201502.24
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Next Step In ‘Dollars’?

I continue to believe that the Swiss National Bank’s action on January 15 opened a “release valve” of sorts inside the world of the global “dollar.” Prior to that day, heightened bearishness all throughout dollar-denominated credit dominated trading. That included funding markets, especially eurodollars. The eurodollar curve itself ignored almost everything else, including the FOMC…

201502.12
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When ‘Deflation’ Reveals ‘Inflation’

One of the curiosities of the commodity collapse since the end of last June has been how various financial derivatives have been thrown off. I’m not speaking of credit default swaps of small businesses that provide sand to fracking rigs or “products” like that, but something far more basic. The price of commodities should, you…

201502.11
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If It Was Just Oil…

The price of WTI index crude has fallen back below $50 again as inventories rise far more than expected. That has been the theme of late despite the recent retracement in crude. However, looking at WTI via the futures curve, trading habits are increasingly locking in the outer years (especially past 2016) around $65 –…

201502.08
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Investment Themes and Asset Allocation

Here is a summary of this week’s research from our strategic partner MRB. Allocation:   Trades to consider: “Short global luxury stocks versus multiline retailers.” “Short 10-year U.S. Treasuries outright.” As always, please feel free to contact me with any questions or concerns. Find out about your personal risk profile and working with Alhambra Click here to…

201502.06
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Finally Retracement

When the FOMC came out and said the economy was good enough for them to begin raising interest rates, the eurodollar funding market did the opposite of what would be expected of that situation. Not only did the market move in the “wrong” direction, it did so with a great deal of conviction. Today’s jobs…

201501.30
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Research Charts: ECB and Commodities

From strategic research partner MRB…with Alhambra’s added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE,…

201501.21
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Dread The New Anchor

I mentioned yesterday in looking at the behavior of gold that it seems as if the “dollar” has entered a bit of a pause in its wider destructive reality of late. Maybe that coincidence with the SNB’s dramatic alteration offers an explanation for it, with renewed focus on the European end of eurdollars, or that…

201501.19
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The Dangers Of Leverage

Leverage: the use of credit to enhance one’s speculative capacity Merriam-Webster Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes The Swiss National Bank – the Swiss equivalent of our Federal Reserve – didn’t exactly move the world last week but the fallout…

201501.11
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Signs Of Stress

2015 has started with a bang with the Dow trading in a roughly 700 point range through the first six trading days. The increase in volatility started in the 4th quarter and appears to have entered the new year with a new – higher – range. The source of the volatility appears to be angst…

201501.09
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Complex Interbank Math, Part 2

The complexity of balance sheet mechanics, as observed in the prior discussion, offers a greatly altered view of liquidity and the ancient concept of elasticity. These are not just theoretical assertions, as we have seen them in practice on more than one occasion. The behavior of “liquidity” starting in August 2007 was exactly along these…