Category Archive: 4.) Marc to Market

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Collective Sigh of Relief in Capital Markets or Turnaround Tuesday?

2016-01-19

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2016-01-19

The relentless pounding that investors suffered in the first two weeks of the year has subsided.  It is too early to have much confidence that a turn is at hand.  By various measures, the sell-off had stretched the technical condition.     I...

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Emerging Markets: Week Ahead Preview

2016-01-18

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2016-01-18

EM ended last week on a sour note. The most important factor for global risk appetite has become China, with the Fed tightening cycle now on the back burner.  Our base case remains that China muddles through, but policymakers there need to commu...

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Trying to Get One’s Bearings

2016-01-18

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2016-01-18

The market is trying to get its bearings today. The large decline in the US equities before the weekend has had modest spillover effects elsewhere.  Equity markets, barring the Shanghai and Shenzhen Composites, are mostly modestly lower.  The M...

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Week Ahead: What Will It Take to Stabilize the Capital Markets?

2016-01-17

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2016-01-17

Two weeks into the year and most investors are nursing sizable drawdowns.  The recovery in the US equities on January 14 looked like a potential turning point. However, the coattails proved non-existent, and the bull trap was sprung with new downside momentum established before the weekend. The obvious takeaway is that the current driver is not …

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Weekly Speculative Positions: Boosted Long Yen Positions, but Mostly Trimmed Exposures

2016-01-16

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2016-01-16

Speculative activity in the CME currency futures picked up in the latest reporting period. There were six significant gross position adjustments, which in our work is more than 10k contracts.   The gross short speculative euro position was reduced by 17.9k contracts, leaving 209.6k. Since early December, 53k gross short euro contracts were covered.  During the same …

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Outlook for the Dollar: Dissecting the Bull

2016-01-16

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2016-01-16

The US dollar remains strong against most currencies.  The exceptions are the Japanese yen, Swiss franc and euro though the franc and euro pulled back in the US afternoon before the weekend.  The greenback is still appreciating on a trade-weighted basis, which is the metric that counts in assessing its impact on the overall economy.   …

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Emerging Markets: What has Changed

2016-01-15

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2016-01-15

1) The Hong Kong dollar posted its biggest two-day decline since 1992 2) Bank Indonesia restarted its easing cycle, cutting rates for the first time since February 2015 3) Poland’s current Monetary Policy Council (RPP) held its last policy meeti...

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When it Rains, It Pours

2016-01-15

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2016-01-15

There are three developments today, which while not driving the market, are important for many investors.  The first are comments from German Finance Minister Schaeuble and EC President Juncker.  The second is an important development in Poland.   The third are growing problems in Greece. Schaeuble is formally acknowledging what investors have known for some time. The …

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A Bloody Friday

2016-01-15

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2016-01-15

The recovery of US shares and oil yesterday provided short-lived.  Asian shares were dragged lower with the help of Chinese equities.  The 3.5% fall in the Shanghai Composite today brings the year-to-date decline to a little more than 18%. Taiw...

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Great Graphic: S&P and Oil–Conjoined Twins or Distant Cousins that Sometimes Look Alike?

2016-01-14

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2016-01-14

The US stock market and the oil market appear joined at the hip. The Great Graphic here, created on Bloomberg, shows the correlation of the two markets.  It is near 0.77, which is the highest since September 2013.   The correlation was condu...

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When Loons Cry: Will the Bank of Canada Cut Rates Next Week?

2016-01-14

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2016-01-14

Speculation is mounting that the Bank of Canada will be the first major central bank to cut rates this year.  It meets on January 20.  The combination of the drop in oil prices (40% since mid-October) and the erosion of the business outlook has boosted the risk of a cut next week.   The bitumen from … Continue reading »

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Market Turmoil Continues, Risk Shunned

2016-01-14

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2016-01-14

Investors still have not found solid footing this year.  Equity markets have continued to sink, even though China's equities advanced.  Bond markets are mostly firmer, with the US 10-year yield seemingly being drawn back toward 2.0%.  Oil prices are little changed, after Brent slipped to marginal new lows.   There is much talk about the Iranian …

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Is Sterling almost Done Being Pounded?

2016-01-13

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2016-01-13

Sterling fell 4.25% from the high on December 28 to yesterday.  It has been confined to yesterday's range today.   After finishing below the lower Bollinger Band yesterday, it has moved back into the band today.  The Bank of England meets tomo...

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Fishing for a Bottom to Dollar-Yen

2016-01-13

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2016-01-13

While the euro often carves out a bottom, the dollar's lows against the yen are frequently characterized by spikes.  That was the case, for example in the middle of October and late-August and the low (~JPY115.60) in December 2014.  Such a spike may ...

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Hump Day’s Bump

2016-01-13

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2016-01-13

Many of the capital markets are enjoying reversals today.  Equity markets are mostly higher. The MSCI Emerging Market equity index is up more than 1%. Several key commodities, like oil and copper, are firmer.  Bond markets, outside the US, are firmer, with the Japan's 10-year yield slipping to new record lows slightly below 20 bp.   … Continue reading...

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The S.H.O.E. Crisis

2016-01-13

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2016-01-13

The weak growth, large output gap, low return on capital, and a host of other economic malaise are widely recognized.  There seem to be two main schools.   One is associated with Reinhart and Rogoff.    They argue that "this time is not diffe...

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Sterling’s Slide Extended on Dismal Industrial Output Figures

2016-01-12

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2016-01-12

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.   The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary Sherwin Alumina seemed to weigh on the dollar-bloc currencies. However, it is sterling today that …

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Great Graphic: Shanghai Composite and the S&P 500

2016-01-11

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2016-01-11

I was canoeing recently.  When I looked that oar in the water, it looked bent.  It wasn't my equipment, and I am a novice.  I cursed to myself and quickly pulled the oar from the water.  I smiled.  It was not bent.  It was an optical illusion. ...

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Pavlov’s Dogs Spot New Currency War

2016-01-11

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2016-01-11

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engage...

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Emerging Markets: Preview of the Week Ahead

2016-01-11

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2016-01-11

***From my colleague Dr. Win Thin

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