Category Archive: 4.) Marc to Market

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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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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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