I will be going on vacation for two weeks. I will be back on September 10. Hopefully, you will be able to find some other place where you can get my kind of cutting-edge commentary until then.
Archive | August, 2007
Financial Conditions Look to Be Better
Calm seems to be returning to international financial markets. US economic data released today surprised to the upside. The US dollar is even losing its safe-haven bid with fear not as dominant in the market as in days past. We could even see conditions set up for a normalization of credit and liquidity in the [...]
Carry Trade Coming Back?
Financial markets look to be rebounding after their huge drops in the last couple of weeks. Markets have seen an uptick in value and, and recent news only seems to support that trend. The primary effects of this movement on the foreign exchange market have been twofold: providing the Fed with justification to slow down [...]
US Sneezes
Yesterday, we wrote that when the US sneezes, the rest of the world still gets a cold. Now there are reports from DailFX.com comparing the Asian financial crisis of 1997-98 to the US subprime fiasco. But while the starting points may be similar, there is reason to believe the reactions by international central banks will [...]
Discount Rate Cut Just Window Dressing
Yesterday, we stated that there would be little empirical effect of the discount rate cut on the international credit crunch. Until the Fed actually cuts the Fed Funds rate (and that will not happen until September at the earliest), markets around the world are going to continue to be wary. The equities markets are sending [...]
Effect of the Discount Rate Cut
The Fed cut the discount rate from 6.25% to 5.75% before trading opened Friday morning, and US stocks responded. Green numbers showed up for the first time in weeks. The Nikkei rebounded from its shocking fall on Friday. But it is impossible to tell right now if the cut will provide a lasting calm to [...]
US Dollar Falls But That’s a Good Thing
The discount rate in the United States was lowered today from 6.25% to 5.75%. The 50 basis point reduction was a necessary move to stave off credit market gridlock (at the very least, it will satisfy Jim Cramer). With regard to the foreign exchange markets, volatility is approaching the crazy days of October 1998. The [...]
Yen Resurgence is Vicious
The yen crosses are all taking a beating. After more than a year of weakness (mostly through carry trade borrowing) the Japanese yen is cleaning up. Even the US dollar, up against all the other major currencies, is not safe from the yen’s resurgence. The yen is now at its highest level since July 2006. [...]
Dollar Rally
The Dow sold off below 13K yesterday, foreign purchases of US securities were mixed and the market has already priced in an interest rate cut in the United States at the Fed’s next meeting on September 18. But the US dollar has shrugged off that data and continued to remain strong, at least against every [...]
Who is Mrs. Watanabe?
“Mrs. Watanabe” is the designation used to describe the typical Japanese woman, and she is killing the professional forex market right now. Currency analysts at places like Deutsche Bank and Goldman Sachs predicted USD/JPY to end this year around 115, or even lower. But until the catastrophic events of this past week or so, the [...]
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