Category Archive: 4.) Marc to Market

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Fe Fi Fo Fed

2015-12-16

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2015-12-16

The much awaited Fed meeting is here.  A 25 bp increase in the Fed funds range to 25-50 bp is widely expected.  The near certainty of this contrasts to the high uncertainty of the immediate impact stocks, bonds, and the dollar.   There are five components of the Fed's decision that will command attention.  First, is … Continue reading...

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Great Graphic: US Equities in December

2015-12-15

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2015-12-15

This Great Graphic shows how different measures of US equities perform in December by day for the past 20 years.  I got it as a tweet from Urban Carmel, who got it from the Stock Almanac.   Today is eleventh session of the month.  Equities typically rallied starting now in December.   Since 1994, the S&P … Continue reading...

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While Waiting for the Fed, Don’t Forget Fiscal Policy

2015-12-15

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2015-12-15

The focus of most investors is the rate decision by the Federal Reserve tomorrow.  Since the central bank completed its asset purchase program at the end of last year, a rate hike has been understood as a matter of time.   Expectations for a Ju...

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Corrective Forces Dominate

2015-12-15

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2015-12-15

The euro made marginal news highs near $1.1060 while sterling and the yen have been confined to yesterday's ranges.  European equities are bouncing off ten-week lows.   The dollar-bloc is firm; the upbeat RBA meetings provided only a short-lived...

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Great Graphic: Large Yuan Devalution in 2016?

2015-12-14

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2015-12-14

Following the mini-devaluation in August, the yuan appreciated in September and October.  It began depreciating again in November and this has continued through the first half of December.   The dollar finished the local session at new multi-year highs against the yuan.  Many observers see in the pre-weekend announcement about monitoring the yuan against a basket …

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Emerging Markets: Week Ahead Preview

2015-12-14

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2015-12-14

Indonesia reports November trade Tuesday.  Exports are expected at -11.5% y/y, while imports are expected at -21.3% y/y.   Bank Indonesia then meets Thursday and is expected to keep rates steady at 7.5%.  We believe an easing bias is in place, given ...

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Outlook for Spain’s Election

2015-12-14

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2015-12-14

The pace of reform in Spain has slowed, with electoral considerations likely playing a role.  A new center-right government may resume efforts to reform the labor market, even if leading a government costs Rajoy his job.   Representation of Podemos i...

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Great Graphic: Euro Forecast by Global Banks

2015-12-14

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2015-12-14

The dollar-euro is the most actively traded currency pair in the world.  It is often what is meant when people ask where is the dollar trading.   Dollar bullish sentiment prevailed in 2015, but many large banks doubt that it will continue in 2016.  This Great Graphic from the Wall Street Journal shows the euro forecasts … Continue...

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Slow Start to Important Week, though Rand Jumps Back

2015-12-14

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2015-12-14

The US dollar is firmer against the euro, sterling and yen, but within the ranges seen before the weekend. The greenback is softer against the dollar-bloc currencies after early gains were unwound.  The biggest mover has been the South African rand, which is up a little more than 5%, retracing nearly half of last week's … Continue reading...

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After ECB’s Hawkish Cut, Is the Fed about to Deliver a Dovish Hike?

2015-12-13

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2015-12-13

After much hemming and hawing since mid-year, the Federal Reserve is finally poised to raise rates for the first time in nearly a decade. Indeed, given the speeches by the leadership and the economic data, especially the labor market readings, the failure to raise rates would likely be more destabilizing at this juncture than lifting them. …

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Weekly Speculative Position Limited: Adjustment Warns USD Correction may not be Over

2015-12-12

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2015-12-12

1. Activity increased during the Commitment of Traders reporting week ending 8 December.  There were four significant (10k+ contracts) gross currency adjustments by speculators.  Given that this period covers the second largest gain in the euro's history, it is surprising that it did not meet the threshold.  It is astounding that only that speculators added only …

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Technical Condition of the Greenback on the Eve of Lift-Off

2015-12-12

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2015-12-12

The US dollar turned in a mixed performance in the week following the ECB's surprise and the healthy US jobs report.  In some ways, the greenback was like a fulcrum, not the driver.   The dollar-bloc currencies and the Norwegian krona were on ...

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Emerging Markets: What has Changed

2015-12-11

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2015-12-11

1) South African President Jacob Zuma fired Finance Minister Nene and replaced him with little-known ANZ lawmaker David Van Rooyen  2) S&P revised the outlook on South Africa’s BBB- rating from stable to negative  3) People’s Bank of Chi...

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Insight into the ECB

2015-12-11

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2015-12-11

Investors, fellow central bankers, and the media continue to try to make sense of last week's ECB surprise.    We had argued that given the market positioning, especially the dramatic accumulation of speculative short euro positions since the m...

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Commodity Weakness takes a Toll, Rand Fall Continues, US Retail Sales Awaited

2015-12-11

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2015-12-11

The US dollar is confined to narrow ranges against the euro and sterling after pushing higher yesterday.  The greenback is staging stronger upticks against the yen but is struggling to resurface above previous support in the JPY122.25 area.   Weak commodity prices and the loss of upside momentum has seen profit-taking in the Australian and New …

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Great Graphic: A Divergence that Gives China a Headache

2015-12-11

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2015-12-11

China was instructed by the IMF that as an operational requirement for joining the SDR that the gap between the onshore and offshore yuan (CNY and CNH respectively) needed to close.  This was important for central banks to hedge.  The opposite is taking place. That is what this Great Graphic, created on Bloomberg depicts. The …

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Greenback Recovers, but Antipodeans Advance

2015-12-10

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2015-12-10

There are two broad themes among the major currencies today.  The first is the pullback in the euro and yen after yesterday's run-up.  Position adjustments with the help of stop losses seemed to be the key consideration.  Both the euro and yen extended the recovery seen in the second half of last week.  Year-end considerations, …

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France, Schengen and the Future of Europe

2015-12-09

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2015-12-09

The second round of French regional elections will be held this weekend.  The first round last weekend saw the National Front do best in terms of popular votes and led in six of the twelve regions.    The National Front is not simply anti-austerity, but it is anti-EMU.  In regions that NF garnered more than 40% … Continue reading »

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Dollar Bloc Remains Soft, but Euro, Sterling and Yen Firm

2015-12-09

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2015-12-09

The US dollar continues its mixed performance.  The fragile stability of commodity prices today is not lending much support to the Australian and New Zealand dollars though the Canadian dollar is flat after yesterday's slide.  The euro has pushe...

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Oil: WWJD–What would JD Rockefeller have Done?

2015-12-09

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2015-12-09

Many observers conclude OPEC is dead.  Oh, its demise has been claimed before, but after the oil cartel failed to provide a quota (output goal) in last week's statement, the claim has been given new life.  The problem is that OPEC's action under Saudi leadership may be perfectly rational for a cartel.  Suppose you were … Continue...

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