• Sprott Money
    03/26/2015 - 11:56
    Take the S&P Index and multiply by the US dollar index. This removes most of the currency variation. Do the same with silver. The chart of silver times the dollar looks very much like silver...

EuroDollar

Tyler Durden's picture

The Fed's Artificial Steepening Of The Yield Curve





To be blunt about it, the Federal Reserve under interest rate targeting clearly and artificially shifted the treasury curve toward steepness; they did so as a means to influence investor behavior and, as silly as it sounds, mood. In other words, the yield curve is not made solely out of actual market and fundamental conditions, but of influence from decidedly non-market political action (actually only threats of action that have been forced only since 2007). Given that station, there is no real reason to believe that absolute levels bear any similar resemblance to signals of past function... in other words - waiting for curve inversion as a signal of recession is no longer valid.

 
Tyler Durden's picture

How The Eurodollar Brought About The Rise Of London Banking





Bankers who took up their business in the Square Mile of London’s banking heart could smell the Eurodollars in the air. As Anthony Sampson wrote, “Young British bankers and their foreign counterparts began to earn higher salaries than other bankers. Skyscrapers shot up by the old classic architecture near St. Paul’s Cathedral. Far Eastern and Arabic banks appeared, as did Mercedes and Cadillacs to cart bankers around the thin London streets.” The Soviet Union and other Eastern Bloc countries needed dollars for trade but wanted to avoid adverse US policy by not keeping or borrowing money in the United States. So they stuck funds in the London offices of British and American banks, causing the City of London to grow as a banking center and recoup some prewar financial glory.

 
Marc To Market's picture

Dollar Bulls Retake the Whip Hand





Put on the a tin foil hat if you must, but US dollar's rally is resuming after short consolidation phase.  I think the rally is only about 1/3 of where it is eventually going.  

 
Tyler Durden's picture

Market Calls Fed's Bluff - Desperation Becomes Palpable





Funding Markets just called The FOMC's bluff. Policymakers are acting out rational expectations theory or at least how they see it. In other words, their job is not to analyze actual economic conditions, but to condition economic thought toward the end goal. If they convince you that they believe the economy is on track they further believe you will act accordingly (“you” being both investor and economic agent). The more the economy diverges from the “preferred” projection, the more emphatic the cries of “recovery” become. At some point, desperation becomes palpable.

 
Marc To Market's picture

Preview of January FOMC Meeting and Beyond





Straight forward look at the Federal Reserve and what to expect.  

 
Tyler Durden's picture

Gold, Dollar "Disruption", And Central Banks' Miscalculated Insanity





"It isn’t really about interest rates or “inflation”, obviously as gold is rising as inflation “expectations” dramatically sink here, so much as gold is insurance against central banks being wrong. That seems to be the common theme all over the world ever since June when the ECB placed its desperation and impotence on full display. Everything that has occurred since then has only confirmed the monetary illusion being exactly that, including the US and its central bank’s place at really the central point of the miscalculated insanity."

 
Tyler Durden's picture

Hilsenrath Speaks: Fed Will Proceed With Rate Hikes "Later In The Year"





The Fed's own favorite mouthpiece Jon Hilsenrath (for more see "On The New York Fed's Editorial Influence Over The WSJ"), just released a piece in which he claims, or rather his sources tell him, that the Fed is "on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation." In other words, just like the ECB in 2011, the Fed which has hinted previously that it will hike rates just so it has "dry powder" to ease once the US economy falls into recession, will accelerate a full-blown recession in the US when it does - if indeed Hilsenrath's source is correct and not merely trying to push the USDJPY higher (for reference, see Reuters "exclusive" report on the Samsung takeover of Blackberry, denied by both parties within hours - hike some time this summer.

 
Marc To Market's picture

News Stream May Favor US Doves and Spur Dollar Consolidation





Data and market positioning can explain movement in the currencies.  It does not prove that there is no manipulation or a great conspiracy.  It just means the markets are understandable without resorting to such explanations.    Try it.  

 
Tyler Durden's picture

Market Wrap: Evans' "Catastrophe" Comment Blasts Overnight Futures Into Overdrive, 10-Year Rises To 2%





After subdued trading in the overnight session until a little after 8pm Eastern, algos went into overdrive just around the time the Fed's 2015 voting member and uberdove Charlie Evans told reporters that "raising rates would be a catastrophe", hinting that the first rate hike would likely be - as usual - pushed back from market expectations of a mid-2015 liftoff cycle into 2016 or beyond (but don't blame the US, it is the "international situation's" fault), in the process punking the latest generation of Eurodollar traders yet again. Whatever the thinking, S&P futures soared on the comments and were higher by just under 20 points at last check even as Crude has failed to pick up and the 10Y is barely changed at 2.00%.

 
Tyler Durden's picture

FOMC Minutes Confirm Confused Fed Is Patient, Confident, And Fearful Of "International Situation"





Amid all of the confusion stemming from the December dissents and disinformation, the hope was that the Minutes might add some color on global risks, inflation, and lift-off timing.

  • *FED OFFICIALS SAW RATE RISE UNLIKELY BEFORE APRIL, MINUTES SHOW (Patient)
  • *MANY ON FOMC SAW DOWNSIDE RISKS TO U.S. FROM GLOBAL WEAKNESS (Fear)
  • *FOMC SAW OIL, DOLLAR MOVES TEMPORARILY PUSHING INFLATION LOWER (Transitory)

So The Fed is positive (jobs, US Econ), negative (global risk contagion), and neither (everything's transitory). Pre-FOMC Minutes: S&P Futs 2018.5, 10Y 1.97%, Gold $1210, WTI $48.16

 
Tyler Durden's picture

2015: The Year Of Living Uncertainly





The rash of “unexpected” declines in PMI’s this morning in the US, of all places, seems to have abraded at least somewhat the pervasive belief in the American “decoupling.” But... The FOMC sees 5% GDP and a serious workdown in the unemployment rate; credit markets are worried about how continued mistreatment of economic fundamentals may mean another disastrous trip like the one from the housing bust to the Great Recession. Worse than that, the treasury curve, in particular, may be going a step further by envisioning that we may already have replicated that period and are now very deep within it.

 
Capitalist Exploits's picture

2014 in the Rear-View Mirror





How did the investment ideas we discussed throughout the year play out

 
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