Category Archive: 4.) Marc to Market

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Put on Your Red Shoes and Dance the Blues

2016-01-11

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2016-01-11

Chinese shares continued last week's plunge, with the Shanghai Composite off 5.3% and the Shenzhen Composite falling 6.6%.  Both indices closed on their lows.  With the apparenthelp of officials, the onshore yuan strengthened, though the real squeeze was in the offshore yuan, which strengthened by nearly 1%, the most in four months. Excluding the Japanese …

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Last Week’s Drivers Still with the Whip Hand.

2016-01-11

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2016-01-11

Developments in China seemed to overshadow other considerations as investors returned from the New Year.  The offices were open and desks manned, yet many did not appear to be prepared to re-deploy resources.  The lack of participation helps ...

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Weekly Speculative Positions: First Net Long Yen in 3 Years

2016-01-09

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2016-01-09

Due to the holidays, the CFTC has been releasing its Commitment of Traders report late.  With this week's  report, the normal Friday release schedule resumes.   The latest report covers the shortened week through January 5.  It is not surpr...

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Nuanced Dollar Performance Likely in the Week Ahead

2016-01-09

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2016-01-09

A tumultuous start of the year saw the US dollar turn in a mixed performance.   Emerging market currencies and the dollar-bloc softened.  Sterling was in this camp, losing about 1.2% against the dollar.  On the other hand, the euro, Swiss franc...

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Emerging Markets: What has Changed

2016-01-08

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2016-01-08

In the EM equity space, Qatar (+2.7%), Hungary (+1.3%), and Turkey (+1.1%) have outperformed this week, while Poland (-4.6%), Hong Kong (-4.1%), and the Philippines (-3.8%) have underperformed.  To put this in better context, MSCI EM fell -3.6% this ...

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Great Graphic: Euro Flirting with Downtrend Against Sterling

2016-01-08

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2016-01-08

Tactically, there seems to be two broad ways a short-term participant can trade this.  The first is to buy the euro on a break out.  The second way is to fade the patter.  This entails selling the euro as it approaches  the GBP0.7500 level.     Which...

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US Growth Accelerates, Dollar Advances

2016-01-08

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2016-01-08

US grew nearly 300k jobs in December.  The October and November jobs growth were revised up by 50k.  The unemployment rate was unchanged at 5.0%, even though the participation rate ticked up. If there was  a disappointment it was that hourly earnings did not rise as much as expected.  The 2.5% year-over-year growth from 2.3% …

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Markets Calm Ahead of US Jobs Data

2016-01-08

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2016-01-08

For the first time this week, the PBOC set higher central reference rate for the yuan and Chinese shares rallied, with the apparent assistance of officials, after the circuit breakers were abandoned.    This, coupled with somewhat firmer oil pri...

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Don’t Believe Your Lying Eyes

2016-01-07

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2016-01-07

Chinese equities continued their precipitous decline, interrupted by the new circuit breakers, which reportedly will be suspended.  Global equity markets are also in a dramatic decline.   However, do not be misled.  Knowing the direction of China's blue chips (CSI 300) does not really help predict the direction of the US equity market, even though …

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Great Graphic: Possible Head and Shoulders in Dollar-Yen

2016-01-07

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2016-01-07

The dollar has broken down against the yen.    Although many talk about safe haven role for the yen, this seems to be a misconception.  Investors are not buying the yen to escape the turmoil of the markets.   The yen's strength itself is th...

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Is it Too Early To Talk about Annus Horribilis?

2016-01-07

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2016-01-07

One might be forgiven for believing that nail-baiting start to the year is all China's fault.  It has repeatedly for eight sessions fixed the yuan lower, including earlier today, at a seemingly accelerating pace.  The new circuit breakers, introduced on Monday, appear to be adding to the volatility.  Chinese share trading was stopped today after …

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Great Graphic: The Euro Touchstone

2016-01-06

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2016-01-06

This Great Graphic is a favorite of mine.   Created on Bloomberg, it depicts the 2-year spread between Germany and the US on two-year money (white line) and the euro-dollar exchange rate (yellow line).  The chart covers the past five years. The scales of the two time series are different so it makes little sense to … Continue reading...

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The Enigmatic Yen–It is More than an Equity Story

2016-01-05

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2016-01-05

Last year was the fourth consecutive year that the yen fell against the dollar.   However, what is obscured by this factoid is that over the past  six months, the yen has been the strongest of the major currencies, rising almost 3.2% against the US dollar. While some may be tempted to attribute the yen's strength … Continue reading...

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Focus is Squarely on Equities, Dollar and Yen Firmer

2016-01-05

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2016-01-05

Chinese shares and the yuan stabilized with the apparent help of the government's guiding hand, but global markets are still on the defensive.     The euro extended yesterday's decline through the $1.08 level.  The next immediate technical obj...

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Sweden’s Riksbank Prepares for Intervention

2016-01-04

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2016-01-04

Many countries may look with envy upon Sweden.  Growth last year was probably around 3%, with household consumption rising a little more than 2%.   Its current account surplus is 7.5% of GDP.  Exports were up by 4.3%.  Its budget deficit is around 1% of GDP.    Earlier today Sweden reported its manufacturing PMI rose to 56.0 …

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Europe’s Banking Union Begins Taking Shape

2016-01-04

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2016-01-04

The knock-on effects of the meltdown in Chinese shares and the tension among major Middle East rivals are dominating the re-opening of the global capital markets after the New Year holiday.  The US dollar has recouped its earlier losses against t...

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Emerging Markets: Week Ahead Preview

2016-01-04

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2016-01-04

Brazil reports December trade later today.  Exports are expected at -1% y/y and imports at -35% y/y.  That would result in a $6.1 bln surplus, one of the largest on record.  Brazil then reports November IP Thursday, and is expected at -10.3% y/y vs. ...

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Dramatic Start to the New Year

2016-01-04

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2016-01-04

The markets are in turmoil.   Global equity markets are sharply lower, dragging bond yields down.  The risk-off move has propelled the yen sharply higher.  Its 1.4% advance has seen the dollar slump to JPY118.70, its lowest level since-mid-October. The dollar is also weaker against the euro (~0.65%) and sterling (~0.25%).  However, the dollar-bloc has been …

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Dollar: State of Play

2016-01-03

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2016-01-03

The start of a new calendar year does not necessarily mean the rise of new market drivers.   In fact, the key issues investors face at the start of 2016 are the same that dominated Q4 2015.   These issues center around pace of Fed tightening, the outlook for the world's second largest economy and its … Continue reading »

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The Dollar’s Technical Tone at the Start of the New Year

2016-01-02

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2016-01-02

The US dollar firmed against nearly all the major currencies in the last week of 2015.  The exceptions were the Antipodean currencies and the Japanese yen. The relatively high short-term yields offered Australia, and New Zealand may have attract...

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