Market News

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.

If we were to go by the traditional definition of a recession, the US is still not in recession! The technical definition of recession requires an economy to contract in two consecutive quarters. That is yet to happen.

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.

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.

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.

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.

Obama has a new economic advisory team in place. Obama-speak on fresh economic initiatives with a new team seems to excite investors. This leads to a return of risk appetite and investors seem to be willing to look at other options than staying hedged with dollar investments.

As every trader with some longevity knows the first question you should ask the moment a trade is made is this: Where am I wrong? And that question needs to be repeated hundreds of times in your head throughout the trade in order to stay open to new information; that’s because your objectivity will always be ever so slightly tilted toward your current position.

Yesterday looked like another day foreshadowing a decent dollar correction on the bounce higher in stocks. This morning we wake to a stronger dollar again….hmmm…and of course “new” concerns about stocks, one story we saw read.

I received an email from a reader that contained an interesting fact: Seven separate assets currently maintain an 85% correlation (or better) with the S&P 500 over the last six months.

The answer to this question depends upon global economic conditions. A strong dollar may be helpful when the global economy is doing well and the US economy is growing as a strong dollar make imports into the US cheaper.

Last week I touched on the potential end to the sideways US dollar correction. Then all of a sudden some unidentified reckless group came in to buy stocks and keep them from finishing at lows not seen since 2003.

President elect Barrack Obama seems to have a tough job at hand as far as the economic situation is concerned. Deflating stock and real estate markets, falling consumer sentiment and rising unemployment are some of the challenges that Obama will need to address as soon as he steps into the Presidential shoes

1) Still overvalued on a Purchasing Power Parity basis against the dollar 2) Interest rate differential to shrink as ECB catches up to the Fed…..

ZERO INTEREST RATE POLICY (ZIRP) seems to be in the works amongst a whole host of central banks we know and love. But haven’t we seen this movie before? And doesn’t it end badly?

Jack’s been running around speaking at various currency tours and seminars this year. And there’s one line he likes to use when conveying the uncertainty of trading in any market …

China’s new fiscal stimulus package is receiving rave reviews across the board this morning. Bond prices lower, stocks higher, oil higher, gold higher and the dollar getting whacked–it’s déjà vu all over again for the risk appetite crowd.

Strange can be the relationships between different assets and stores of value. In times of a recession one could expect people to be attracted to the yellow metal due to its intrinsic value. However, and strangely too, the sight of a looming recession in Europe has had a contrary impact on Gold.

Today is interest rate day! That is, the Bank of England and the European Central Bank culminate their most recent monetary policy discussions and announce changes to their benchmark interest rates.

…we are big believers that after following the chain of price action, sooner or later, it all comes back in some way to the rate of interest. Interest rates are the core of all things financial, though the link may be seemingly distorted at times.