Archive - Jan 30, 2013 - Blog entry

BMW, Vatican, Big Banks Enjoy Ill-Gotten Gains

Here, have some derivatives spaghetti!

All this talk about some Super Cycle turn in the economy is putting the proverbial cart ahead of the horse.

The “tipping point” occurs at about the time when the local stock market returns fall below the currency depreciation.

The Fed is growing increasingly splintered as an organization. The media hasn’t really picked up on this issue yet. But once they do things could become quite problematic for the Fed... and the financial system.

The benefits of higher stock prices are soon negated by higher gasoline prices leading to a market sell-off.....

Here is the picture that answers all the queries stated in your letter.

My colleague and erstwhile nemesis Gonzalo Lira posed the question above in a recent essay, and it is indeed a most puzzling one.  Given that the world’s central banks — joined most recently by a shockingly reckless Switzerland — are waging all-out economic war by inflating their currencies, shouldn’t gold be soaring?

There has been a tightening of European financial conditions. Two more pieces of evidence were reported today. This issue may very well overshadow other issues at Draghi's press conference next week. German 2-year rates are moving above the US-- a 30 bp swing since early Dec. Meanwhile, US rates are rising relative to Japan. The dollar-bloc (and sterling) continue to under-perform. We also look at the US economic calendar for the day that features the ADP employment estimate, the first look at Q4 GDP and the conclusion of the FOMC meeting.