201802.12
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2

COT Black, Green, and Blue; Extremes But Not Extremes

No matter where one looks, there is extreme positioning in all the key markets. Each one is pulled further and further toward “reflation”, too, or in the case of the euro this “falling dollar” consistent with that idea. The world is betting big on it finally coming true, the “globally synchronized growth” to this point…

201802.06
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US Imports: A Little Inflation For Yellen, A Little More Bastiat

US imports rocketed higher once again in December, according to just-released estimates from the Census Bureau. Since August 2017, the US economy has been adding foreign goods at an impressive pace. Year-over-year (SA), imports are up just 10.4% (only 9% unadjusted) but 9.3% was in just those last four months. For most of 2017, imports…

201801.29
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Bi-Weekly Economic Review: Markets At Extremes

Economic Reports Production Production ended the year on a strong note but early readings from January are not as positive. The December industrial production report headline was strong at a 0.9% gain but a lot of that strength was in the mining (oil drilling) and utility sectors. Mining has actually led the way the last…

201801.26
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This Explains A LOT (And It’s Still Not Enough)

NOTE: This is really the second half of an earlier missive on the changing nature of the eurodollar system post 2014-16. While it’s not absolutely necessary to read the first here, it’s probably a good idea. The reason nothing ever goes in a straight line is that first everything is always changing. How and why…

201712.27
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Rising ‘Dollar’ Re-Rises? Part 2, The Fruits of Our Obsession

I suppose it’s easy to look at gold and see only fear. It is, after all, the ultimate currency hedge. Therefore, if the price is rising there is probably a good chance fear over monetary considerations is, too. The opposite interpretation, then, would appear to be just as straightforward, but it’s often complicated by the…

201712.27
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Rising ‘Dollar’ Re-Rises? Part 1, Mexico Ain’t Suffering NAFTA

One of Candidate Trump’s biggest priorities was to renegotiate NAFTA. Seen as an accelerator for harm not just inside of the nation’s rust belt, the incoming administration made it a top priority. Blaming the trade deal for the loss of 700k manufacturing jobs, Robert Lighthizer, the US’s top trade official for the renegotiation process, said…

201709.22
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1

Global Asset Allocation Update: Step Away From The Portfolio

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolios this month. The post Fed meeting market reaction was a bit surprising in its intensity. The actions of the Fed were, to…

201709.08
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The Real Euro Watch

Everyone is now a euro watcher. The European common currency’s exchange value against the dollar has been on the rise, to put it mildly. Despite decades of declaring floating currencies the optimal framework, it really is quite entertaining to watch the furor when these things actually float one way or the other. This recent trend…

201707.26 1

Draghi Did Not Keep His Promise

It is like a great many things forgotten now, but five years ago today the head of the ECB compared Europe to a bumblebee. That’s not quite right, however, as Mario Draghi really said the euro was like a bumblebee, but you’d be forgiven for mixing the two up. The purpose of his folksy analogy…

201707.02
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Bi-Weekly Economic Review: Draghi Moves Markets

In my last update two weeks ago I commented on the continued weakness in the economic data. The economic surprises were overwhelmingly negative and our market based indicators confirmed that weakness. This week the surprises are not in the economic data but in the indicators. And surprising as well is the source of the outbreak…