The CRB Index is building on last Friday's gains, when it gapped higher.  That gap marked the end of the down move we anticipated on March 28.   The index fell through the two supports we identified (171.30 and 169.50), before bottoming on April...

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FX Daily, April11: Is the Dollar Bottoming against the Yen?

2016-04-11

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2016-04-11

The yen's surge may be easing.  It made a new marginal high in Asia, but has not been able to sustain it   Technically, a hammer candlestick pattern may be traced out by the greenback's recovery today. Supporting the greenback is the movement in interest rate differentials.  The US 10-year premium over Japan has widened by … Continue...

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Great Graphic: Nonperforming Loans, Another Divergence

2016-04-11

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2016-04-11

   Early in the financial crisis, the US forced all large banks to take an infusion of capital.  This helped put a floor under the US financial system.  Regulators and stakeholders encouraged US banks to address the significant nonperforming loan problem. The eurozone banking woes persist.  Before the weekend, the shares of the one the …

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Sterling Shines Temporarily in Choppy Start for Foreign Exchange

2016-04-11

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2016-04-11

In an unusual development, sterling is outperforming today.   It rose to a four-day high near $1.4230 on what appears to be mostly modest position adjustment in relatively subdued turnover.  The $1.40 area held on repeated tests in the second ha...

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FX Daily, April 10: Same Drivers, Different Direction

2016-04-10

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2016-04-10

Over the past three months and the past month, the dollar has fallen against all the major currencies but the British pound.  Sterling's underperformance can largely be explained by uncertainty created by the Tory government's sponsored referendum on continued EU membership.   Most of the polls show those wanting to remain hold on to a slight …

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Weekly Speculative Position: Switch to Net Long Canadian Dollar and Set New Record Gross Long Yen

2016-04-09

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2016-04-09

Speculators in the futures market were not particularly active in Commitment of Traders reporting week ending April 5.  There was only one gross position adjustment which we regard as significant (defined as a 10k contract change), and that was in the yen.   Yen bulls extended their gross long position by 13.3k contract to new record …

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FX Daily: Little Technical Evidence that Greenback’s Slump is Over

2016-04-09

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2016-04-09

Although there is no convincing technical evidence that dollar's retreat in Q1 is over, we suspect it is nearly complete.  We will be especially sensitive to reversal patterns, divergences with technical indicators, and other signs that the move is exhausted. The fundamental economic driver of our medium term constructive outlook for the US dollar, the …

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Denmark Peg Under Pressure, but Won’t be Abandoned

2016-04-08

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2016-04-08

In the first quarter, there was some speculation that currency pegs either in the Middle East or Hong Kong were going to give way.  We argued that the pegs would in fact hold, and hold they have.  In fact, pressure on the Saudi and Hong Kong pegs have dissipated.  Since the end of last month, … Continue reading »

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FX Daily: Yen Pares Gains, Dollar-Bloc Firms

2016-04-08

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2016-04-08

The surging yen has been the main feature in the foreign exchange market in recent days, but its advancing streak has been stopped with today's setback.  The greenback traded briefly dipped below JPY107.70 in North America yesterday but has not ...

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Great Graphic: WSJ survey of Fed Expectations

2016-04-07

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2016-04-07

This Great Graphic shows the results of the last three Wall Street Journal survey of business and academic economists on the outlook for Fed policy. The key take away is that despite all the talk and ink spilled on the shifting Fed stance and the split within the FOMC, economists views did not change much … Continue...

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FX Daily, April 7: Yen Continues to Climb

2016-04-07

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2016-04-07

The main feature in the foreign exchange market continues to be the surge of the Japanese yen.  A convincing explanation of the yen's strength seems elusive.  Until last week, which means through the fiscal year-end last month, Japanese fund managers have been buying foreign bonds at a near-record pace.  Foreign investors, for their part, have …

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