201605.31
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The Pressure Builds

Two weeks ago, Chinese stock futures traded in Hong Kong flash crashed. Between 2:14pm and 2:16pm local time on May 17, the Hang Seng China Enterprises Index suddenly liquidated due to an intense burst of sell orders that crashed through the whole of the futures market depth. At the start, the index was trading at…

201605.25
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The Remarkable Accuracy of The Ticking Clock

The People’s Bank of China today fixed the CNY exchange (reference) rate below 6.56 for the first time since early February. That means all the tremendous effort that went into erasing December and January’s “dollar” pressure (not devaluation) has been unwound, as the currency now trades just about where it was at the start of…

201605.24
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A Discrete Look At What Is Bigger Than All The World’s QE’s Combined

In this brave new banking world of impenetrable bureaucratic morass designed to keep us all from ourselves (slogan: don’t panic, there’s a lot of new math), there are new acronyms for just about anything. To regulators, some groups of letters mean a lot more than they might for banks, while investors, loosely defined, focus on…

201605.24
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Sector Snapshot: Dollar Rally Could Impact Leaders

The short term leadership is shifting as the dollar comes off its lows. Energy and materials had been leading the market during the recent period of dollar weakness. As the dollar found its footing over the last month, defensive sectors took the lead.  Whether this short term shift continues will likely depend on whether the…

201605.20
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TIC Update As Usual Offers Confirmation And Maybe A Warning

The Treasury Department’s updated official custody figures show us nothing unexpected. As usual, the TIC numbers are useful more so in corroboration of what contemporary analysis had already described. In the case of March 2016, we find just the sort of apparent reduction in “dollar” pressure that matches observation of general global conditions after February….

201605.18
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The Moon Is Not Random Error

On March 29, 1900, Louis Bachelier successfully defended his doctoral thesis at the University of Paris. It was breathtakingly innovative and complex, so much so that it would take decades for his ideas to be fully understood let alone adopted. This was the case even though his thesis advisor was none other than famed physicist…

201605.13
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Waves Not Solid Cycles; The Difference of Heavy Monetary Influence

It’s not just that there was an obvious and intense change in sentiment, as that is quite common among and within markets. It is more so that this repetition is a little too familiar. In January, the mainstream was taken aback as the world looked headed for a very dark place, all “unexpected” of course….

201605.13
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Bi-Weekly Economic Review

Economic Reports Scorecard The tone of the economic reports improved over the last two weeks with quite a few releases coming in better than expected. From a scorecard viewpoint, we had 6 reports better than expected versus 8 worse than expected for the reports where a consensus can be tracked and interpreted. (Note: sometimes it…

201605.11
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The Shortest Intuitive Leap

It was an impressive rebound from the doldrums of February 11. Stocks managed to get back nearly even, as the S&P 500 closed above 2,100 on successive days April 19 and 20. Since then it has been more of a struggle; sideways to slightly lower. Gold has remained near and above $1,250 while funding markets…

201605.10
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Global Asset Allocation Update

The risk budgets are unchanged again this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. It was tempting to raise the risk allocation this month and up our allocation to the weak dollar investments we’ve favored for some time. But the only indicator that really improved was credit…