Archives of “money” tag

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Watch Warren Buffett’s first ever television interview

  
Analysis, Video
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Warren Buffett feels like he’s been around forever but he was far from a household name until the late 1990s.
His first television interview didn’t take place until 1985, when he was 55-years old. What’s incredible is that he was saying then is consistent to everything he’s said in the 34 years since.
It underscores that trading isn’t about information, it’s about process. It’s his same ‘circle of competence game’ that doesn’t include chasing what’s hot.
“I don’t have to win at every game,” he said. “There are no called strikes in this game, they just keep pitching, you don’t have to swing at any of them.”
Another interesting point for the long-term investor is that he was cautious of excess noise, something that the internet has brought everywhere.
Given all the changes in the world since this interview — and the remarkable outperformance of tech — it’s truly amazing (and telling) that he’s had so much success.

Nikkei 225 closes higher by 0.06% at 22,001.32

  
Analysis, Global Indices
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Tokyo’s main index returns from the long weekend to finish near flat levels today

Nikkei 17-09

It’s a bit of a mixed bag in Asia as Japanese stocks are playing catch up to the events in Saudi Arabia so we’re seeing O&G stocks do the heavy-lifting in Tokyo, offsetting geopolitical tensions that are weighing on risk sentiment elsewhere.

Meanwhile, Hong Kong and Chinese stocks were more pressured due to domestic factors with the city protests still causing some unrest in the former while the latter is dragged down by disappointment that China did not lower its one-year lending rate earlier today.
The Hang Seng is down by 1.5% while the Shanghai Composite is down by 1.7% currently. The risk mood overall remains more cautious but nothing suggestive of major flows as we begin European trading. USD/JPY sits just a tad higher at 108.20 currently.

The short-term dollar funding market is feeling the squeeze

  
  Analysis
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The repo market isn’t healthy

The combination of corporate debt issuance and quarterly tax payments resulted in a shortage of dollars today. That pushed the borrowing rate on overnight repos up by 153 basis points to 3.80%.
A similar phenomenon took place last December and caused much hand-wringing (but ultimately little FX movement).
The timing of this move is particularly interesting because it comes ahead of the Fed decision. There will be some focus on the Fed funds effective rate today and whether it rises from the 2.14% level today. The FOMC targets 2.00-2.25% currently and there’s talk that it’s trading at 2.20%.
Today’s move might have sparked some outright USD buying rather than borrowing among corporates and that could be what’s weighing on EUR/USD.
Keep an eye on how it develops tomorrow.
The repo market isn't healthy

Global currency trading volumes surge to highest-ever level

  
Analysis, Forex
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Trading hits $6.6 billion per day

Trading hits $6.6 billion per day
Trading in the foreign exchange market has hit $6.6 trillion per day, according to the latest survey from the Bank of International Settlements.
The BIS today reported today that volume in the survey month of April rose 29% compared to 2016. The comprehensive survey is conducted every three years.
Aside from the jump, what stands out was the rise in swaps trading — which is now nearly half the market.
Other key details:
  • 88% of all trades include USD
  • London accounts for 43% of all activity
  • US trading is 17%
  • EM currencies are now 25% of turnover
  • Trading involving the euro hit 32%
  • Trading involving the yen at 17%
  • Yuan trading is 4%
  • Spot FX trading rose 20% to $2 trillion
The changes in volumes of the major currencies was muted compared to 2016 aside from a small drop in the yen but that may have been due to lower volatility in the survey month.

JP Morgan think progress in US-China talks is unlikely

  
  Analysis
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JP Morgan on the upcoming talks between the US and China.

  • We are more sceptical
  • still see risks to our growth outlook for 2H 2019 skewed to the downside
JPM that a deal could be struck at the ministerial level talks in mid-Oct and “activity get a cyclical bounce into year end”. But:
  • “Are either likely? No.”
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Based on what we have seen come out of US-China talks so far I find it difficult to disagree with JPM.

Berkshire taps Japan’s hunger for yields with $4bn bond debut

  
  Analysis
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Warren Buffett’s Berkshire Hathaway headlined a record day in Japan’s bond market Friday by setting the terms on a 430 billion yen ($4 billion) offering, the biggest yen-denominated issue ever by a foreign multinational.

The U.S. investment group is selling five-, seven-, 10-, 15-, 20- and 30-year bonds.

The biggest chunk, 146.5 billion yen in 10-year debt, carries a 0.44% coupon — an attractive yield at a time when Japan’s benchmark long-term interest rate languishes below zero.

Banks, insurers, asset managers and other investors flocked to Berkshire’s offering, which falls under a global yen bond heading that allows foreign buyers to participate. Debt offerings under this framework have been growing gradually, with such big names as Apple, Starbucks, and Procter & Gamble joining in, and both Wall Street and Japanese financial institutions are pitching bond floats.

The success of the record debt sale could embolden other multinationals to raise capital in Japan’s bond market, where most yen-denominated offerings by foreign issuers have been small.

Berkshire’s AA issuer rating from S&P Global Ratings puts it slightly above the AA- of Japanese blue chip Toyota Motor. (more…)

ICYMI – Warnings of turmoil in markets if the US intervenes in the Chinese yuan

  
  Analysis
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The Financial Times ran a piece overnight canvassing potential US intervention to drive the USD down against the Chinese currency.

The background to this is
  • strong, and stronger USD, despite the Fed’s rate cut
  • The US naming China as a currency manipulator
  • USD/CNY and USD/CNH moving above what was though as a bit of a ‘line in the sand’ at 7 (wheter it is is/was or not remains to be seen)
  • Plenty of chatter and speculation that the US admin could intervene to send the dollar lower
Via the FT:
  • One senior staffer at a London-based Chinese bank said the US could conceivably intervene in the offshore renminbi market, where the currency is traded more freely than on the mainland. But the consequences could be serious.
  • “If you take on China on the currency . . . it would be interpreted as a political act and it would throw markets into turmoil,” said the senior staffer, speaking on condition of anonymity. The political fallout would be “unprecedented”, the person added.
He says market turmoil likes that’s a bad thing? 😀
(Off to the naughty corner for those thinking what I’m thinking!)
FT piece is here, may be gated

US stocks mixed as attention turns to Fed

  
  Analysis
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US stocks were mixed as Federal Reserve officials cast doubts on further rate cuts and a reading on domestic manufacturing stoked concerns over the health of the economy. The S&P 500 ticked 0.1 per cent lower after drifting between gains and losses, with investors turning their attention to the central bank’s annual summit where chairman Jay Powell will speak on Friday. The Nasdaq Composite was down 0.4 per cent, while the Dow Jones Industrial Average rose 0.2 per cent on a rally in shares of Boeing. Central bankers from around the world have descended on Jackson Hole, Wyoming, for a policy symposium that is closely watched by investors seeking clues on monetary policy.

Market participants are looking for the Fed to follow its July rate cut with another one in September, but at the start of the Jackson Hole gathering on Thursday, Philadelphia Fed president Patrick Harker and Kansas City Fed president Esther George indicated in television interviews that they would not back further cuts. “My sense was we’ve added accommodation, and it wasn’t required in my view,” Ms George, one of two dissenters in the July decision, told CNBC. Mr Harker, who is not a voting member of the Fed’s policy setting committee, said he believes the federal funds rate is around its neutral level, adding: “I think we should stay here for a while and see how things play out.” The US 10- and two-year yield curve inverted for the second time this week following the remarks. The yield on the benchmark 10-year Treasury rose 3.3 basis points to 1.6097 per cent, while the policy-sensitive two-year yield was up 4.5bp at 1.6141 per cent. An inverted yield curve is considered a sign that investors expect a recession.

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