Category Archive: 4.) Marc to Market

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Great Graphic: Surplus Capacity is not the Same as Insufficient Aggregate Demand

2016-03-02

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2016-03-02

Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Government dissavings has been offset by household and business savings.  The solution offered by some economists is a large public investment program. The G20 …

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Great Graphic: Gold Triangle–Continuation or Reversal Pattern?

2016-03-01

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2016-03-01

During a period in which the zero bound no longer is the floor of interest rates, and many central banks continue to ease policy,  we have been watching gold a bit closer.   In early January, we noted that the technical pattern warned of breakout.  Our first objective was $1110-$1135. In early February, we updated our …

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FX Daily, 03/01: Markets Find Steadier Footing

2016-03-01

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2016-03-01

It could have been a disaster.  US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China's PMIs were weaker than expected.  However,  after initial weakness Asian shares turned higher.  The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions. European bourses …

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FAQ: UK’s Referendum on EU Membership

2016-02-29

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2016-02-29

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has ...

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FX Daily, 02/29: Dollar Mixed, While Equities Skid

2016-02-29

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2016-02-29

It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting.  The narrative followed the price action rather than the other way around.  Before that, at least, one newswire claimed China was the winner of at the G20 meeting.  Its currency policy was not criticized.  Many, …

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Baker’s Dozen: 13 Items that Should be on Your Radar Screen

2016-02-28

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2016-02-28

The year has begun on a tumultuous note.  The Nikkei, DAX and S&P 500 all gapped lower the first day of the year. However, heightened anxiety has calmed as the fire appears to have burnt itself out, and equities have moved higher over the past two week. Three sources of stress have eased.  Investors are no longer … Continue reading...

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Weekly Speculative Positions: Small Changes

2016-02-27

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2016-02-27

The position adjustment among speculators in the currency futures market were minor in the reporting week that ended February 23.  There was only one gross adjustment we regard as significant (more than 10k contracts).  The Mexican officials sprung a bear trap and forced speculators to cover.  There were 15.8k gross short peso in speculative hands that …

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FX Daily, 02/27: Are the Dollar Bulls Retaking the Initiative?

2016-02-27

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2016-02-27

As systemic anxiety eased, the US dollar got better traction. The dollar-bloc currencies managed to hold their own as cross positions were unwound.    Major bourses posted gains for the second consecutive week.  With the recent advance, several markets, including the S&P 500, FTSE and Sweden, China, Korea, and Taiwan are now positive on the month.    …

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Weekly Emerging Markets: What has Changed?

2016-02-26

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2016-02-26

(from my colleague Dr. Win Thin)

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Liberty and the 500 Euro Note

2016-02-26

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2016-02-26

The internecine pitch battle between ECB President Draghi and the man who may very well be his successor, Bundesbank President Weidmann opened a new front this week.  It is over the future of the 500 euro note.   Practically, every initiative by Draghi has been resisted by the Bundesbank.  Sometimes it puts the Bundesbank at odds with …

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FX Daily, 02/26: Global Markets Trying to End Week on Upbeat

2016-02-26

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2016-02-26

The US S&P 500 closed above 1950 for the first time since January 6.  Global equity markets are broadly higher in response.  At the same time, ahead of the G20 meeting, the world's second and third-largest economies have signaled additional...

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G20 Meeting is no Jedi Council

2016-02-25

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2016-02-25

The G20 finance ministers and central bankers will meet in Shanghai starting tomorrow.   From some quarters, there is a sense of urgency.  The IMF, for example, is likely to cut its world GDP forecast of 3.4% this year.  That forecast is not even two months old.  The tightening of global financial conditions, exemplified by the sharp … Continue...

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FX Daily, 02/25: Market Anxiety Heightened, Oil and Stocks Head Lower, Sterling Can’t Catch a Bid

2016-02-25

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2016-02-25

A confluence of factors are raising anxiety levels among investors, and it is being expressed in heightened volatility. The S&P 500 was turned back yesterday from the key 1945 level, and global equities are falling today.   The over-productio...

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FX Daily, 02/24: Dollar is Little Changed, US Leadership Awaited

2016-02-25

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2016-02-25

The foreign exchange market is unusually calm.  The US dollar is little changed against currencies.  While the selling pressure that took sterling below $1.39 and the euro below $1.10 has subsided, neither has been able sustain upticks.  The e...

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The Return of Moral Economy?

2016-02-25

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2016-02-25

The concept of moral economy was first used by 18th-century thinkers trying to make sense of the rising capitalist values.  In feudal society, a "fair price" was preferred over a free price especially for the necessities of the day.   The reci...

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Great Graphic: Trade-Weighted Look at Major Currencies

2016-02-24

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2016-02-24

When considering the impact of changing currency prices on an economy, trade-weighted measures are appropriate.  The Federal Reserve has cited the dollar's appreciation as a headwind on the economy and a depressant on prices. Given the moves in...

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Sovereignty and Brexit

2016-02-22

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2016-02-22

As the European Union grew, the unanimity in decision-making increasingly gave way to qualified majority voting.  This development took away an important weapon the UK deployed to pursue its national interest.  It use often to frustrate the collectivist decision-making in Brussels and exert its will for a broad union that preserved national sovereignty. National sovereignty is …

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Thoughts about the Price Action

2016-02-22

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2016-02-22

The US dollar has begun the week with a strong advance against sterling and the euro. Sterling's drop, the most in several years, is not a function of macroeconomic policy.  It is a function of Brexit and its endorsement by London Mayor Johnson....

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FX Daily, 02/22: Sterling is Pounded and Eurozone PMI Disappoints

2016-02-22

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2016-02-22

Global equities are beginning the last week of February on a firm note.  The MSCI Asia Pacific Index rose 0.75%, with China's markets gaining more than 2%, leading the way. European shares have followed suit.  The Dow Jones Stoxx 600 is up 1.7%...

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Re-Emergence of Divergence Helps Stabilize Markets

2016-02-21

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2016-02-21

The main driver of the investment climate is not so much the incremental economic data as the capital markets themselves. The market turmoil contributed to the tightening of financial conditions, which in turn heightened risks, which monetary of...

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