Tag Archive: newsletter

Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

2019-09-17

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2019-09-17

Money Markets Equivalent, 2017-2019
Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that rates have backed up in what has been the first real selloff since last year.

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Dollar Mixed, Oil Spikes as Markets Digest Saudi Attack

2019-09-16

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2019-09-16

The weekend bombing of Saudi oil facilities continue to reverberate across global markets. The currencies of the oil producing nations are likely to outperform near-term. US rates continue to adjust ahead of the FOMC. UK Prime Minister Johnson is in Luxembourg today to meet with EC President Juncker. China reported weak August IP and retail sales.

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FX Daily, September 16: Oil Surge Pared, Markets Remain on Edge

2019-09-16

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2019-09-16

Overview: Oil prices surged in the initial reaction to the unprecedented drone attack on Saudi Arabia facilities. Saudi Arabia may be able to restore around half of the lost production in a few days. Saudi Arabia and other countries, including the US, prepared to tap strategic reserves, oil prices have seen the initial gains halved. Brent is trading near $65 after finishing last week near $60.

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FX Weekly Preview: Six Things to Watch in the Week Ahead

2019-09-16

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2019-09-16

The prospect of a third trade truce between the US and China helped underpin the optimism that extended the rally in equities.  Bond yields continued to back-up after dropping precipitously in August, led by a more than  30 bp increase in the US yield benchmark.  The Dollar Index fell for the second consecutive week, something it had not done this quarter.

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The Black Swan Is a Drone

2019-09-16

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2019-09-16

What was "possible" yesterday is now a low-cost proven capability, and the consequences are far from predictable. Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly.

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What a Relief that the U.S. and Global Economies Are Booming

2019-09-16

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2019-09-16

Batic Dry Index, 2018-2019
Doing more of what's failed for ten years will finally fail spectacularly.. It was a huge relief to see the charts of the Baltic Dry Index (BDI) and the U.S. retail sector ETF (RTH): both have soared to the moon, signaling that both the U.S. and global economies are booming: the BDI is widely regarded as a proxy for global shipping, which is a proxy for global trade and economic activity.

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EUR/JPY rallies the hardest vs EUR/CHF as CHF/JPY spikes following ECB

2019-09-15

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2019-09-15

EUR/JPY levels
EUR/JPY rallies hard following hawkish ECB cut and trade war optimism. EUR/JPY tracking positive sentiment in financial and commodity markets. While the trade war tensions seem to be easing, with stocks climbing and risk appetite returning in droves to financial and commodity markets, EUR/JPY is up 0.79% on the US session so far following what has been perceived as a hawkish rate cut from the European Central Bank earlier today.

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Cool Video: Thoughts on ECB

2019-09-15

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2019-09-15

A few hours after the ECB announced a new package of monetary accommodation, I joined a discussion on CNBC Asia with Nancy Hungerford and Sir Jegarajah.  Here is a clip of part of our discussion. I make two points.  The first is about the euro's price action.  What impressed me about it was that the euro posted an outside up day, trading on both sides of the previous day's range and closing above its high.

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Dollar Soft as Risk Sentiment Stoked Ahead of US Retail Sales

2019-09-15

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2019-09-15

US-China relations appear to be thawing. Trading was volatile after the ECB decision; we are still dollar bulls. EM has benefitted from the shift in the global backdrop this week. The US data highlight is August retail sales. Vietnam cut rates 25 bp to 6.0%; Turkey reported July current account and IP.

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The Inevitable Bursting of Our Bubble Economy

2019-09-15

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2019-09-15

S&P 500 SPX, 2000-2018
All of America's bubbles will pop, and sooner rather than later. Financial bubbles manifest three dynamics: the one we're most familiar with is human greed, the desire to exploit a windfall and catch a work-free ride to riches. The second dynamic gets much less attention: financial manias arise when there is no other more productive, profitable use for capital, and these periods occur when there is an abundance of credit available to inflate the...

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Since 2014, European Banks Have Paid €23 Billion To The ECB… And Now Face Disaster

2019-09-15

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2019-09-15

Easing Package Scenarios
Earlier this morning, there was an added wobble in European bond prices after an unconfirmed MNI report said the ECB could delay the launch of QE on Thursday and make it data dependent. While skeptics quickly slammed the story, saying it was just a clickbait by MarketNews...

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Tobacco consumption costs Switzerland 5 billion francs a year

2019-09-14

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2019-09-14

Health care in Switzerland is funded by a mixture of taxes and health insurance premiums. Much of the insurance premiums paid are compulsory with no discounts offered to non-smokers. According to figures recently published by the Swiss association for smoking, the annual direct medical costs of smoking are CHF 3 billion (2015), or CHF 350 per person.

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Your Unofficial Europe QE Preview

2019-09-14

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2019-09-14

Eurodollar Futures Curve History, 2007-2019
The thing about R* is mostly that it doesn’t really make much sense when you stop and think about it; which you aren’t meant to do. It is a reaction to unanticipated reality, a world that has turned out very differently than it “should” have. Central bankers are our best and brightest, allegedly, they certainly feel that way about themselves, yet the evidence is clearly lacking.

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Turkey Monetary Policy Planting Seeds of Future Crisis

2019-09-14

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2019-09-14

Turkey central bank meets September 12 and is expected to cut rates 275 bp.  With Erdogan talking about single digit rates and inflation, it’s clear that rates are headed significantly lower.  At some point soon, we think the risk/reward for investing in Turkey will send investors fleeing for the exits.POLITICAL OUTLOOK President Erdogan sacked central bank Governor Murat Cetinkaya on July 6, ostensibly for not cutting rates quickly enough.

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FX Daily, September 13: Bonds and the Dollar Remain Heavy Ahead of the Weekend

2019-09-13

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2019-09-13

Overview: The markets are digesting ECB's actions and an easing in US-Chinese rhetoric. Next week features the FOMC meeting and three other major central banks (Japan, Switzerland, and Norway). The US equity rally that saw the S&P 500 edge closer to the record high set in late July spilled over to lift Asian markets. Chinese and Korean markets were closed for a mid-autumn holiday.

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Housing vacancies rise in 20 Swiss cantons

2019-09-13

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2019-09-13

Recent figures show an annual 4.2% rise in the number of vacant homes in Switzerland, extending a trend that started 10 years ago, according to the Federal Statistical Office. At the start of June 2019, there were 75,323 vacant homes, representing 1.66% of Switzerland’s total stock of homes.

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The Obligatory Europe QE Review

2019-09-13

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2019-09-13

Germany 10-year Bund Yield, 2008-2019
If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived.

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The remarkable rise of GDP per capita in Switzerland

2019-09-12

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2019-09-12

In 1998, GDP per person in Switzerland was CHF 59,693. Recently published statistics put the figure at CHF 80,986 in 2018, a rise of 36%. When Swiss GDP per capita is expressed in globally comparable US dollar terms its rise is even greater. In US dollar terms Swiss GDP per capita grew from US$ 41,497 to US$ 82,839 between 1998 and 2018, a rise of 100%.

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FX Daily, September 12: Focus on the ECB, while the Dollar Slips below CNY7.09

2019-09-12

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2019-09-12

Overview: Some gestures in the US-China trade spat have given the market the reason to do what it had been doing, and that is taking on more risk. Equities are higher in Asia Pacific and opened in Europe higher before slipping. The MSCI Asia Pacific and the Dow Jones Stoxx 600 are advancing for the fourth consecutive week.

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100-franc note enters circulation today

2019-09-12

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2019-09-12

SNB banknote app with information on all new denominations. Issuance of the new 100-franc note presented a week ago begins today, 12 September. The complete version of the Swiss National Bank’s ‘Swiss Banknotes’ app is now also available. It has been updated to include the 100-franc note and features information on all six new denominations.

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