December 2008 Monthly Archive

The Economics of Christmas

A lot can be argued to the point that the true meaning of Christmas is slowly slipping by us; because many people instead focus on seemingly more-important facets of this gift-giving holiday, or so it goes. Read more

Can we rest? Gold may lead the way.

The volatility has been humongous in currencies, you might have noticed. The huge run in the euro recently seems to have a lot of Johnny Come Lately dollar bulls changing their tunes, and now suggesting the dollar move is done. Read more

Underestimating the power of deflation is dangerous!

Sometimes we are a bit absurd in this morning missive in an attempt to make a point. Looking back at a recent issue, from the 2nd of December, titled “Can you say 1% Treasury Bond Yield?” we noticed the 30-year bond futures price has risen a bit since then; yields have fallen. Yes, yields have plunged faster than expected–by us, and I imagine by many others. Read more

Consuming Forces Shaking Ukraine, Germany … and China

You’re probably kicking yourself for holding on to those hryvnia for a couple days too many. Read more

Blam! Liquidity Trap? Is it over for the buck?

The dollar was blasted yesterday by Ben’s Quantitative Easing cannons. It’s game over for the buck, right? Well, maybe… Read more

I Love the Smell of Rate Cuts in the Morning

Interest rate decision out of the FOMC today – Mr. Ben Bernanke and his busy policy-makers announce their latest decision on interest rates this afternoon in the US. Will Ben schmooze the media like Trichet? Doubtful. Estimates say rates will drop another 50 basis points, down to 0.50% from 1%. Read more

Euro as new safe haven currency?

We don’t think so–at least over the longer term. But no matter what we think near- or long-term, the market likes euro compared to the other players. The euro has bounced strongly against the US dollar. Also, you can see euro’s relative strength in the Euro – British pound cross (at an all-time high) and the Euro – Swiss franc cross (wasn’t Swiss supposed to be the safe haven)? Read more

Turning to the Technicals for Guidance

We’ve told our story as to why the US dollar has possibly entered a multi-year bull market. And depending on where else you dig for investment advice, you may have also heard why the US dollar has not entered such a bull market … why this is only a correction in the major long-term downtrend. Read more

Foiled again? Rambling about trading inside the chop zone!

Ouch! Another seeming dollar correction is off the rails so far this morning, as it is sharply higher against all comers (yen the exception). Watching the dollar move sideways since November 21st is like watching an episode of the Twilight Zone–all kinds of game changing global macro events everyday and the world’s major currency just ranges. Let’s call it the “chop zone,” because that is what it can do to one’s short-term trading account–chop it up into small little pieces: Read more

Dollar correction time? Finally?

If we could only forecast the stock market, then we’d be able to forecast the dollar–it seems. But we can forecast either of them–we can only make probability bets on both. And those probabilities are all in our head–guesswork at best there too. Read more

Interest Rate Decisions Dominate Headlines — But Is It News?

Well, the trend is certainly there. Central banks are cutting interest rates in a big way. The first two key news headlines above speak to that point. And of course, the Bank of England just announced a 100-basis point rate cut this morning. The European Central Bank cut 75 basis points. Read more

Oh Canada in a little trouble of late…

Oh the Canadian dollar! John Ross and I usually say: “They don’t call it the Loonie for nothing!” And at times, after playing a setup in the Loonie where we felt some degree of confidence, and got crushed still, we add another moniker–Currency Assured Destruction. I share this with you as a type of disclaimer, so to speak. Read more

Can you say 1% Treasury Bond Yield?

The Fed’s announcement that it will start buying Treasury bonds, along with everyone else in the world it seems, pushes the Fed into official Quantitative Easing (QE) territory. Read more

China, China, China … A Nightmare in the Making?

Our attention turns towards the latest economic data from China. Yes, because it fits our fundamental story but also because the ramifications reach far and wide. Read more