Category Archive: 4.) Marc to Market

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Caixin Monthly Column: Brexit

2016-07-11

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2016-07-11

(Here is the latest monthly column I write for Caixin.  It is on Brexit and I wrote it as an email to my mother.  Here is the link.  The text follows) To: Mother, Date: July 4, 2016, Glad to see you figured out how to access your email account. I smiled when I saw your note in my inbox. Thank you, though I am not sure that Thomas Watson felt the same way when Alexander Graham Bell called him.

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New Wrinkle in European Bail-In Efforts

2016-07-11

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2016-07-11

European Court of Justice could rule on July 19 that private investors do not have to be bailed in before public money can be used to recapitalize banks. Italy stands to gain the most, at least immediately, from such a judgment. Italian bank shares recovered after initial weakness.

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Cool Video: Whirlwind Discussion; UK, Politics and the Dollar

2016-07-11

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2016-07-11

Shortly before I was on Bloomberg TV today, Leadsom withdrew from the Tory leadership context, leaving May, who favored remaining the EU, as the likely successor of Cameron. Leadsom had been trailing May even before her controversial weekend comments.

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FX Weekly Preview: Sources of Movement

2016-07-10

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2016-07-10

Electoral politics remains significant. BOE is likely to cut rates, while BoC may tilt more dovishly. US Q2 earnings season formally begins.

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Weekly Speculative Positions: Speculators Still Don’t Believe in the Greenback

2016-07-09

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2016-07-09

Commitments of Traders July 05 Speculative Positions
Speculators reduced their Net long CHF position (against USD) from 10.9K contracts to 8.7K contracts. In five of the eight currency futures, we track, speculators covered their gross short exposure and added to their gross long exposure.

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North American Jobs Report and Implications

2016-07-08

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2016-07-08

There is something for everyone in today's US jobs report, and at the end of the day, it is unlikely to sway opinion about the direction and timing of the next Fed move. The greenback itself may remain range bound after the initial flurry. On the other hand, the disappointing but noisy Canadian data underscores the risk of a more dovish slant to the central bank's neutral stance next week.

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FX Daily, July 07: Sterling Bounces Two Cents, but Does not Appear Sustainable

2016-07-07

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2016-07-07

Amid a better if not strong risk appetite, sterling has rallied two cents from yesterday's lows near $1.28 to poke through the $1.30 level in the European morning. It was helped by an industrial production report that was better than expected. Industrial and manufacturing output fell 0.5% in May. This was around half of the expected decline after a strong April advance (2.1% and 2.4% respectively).

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Great Graphic: More Thoughts on Banks

2016-07-07

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2016-07-07

Italian banks have done worse that European banks. Italian banks outperformed Germany banks from end of H1 12 through H1 15. US banks and financials more broadly have outperformed Europe.

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Great Graphic: The Yuan’s Weakness

2016-07-07

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2016-07-07

Don't be fooled, the yuan has fallen more against its basket that against the dollar this year. It is not clear what China means by stable. Market forces appear to be moving in the same direction as officials wish.

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FX Daily, July 06: Dollar and Yen Advance Amid Growing Investor Angst

2016-07-06

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2016-07-06

What a difference a few days make. Many saw last week's equity market advance a sign that Brexit anxiety was overdone. However, quarter-end position adjustments appear to have been misread. Equity markets are falling now. Bond yields in the US, Japan, and Germany, are at new record low. Japan's 20-year bond yield briefly dipped below zero for the first time.

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Return of the Repressed: Europe’s Unresolved Banking Crisis

2016-07-06

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2016-07-06

The IMF identified three banks that posted the most significant systemic risks. It has been overshadowed by new pressure on Italy's banks, and Three UK commercial real estate funds have been frozen to prevent redemptions.

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Is Carney the Sole Adult in UK’s Political Morass?

2016-07-05

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2016-07-05

Sterling has fallen to $1.3050. Two real estate funds have suspended trading (liquidation). Constitutional crisis over who has authority to trigger Article 50 may have begun.

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FX Daily, July 04: Four Things that Happened on the Anniversary of the Original Brexit

2016-07-04

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2016-07-04

Inflation expectations fall in Japan. UK construction PMI fell sharply before Brexit. The Australian dollar recovers from the dip as investors await more results. It is not clear that Brexit has sparked a wave of nationalism or anti-EU sentiment.

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FX Weekly Preview: If No Article 50 Soon, What are the Fundamental Drivers?

2016-07-03

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2016-07-03

Impact of Brexit will take some time to be seen, but the U.K. is already losing influence. U.S. employment data is not sufficient to get the Fed to hike this month. Pressure continues to build on the BOJ to act.

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Weekly speculative Positions: Bulls and Bears Saw Speculative Opportunity in Euros

2016-07-02

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2016-07-02

In the sessions before and after the UK referendum speculators in the currency futures did three things. First, they generally reduced exposure. This means gross longs and short positions were reduced. CHF long positions increased to 10K Speculators were divided about what to do with the euro.

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FX Daily, June 30: Calm Continues, but Rot Below the Surface

2016-06-30

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2016-06-30

During the week the Swiss Franc lost momentum. It could regain speed only on June 30, after BoJ Carney's speech.

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Great Graphic: What are UK Equities Doing?

2016-06-30

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2016-06-30

Domestic-oriented UK companies have been marked down. The outperformance by UK's global companies is a negative view of sterling. The drop in interest rates is in anticipation of a recession and easier BOE policy.

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FX Daily, June 29: Fragile Calm Ahead of Quarter-End

2016-06-30

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2016-06-30

Sterling is firmer, but quarter-end considerations seem to be the key driver. Poor Japanese retail sales keep focus on policy response likely next month. New Zealand and Australian dollars are leading today's advance against the US dollar.

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The Worst is Yet to Come–Don’t be Seduced by the Price Action

2016-06-29

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2016-06-29

The two-day bounce in sterling seems technically driven rather than fundamental. The Brexit decision has set off a unfathomable chain of events whose impact and implications are far from clear. The economic hit on the UK may spur a BOE rate cut, even if not QE, as early as next month.

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FX Daily, June 28: Markets Stabilize on Turn Around Tuesday

2016-06-29

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2016-06-29

The global capital markets are stabilizing for the first time since the UK referendum. It is not uncommon for markets to move in the direction of underlying trends on Friday's; see follow-through gains on Monday, and a reversal on Tuesday. That is what is happening today.

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