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Forex Update :US Dollar Index ,Euro ,JPY ,GBP ,CAD ,ADU ,NZD ,INR -Anirudh Sethi
Archives of “June 2019” month
rssAssume Nothing; Question Everything; Verify All
“The market can remain irrational longer than you can remain solvent.” –Not John Maynard KeynesI am reading a pretty good book by an industry expert that (like so many others) is a semi-autobiographical mix of business and personal history. The introduction to the book is a broad, throat-clearing exercise, outside of their expertise.And I begin to notice a few errors.Little things at first: dates, market levels, valuations. The narrative history about the GFC. It jars. I got a sense a publisher/editor type scanned the book and declared “This needs an intro.” Thus, a section gets written without the same love as the main (more interesting) story. As far as I can tell, the heart of the book (which is outside my area of expertise) is error-free. But these small misstatements are revealing about the industry: Publishers have morphed into mere copy shops, shadows of their former selves, no longer bothering with editing, fact-checking, etc. They have become glorified, spell-checking, xerox machines.The errors are about things within my area(s) of expertise. It gnaws at me. So much so that when I come to the famous Lord Keynes quote above within the context of this throwaway chapter, it bothers me. This forces me to question whether it too is wrong.Full disclosure: I have used that quote too many times to count. Mostly verbally, sometimes on social media, occasionally in print. Never once was I self-motivated to see if it was truly written by Keynes.1 My assumption was that it was Keynes, simply because every utterance of his has been poured over and annotated since the day they were made.We have all used that line because it is a brilliant insight into the madness of markets, a reveal of human psychology, and the ugly reality that you can be right and still lose money. Of course it was by Keynes! Who else is wise enough could to utter such pithy insight about the human condition as manifest in capital markets?Despite everyone knowing this was John Maynard Keynes, I wanted to confirm these were really his words. I cannot say why it felt wrong to me, it just did. Read enough media, books, news, etc. and your Spidey-sense will tingle about these things. (more…)
Upcoming Week : Cutting to the Quick
Central banks are prepared to take fresh measures to strengthen and extend the business cycle primarily because price pressures are below what their predecessors thought would be acceptable levels. Draghi, speaking for the ECB, the Federal Reserve, and the Bank of Japan ratcheted up their concerns, which, even without new initiatives, were sufficient to drive interest rates lower.
There is no real definition of many terms economists throw around like recession or depression. The “two negative quarters of declining GDP” is not a technical definition but a rule of thumb. Ironically there weren’t recessions before the Great Depression. The end of business or credit cycles were called panics and crises. The use of “recession” appears to have been applied to economies to distinguish the end of the business cycle from the Great Depression. Neither the US nor Europe seems to be on the verge of an economic contraction. Given a shrinking population, the Japanese economy can contract, and per capita GDP can still rise.
The Bundesbank warned last week that the German economy may have contracted in Q2, but the eurozone flash composite PMI suggests the region expanded. Although the composite PMI averaged 51.8 in Q2, following a 51.5 average in Q1, GDP growth maybe half of the 0.4% in recorded in the first three months of the year.
The most important data point for the eurozone next week is the flash CPI reading. Some may see it as a non-story as headline inflation is expected to remain at 1.2% and the core rate at 0.8%. Unchanged data is the story. Draghi was clear: if conditions do not improve, the ECB needs to provide more stimulus.
Markets Pause Ahead of the Weekend
Overview: The global capital markets are trading quietly ahead of the weekend. Equity markets are mostly narrowly mixed. Chinese shares extended their run, and the major benchmarks were up 4%+ on the week. Japan, Australia, South Korea, and India saw gains pared. European equities were edging higher, and the Dow Jones Stoxx 600 is holding on to around a 2% gain for the week. After closing at record highs yesterday, the S&P 500 is trading a little heavier in the electronic activity. News that the US was ready to strike Iranian radar and missile batteries but called it off at the last moment rattled investors. Japanese, Europe, and US 10-year benchmark yields firmed slightly, while Australia and New Zealand 10-year yields eased to new record lows. The dollar itself is also mixed, though the Dollar Index is trading a little below its 200-day moving average (~96.65) in the European morning. The Turkish lira and South African rand are leading most of the emerging market currencies lower. Gold briefly extended its gains above $1400 for the first time since 2013 before pulling back in Europe. It is poised for its largest weekly gain (~3.5%) in three years.
Asia Pacific
Japan reported softer price pressures and a June flash manufacturing PMI that remained below the 50 boom/bust level. Headline CPI slipped to 0.7% in May from 0.9% in April as economists expected. The core rate, which excludes fresh food, eased to 0.8% from 0.9%. When fresh food and energy are excluded–more like the US and Europe core measures–prices were up 0.5% from a year ago rather than 0.6% as was the case in April. The flash manufacturing PMI fell to 49.5 from 49.8 and reported the first drop in new orders since June 2016. Output remained firm, and the order backlog is being absorbed, setting the stage for a potentially difficult Q3. A bright spot may be services. The tertiary index for April jumped 0.9% after a 0.5% decline in March. This is the largest increase since last October. There are no policy implications from today’s reports. The bar to BOJ action appears a bit higher than in the US and Europe.
(more…)World’s 100 Most Valuable Brands in 2019
Where are we on this chart? Be very specific in your answers.
Thought For A Day
What could possibly go wrong?
GS note CNH, and other Asian currencies, strength approaching the G20 meeting next week (June 28 and 29), and are looking to short CNH.
Citing that even if there is some sort of easing in trade tensions at the G20 they will not disappear entirely:- likely to “ebb and flow”
- still see additional tariffs as “more likely than not”
Week ahead: Trump-Xi meeting, Fed, SpaceX
Investors are hoping a highly anticipated meeting next week between President Donald Trump and his Chinese counterpart, Xi Jinping, will lead to a breakthrough in contentious trade negotiations between the world’s two most important economies.A line-up of Federal Reserve speakers, fresh economic data and a SpaceX rocket launch will also draw attention in the coming week. Here’s what to watch.G20 meeting
Geopolitical tensions have taken centre stage for investors in recent days, with Iran’s downing of a US drone driving oil prices higher amid worries of a growing conflict.Add global trade back into the mix next week as Mr Trump and Mr Xi meet on the sidelines of the G20 summit in Japan.Mr Trump announced earlier in the week that he would hold an “extended meeting” with Mr Xi in Japan and that officials on both sides would jump-start negotiations ahead of time. US vice-president Mike Pence said Friday there were signs of progress in talks with China, further raising hopes of a breakthrough. The two-day G20 summit begins June 28.The talks will come amid a standing threat by Mr Trump to slap tariffs on another $300bn in Chinese goods if Washington and Beijing can’t come to terms on a deal. Negotiations stalled in May, with the US and China exchanging a fresh round of tariffs.Meanwhile, Nato defence ministers including Mark Esper, recently named by Mr Trump as acting head of the Pentagon, will begin a regularly scheduled meeting on June 26 in Brussels amid escalating tensions with Iran.Federal Reserve (more…)