201608.23
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The Oil of ‘Dollars’, Japanese ‘Dollars’

Starting June 8, oil prices began falling again, reversing their more optimistic trend that had lingered since February 11 long after the usual correlation to CNY was broken. In fact, by the time WTI had peaked, CNY was already being meddled with again in clear PBOC interference. Despite being backward to what was 2015’s relationship…

201608.23
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Bi-Weekly Economic Review: The Big Picture

Economic Reports Scorecard If you want to understand the US economy based on one economic report, you could do a lot worse than the report on productivity released last week. This was the third quarter in a row that showed a decline in US productivity. That is, output was up (GDP was positive) but not…

201608.16
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Global Asset Allocation Update

The risk budget is unchanged this month although the composition of the portfolio does change. For the moderate risk investor, the allocation between bonds, risk assets and cash remains at 50/45/5. There are changes to the allocation but the overall risk budget stays the same. Credit spreads did continue to narrow this month but other…

201607.28
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What Is Truly Left of the ‘Recovery’

Oil prices are like an unfolding train wreck, as it is nearly impossible to look away now.  Day after day, not only are spot prices down but the entire WTI curve is now moving lower in almost perfect unison.  Prices have dropped six days in a row, more than $4, and at just above $41…

201607.27
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The Ritual of Summer

Domestic oil inventory rose in the latest week, updates from the US EIA show. That build broke a streak of nine consecutive weekly draws dating back to mid-May. It is not unusual for oil inventory to rise and fall in various weeks, but given the mechanics of oil prices of late there is an atypical…

201607.26
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The Official Face of the ‘Rising Dollar’, Written Officially As Farce

Last July, the US Treasury Department finally issued its official report detailing its account of what happened on October 15, 2014. The statement was co-authored by staff at the Board of Governors of the Federal Reserve System, FRBNY, the SEC, and CFTC, as if the government were going overboard trying to prove its word the…

201607.26
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Bi-Weekly Economic Review: Same Old, Same Old

Economic Reports Scorecard The economic data the last two weeks was deja vu all over again. The US economy has been growing at roughly 2% the last three years and I see no reason – yet – to expect that is going to change any time soon in either direction. Certainly there hasn’t been anything…

201607.26
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The ‘Dollar’ May Only Ever Rhyme

It isn’t just that oil prices are falling, that is only one dimension of the full oil spectrum concentrating in the spot market. The more interesting and important information is contained within the whole WTI futures curve. As “dollar” funding pressure has built up since the front month peak on June 8, it has steepened…

201607.22
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The Narrative of Energy Inventories

While there is a direct relationship between the steepness of contango in the oil futures curve and the amount of crude siphoned from the market to storage, it is not an immediate one. When crude prices originally collapsed starting in late 2014, twisting the WTI curve from backwardation to so far permanent contango (of varying…

201607.19
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Baseline Tendencies

With no clear direction from any of the Asian influences, it isn’t surprising to see more listlessness in everything from stocks to bonds. The Dow was up, the NASDAQ down, and the S&P 500 somewhere in between. The 10-year UST that had looked primed for receding back into the 1.60’s (for yield) bounced back to…