Both the two-year Treasury and oil are surging. The two-year Treasury or the instrument most sensitive to monetary policy has dropped in yield from late last week’s yield of 1.62% to an intraday low of 1.25%. The velocity of change is incredible. As discussed many times there is a near universal short interest in this … Read more
Is it all now about the Ukraine? The number of possible outcomes is infinite. Oil is up about 4%. Equity futures have retraced about two thirds of their previous losses. Perhaps the only certainty to write is the uncertainty has again increased. As widely discussed, the markets are greatly influenced by algorithmic trading, trading that … Read more
Prices paid to US producers jumped in January by more than forecast, point to persistent inflationary pressures as companies contend with supply-chain and labor constraints. The PPI increased 9.7% from January of last year and 1% from the prior month. The gain from December was the largest in eight months, exceeding the median forecasts of … Read more
Is there a liquidity crisis? Yesterday’s repo auction was oversubscribed by a factor of two. However yields did not spike. The Fed is providing the necessary liquidity, operating in its most foremost capacity of being the “banker’s banker,” the lender of last resort. Many including me are asking why? Is the activity anything of significance? … Read more
Equity markets were again relatively quiet. There was some discussion regarding January’s CPI data. A plunge in January’s energy costs pulled the CPI down by 0.7%, the biggest decline since 2008 but ex food and energy, costs rose by 0.2%. The data confirmed the Fed’s view that inflation will eventually reach its 2.0% goal. Cheaper … Read more
Stocks rose handsomely on Friday on reports of a deal between Greece and its creditors. It is my understanding there is a four month extension of Greece’s aid if Greece meets conditions. In my view, most have acknowledged that in most scenarios Greece may not be a significant market event given the monetary posture of … Read more
In a move few had expected, Sweden yesterday quietly fired another salvo into the escalating currency war by joining Denmark, Switzerland and the ECB in introducing negative interest rates. I am hesitant to use the world “surprise” since such interest rate cuts are coming at a rapid pace. When will these reductions come to an … Read more
I am very hesitant to comment there is little to write about yesterday’s market action for every time I pen such remarks, a dramatic event occurs. Markets fluctuated and closed essentially unchanged while all awaited the outcome of Greece’s showdown with its euro area creditors and the tenuous peace talks over fighting in eastern Ukraine. … Read more
About fifteen years ago the common mantra on Wall Street was that the business cycle is dead partially predicated by the mutlipolarity and interconnecting business relationships. Why would ABC go to war against XYZ for ABC owns businesses/lent money to XYZ. Economic interests would reign supreme. Yesterday Bloomberg reported Ukraine asked Russia to restructure $3 … Read more
Reflecting upon the past several days, one would think equities would be down a gazillion points. To recap, little was accomplished regarding the Ukraine. Jordon, perhaps one of the weakest Middle East countries is aggressively pursuing ISIS. Greek is thumbing its nose at the ECB and is demanding German reparations from WWII. The President submitted … Read more
