More trouble ahead for the euro in Dutch and French elections
So far the euro is hanging tough and the French financial markets are doing better than I expected. But I think that’s likely to change in the next four to six weeks. In Dutch elections on March 15 Geert Wilders and his far-right Freedom Party look likely to win...
China’s foreign exchange reserves fall below $3 trillion
It’s mostly symbolic, but in financial markets symbols count. In January China’s foreign exchange reserves dropped below the $3 trillion mark for the first time in almost six years, the People’s Bank of China announced today, February 7. The drop, the...Goldilocks returns with January jobs report
The January jobs report showing a net gain of 227,000 jobs (versus the consensus of 170,000 among economists surveyed by Briefing.com) would have been enough to send stock and Treasury bond prices down and the dollar up because the very strong job creation in January...
European Central Bank stands pat; Draghi urges Germany to have patience
If it sounds a little simplistic to you as monetary policy, that may be because it is. Confronted with German criticism of the asset buying stimulus program at the European Central Bank and German fears of resurgent inflation, bank president Mario Draghi advised...
Trump talks down dollar–and U.S. stocks
The U.S. dollar fell today after President-elect Donald Trump told the Wall Street Journal that the U.S. currency was too high–in part because China holds down the price of the yuan. On the comments the Bloomberg Dollar Spot Index was down 1.1% as of noon New...
There goes the neighborhood: In one interview President-elect Trump bashes both EU and NATO
In an interview with the London Times and Germany’s Bild President-elect Donald Trump managed to dismiss the European Union as a tool for expanding German exports and to label NATO as obsolete. Trump praised the Brexit vote saying that people “want their...
China’s export engine falters again
Calculated in yuan, China’s exports rose a tepid year-over-year 0.6% in December. Unfortunately, China’s export companies don’t pay for raw materials such as oil and copper or for subassemblies from Malaysia or Indonesia in yuan but in most cases in...
The inflation squeeze on the European Central Bank just got tighter
In my macro look forward at 2017 “My-forecast-of-the-big-events-and-macro-trends-for-the-year-ahead-the-12-most-dangerous-months-of-2017/” I flagged the lose/lose decision facing the European Central Bank in the year ahead. The bank’s current policy...
My forecast of the big events and macro trends for the year ahead: The 12 most dangerous months of 2017
I’ve got good news for all those who didn’t find 2016 volatile enough. Yep, 2017 looks likely to top 2016 for volatility. Hard to imagine, perhaps. Even though the CBOE S&P 500 Volatility Index (VIX) spent much of the year near multi-year lows, because...
Mixed fallout from higher revision to U.S. GDP growth
The news that U.S. economic growth in the third quarter had been revised upward to 3.5% from an earlier 3.2% has been a mixed blessing for the financial markets. Higher growth has helped stocks resume their post-election rally. But it hasn’t helped the bond...
China faces an increasingly frenzied, increasingly dangerous game of financial Whac-A-Mole
Where to begin? China faces a depreciating currency, a bond market that has switched from rally to sell off, huge outflows of cash, and what looks like a resurgence of inflation. Fixing one of these problems alone would be a huge challenge to the People’s Bank....
Vale sells fertilizer assets to Mosaic–time for this long-term stock pick to pay down some debt
Brazil’s Vale (VALE) has agreed to sell it fertilizer assets to Mosaic (MOS) for $2.5 billion in cash and stock. The price at 15 times trailing-12-month EBITDA (earnings before taxes, interest, depreciation, and amortization) is a good one given the continued...
Pre-holiday move to safety starts a little early
With trading volumes already starting to slip–trading in Standard & Poor’s 500 stocks was running about 25% below its average for this time of day at noon today–traders and investors are locking in some gains and seeking safety for the week...
Traders long U.S. dollars figure there’s another 2% to 3% free money in this trade before the end of the year
Yesterday the dollar rose another 1.2% against the euro to $1.0415, the highest since January 2003. And the US. currency climbed by another 1.4% against the yen. The Dollar Index added to its gain to hit a 15-year high. Today the dollar has backed off a bit. Not...
Happy now? European Central Bank cuts rate of monthly bond purchases but extends program–maybe for a really long time
The European Central Bank today extended its bond-buying program to the end of 2017 but cut the monthly purchases to 60 billion euros from 80 billion euros. That would take the total for this quantitative-easing effort to 2.2 billion euros ($2.4 billion.) That will...
China’s yuan on collision course with Trump in 2017
$10 billion here. $10 billion there. And soon you’re talking about real money. China’s foreign exchange reserves fell $69.1 billion in November to $3.05 trillion, the People’s Bank of China said today. That follows on a $47.5 billion drop in October....
In Italy Renzi’s constitutional referendum doesn’t just lose; it gets destroyed
The preliminary count at 3:14 a.m. in Rome (9:14 p.m. in New York) shows Italian voters rejecting Prime Minister Matteo Renzi’s referendum on constitutional change by an almost 60/40 margin. If Renzi’s proposals had lost by a narrow margin, he might have...
Rampaging dollar puts pressure on emerging market currencies and central banks
Yesterday, November 17, Mexico’s central bank raised interest rates for the fourth time in 2016. The new rate of 5.25% is the highest since 2009. The Mexican peso traded today, November 18, at 20.5626 to the dollar as of 2 p.m. New York time. And that’s just one...
3 moves for a vulnerable market
If this market is vulnerable, what should I do? I’ve been asked that question repeatedly since I first called this market vulnerable back in my October 11 post “Suddenly U.S. stocks seem vulnerable.” To answer that–the what should I do...
U.S. markets decide not to go anywhere ahead of the weekend
U.S. stocks stabilized today–thanks to better than expected earnings from Citigroup (C) and JPMorgan Chase (JPM) and, well, Friday. The Standard & Poor’s 500 stock index closed up 0.02%. U.S. crude oil benchmark West Texas Intermediate fell 0.24% but...
Suddenly U.S. stocks seem vulnerable
It’s not like U.S. stocks didn’t have enough to worry about today. The bond market priced in the highest level of inflation expectations since May. Oil fell as Russia’s biggest producer Rosneft said it won’t cut output. Alcoa (AA), the company...
Today gold pays attention to dollar, interest rates, Fed
Sometimes it’s not so much new news that moves the market as it is a tipping point where the market decides to pay attention to what it has known all along. Today gold dropped to a three-month low to close at $1253 an ounce. That drop brings the 200-day moving...
Economy and financial markets point in different directions ahead of Wednesday’s Fed meeting
Pity the poor Federal Reserve. In making decisions about interest rates–in this case about whether or not to raise interest rates at its June, July or September meetings–it has to consider the condition of both the real economy and the financial markets. And right now...
UK voters decide to leave European Union–What’s next (Part 1 short term effects)?
By a surprisingly large margin of 52% to 48% the United Kingdom voted to leave the European Union in Thursday’s Brexit referendum. Global financial markets plunged in a decline all the more dramatic because traders and investors had decided on Wednesday that the...Trying to figure out how long the U.S. has to get its financial house in order? History says longer than you think but not forever
The world has a fair deal of experience in dealing with small countries that can’t pay their bills. And the world is gaining more experience by the minute. Greece can’t pay its bills? Put together a funding package that comes at the price of domestic austerity and...Dollar rallies while the euro stumbles: Which is good for some stocks
The U.S. dollar keeps running higher as the euro stumbles. With financial markets unconvinced that the Irish bailout will put an end to a euro debt crisis that’s ready to engulf Portugal and Spain, the U.S. Dollar Index (DXY) pushed above 81 this morning for the first...2011 is going to be different than investors thought even a few weeks ago
Time to re-think 2011. The news of the last three weeks plus the market reaction to that news demands a rethink of investment strategy for 2011. 2011is going to be a lot less linear, a lot more volatile—if not necessary more or less profitable– than I thought it...With no strong trend out of today's market, stocks hang on tomorrow's news flow
Bounce or rally? We still don’t know. The U.S. stock markets started with a strong bounce this morning. The Standard & Poor’s 500 index moved up 1.1% off the starting line. Key was “news” from Europe that suggested Ireland might be closer to a rescue deal. That...Whoops! Is the Fed about to do it again? Create another asset bubble, I mean
2000. 2007. 2011. Is the Federal Reserve about to do it again? Is the Fed about to preside over the creation of another financial bubble? Asset prices in the world’s emerging economies are climbing on the crest of a flood of dollars from the Federal Reserve. Central...Jim’s Daily Email Alerts:
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