Markets

Too many observers mistakenly focus on the net positions in the futures market. Drilling down from the net to the gross positioning is very revealing. The gross euro longs have risen in four of the past five weeks. And there is another…

I have talked a decent bit about the jobs report in my last two posts here. So I want to say more about what the information in that report says to Fed members, given recent Fed guidance and speeches. I am going to lean heavily on comments…

This post was originally published on Patreon on 30 May 2018 Yesterday I said that I believed the Italian meltdown presented a buying opportunity because it was not existential. And today, calm has returned, actually sooner than I had…

For now, think of Italy as a short-term risk-off trigger that has limited longer-term impact. To me, this presents a buying opportunity.

It's early days. So I wouldn't call this a crisis. What I would say, however, is that the Fed's rate hike train is doubly negative for the emerging markets. We can see the effects in Argentina and Turkey in particular.

I've talked about 12-18 between curve inversion and recession months as a rule of thumb. That gives you at least a year to rotate your portfolio and get defensive.

The yield curve has steepened to where 10-year yields exceed 2-year yields by 52 basis points. While this may seem like a case of market whiplash, it's not. It's what should be expected in a late cycle rate hike regime.

As Wednesday begins, the question has to be: is the slowdown temporary or is it going to be more pronounced? And if it is pronounced, what do central banks do?

When China builds a trade surplus, it accumulates dollars. And it has to do something with those dollars. That means its purchase of US dollar assets is non-discretionary unless it revalues its currency.

We suspect some of the pressure on dollar-yen had been hedging activity ahead of the end of the fiscal year.  The end of the hedging operations may be sufficient to ease the pressure on the greenback.