Archive - Feb 2013 - Blog entry

The price action in the foreign exchange market is choppy as short-term participants seem nervous after being whipsawed yesterday. Sterling fell nearly a cent to new multi-month lows following the BOE's inflation report that confirmed official expectations that price pressures will remain above target and King welcomed the recent depreciation of the point. Also of note the Australian dollar, which staged a sharp recovery off the year's lows yesterday and has seen follow through buying today, helped perhaps by gains in a consumer confidence measure.

The was nothing in the rogue G7 sourced comment yesterday that that Japanese Finance Minister Aso did not say prior to the G7 statement and before the weekend. The pace of the yen's depreciation was too fast. The market reacted to it at the time.

We have gone from a supply and demand market to a funds flow market and this really sucks for consumers. 

Michael Woolfolk took the anti-gold position and Komal Sri-Kumar defended a gold standard on Bloomberg TV.  Is it true that we don't have enough gold for a gold standard?  Is it true that a gold standard is established by government fixing the price of gold?

I think that FERS and MRS are adding to the Debt Owed to the Public in a significant way.

If you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding, potentially taking down the financial system with them. Think I'm joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.

Four good reasons to move all food and beverages away from the computer right now! 

Now that Enterprise Products Partners LLP has let the cat out of the bag that less than a month after expanding the Seaway pipeline capacity to 400,000 barrels per day, The Jones Creek terminal has storage capacity of 2.6 million barrels, and it is basically maxed out in available storage. 

As debate about currency wars heats up, there's been little talk about which currencies will prove safe havens. We think the Singapore dollar tops the list.

The problem with “too-big-to-fail” is first and foremost the behavior of our beloved political leaders in Washington

The G7 issued a statement that essentially endorses stimulative policies in Japan and elsewhere, but reaffirmed its commitment to market determined exchange rates. This is a green light to buy dollars against the yen and to buy euros.

The first two months of the year have seen volatility crushed downward in this two month bullish rally in assets as new money came rushing into markets needing to get off to a positive start for the year. 

Did Executives, who’re dumping their stock, get actionable information from the Fed?

This is an overview of the euro area financial conditions, including the ECB's balance sheet, deposits and Target2 imbalances. By these measures, the financial condition in Europe continues to improve. We suggest the biggest loser last week was Hollande who was rebuffed twice by Merkel, who is the vastly superior politician. While Hollande's call for FX policy to address the over-valued euro was easily turned aside, less appreciated is that Merkel joined forces with the UK's Cameron to cut the EU budget and France's sacred cow--CAP.

That's Pope, not Dope and Dorner not Droner!

The markets generate noise and a signal.  Reasonable people can and do differ on which is which.  This brief note address the signals for the yen and euro.  Secondarily it looks at sterling and the Australian dollar.