Overview: Some regional bank earnings were weighing on investor sentiment but reports that the FDIC is running out of patience with First Republic Bank to strike a private deal and could decide to downgrade its assessment. This could lead to limits on its ability to use the Fed’s emergency facilities. Other reports said that the bank’s …
Markets Becalmed Ahead of Key Data and BOJ Meeting Outcome Read More »
Regardless of the dollar’s role and function in the world economy and the halls of finance, in the near and intermediate terms, investors and businesses are more concerned with foreign exchange prices. The greenback has fallen out of favor. Its main supports, like wide interest rate differentials, favorable growth differentials, and political certainty if not stability, …
The Ant and the Grasshopper: A Window into Macro Part II Read More »
Overview: Better than expected reports from Apple, Facebook, Amazon, and Alphabet have failed to revive the dollar’s fortunes, and the greenback was sold to a new low against the euro, yen, sterling, and Australian dollar before staging a bit of a recovery. The dollar is stretched, and if the improvement is sustained through North America …
Greenback Ending Miserable Month with a Spark of Resilience Read More »
Overview: The US dollar’s dramatic sell-off continues. It is off against nearly all currencies. Among the majors, the Swedish krona and Japanese yen are leading the money, and the euro surged through $1.17. Emerging market currencies are fully participating, with the JP Morgan Emerging Market Currency Index posting its fifth gain in six sessions. The greenback’s …
It is sometimes said that two emotions drive the capital markets, fear and greed. That may cast it in moralistic terms, but there does seem to be two attractors that the pendulum of market sentiment is presently swinging between. On the one hand, central banks have eased monetary policy through conventional and unconventional measures. Governments …
Overview: After early indecision, investors ramped the demand for risk assets, encouraged perhaps by indications that the Trump Administration is going to support at least another trillion-stimulus package. The NASDAQ rallied to new record highs, and the dollar got thumped across the board. However, in early Asia activity, Trump adviser Navarro seemed to have told Fox …
Sometimes it is easier to have a sense of what will not happen, rather than a view of what will happen. No Negative Rates in the US: Nearly every Federal Reserve official has argued against the deployment of negative interest rates in the US. It is also not completely clear that the same Congressional authorization …
Overview: There is no reprieve for investors. Equities are falling sharply. Nearly all the Asia Pacific markets slumped but Australia. Chinese markets fared better than most, but the Nikkei was off 4.5%, and India was down almost as much in late dealings. Europe’s Dow Jones Stoxx 600 is off more than 3% near midday, led …
Overview: The spread of Covid-19 outside of China and early signs of the economic consequences again emerged to weigh on investor sentiment. Poor Japanese and Australian preliminary February PMI reports and some trade indications from South Korea saw most Asia Pacific equities sell-off. China was an exception. The small gain (0.3%), lifted the Shanghai Composite …
Covid-19 Contagion Outside China Keeps Investors on the Defensive Read More »
Like a Newtonian law of motion, market participants will continue to rely on a particular trading style or system until it stops working. Betting that volatility stays low is a cash register for many, and there appears to be what Soros called “reflexivity” here, like a self-fulfilling prophecy. Why is volatility low? Because it is being …