For the past few weeks, EURJPY has been contained to a 132.00-133.00 zone as the push/pull tug of war between bulls and bears provided no clear winner. The market essentially remains in a “show me” mode as traders await the FOMC rate decision and more importantly its guidance about the growth and inflation in 2018. While the chance of a rate hike tomorrow is 100%, the much more important question is whether the Fed has now moved unambiguously into a tightening mode as it tries to normalize policy. If the statement tomorrow looks past the weak inflation numbers and instead upgrades the growth forecast the dollar is likely to rally hard ...
China is the “mouth of the world” when it comes to commodities and the data shows that China will have a significant, positive impact on mining investments during 2018. Look at any list of the world’s largest commodity consumers, and China is at the top. It consumes half the world’s thermal coal production (used for power generation). It uses nearly half of all the aluminum, nickel, zinc, copper, iron ore and lead production. So, when demand from China goes up, it usually sends prices up too. That’s great news for copper. According to Bloomberg, November’s copper imports hit a record. The data is still preliminary, but accor...
All eyes are currently on the crucial two-day FOMC meeting slated to start today as the central bank is highly anticipated to raise interest rates by a quarter percentage point to 1.25-1.5% for the third time this year. Per the latest CME Group’s FedWatch tool, the odds of a December rate hike is 96%. The Fed funds’ futures market shows 100% chance of a liftoff. Investors are also keenly awaiting the Fed’s guidance on the 2018 rate trajectory. Hawkish Views for 2018 Fed officials are expecting three rate hikes next year while a few firms like Goldman (GS – Free Report) and Deutsche Bank (DB – Free Report) predict fas...
(Audio length 00:13:57) Pretty much everyone expects a fed rate hike tomorrow but what to watch for is what Yellen says in her last press conference. Will it be a hawkish rate hike or another dovish hike like what we saw this whole year? Chris Temple joins me today to outline what he is watching and what could change traders minds....
Crytomania continues this week, with prices roaring and news of broke buyers using credit cards and loans against their homes to get in– classic financially-suicidal behaviors. Bizarre as all of this may seem, manufacturing digital credits is reminiscent of what governments have been doing with a vengeance the past decade in issuing and selling treasury bonds to financial intermediaries, collecting the cash, and then funneling it to central banks to buy bonds and other securities off those same financial intermediaries (QE). Corporations too have been issuing bonds to raise cash to buy back their own shares and drive up their market price.T...
We live in inflationary times. Some people might consider this statement controversial. This is because these days inflation is widely understood as a rise in the consumer price index (CPI) of more than 2 percent per year. However, there are convincing reasons to question this viewpoint. On the one hand, the CPI does not include “assets” such as, for instance, stocks, housing, real estate, etc. As a result, the price developments of these goods are not accounted for by the changes in the CPI. On the other hand, and even more essential, price changes of goods and services are associated with changes in the quantity of money. This is why ec...
Shares of Tesla (TSLA) climbed in morning trading following a report that indicated PepsiCo (PEP) has reserved 100 of its new Semi trucks, marking the largest pre-order of the vehicles to date. SEMI TRUCK PRE-ORDER: According to a Reuters report this morning, PepsiCo has reserved 100 of Tesla’s Semi trucks, marking the biggest public pre-order of the electric vehicles. Mike O’Connell, the senior director of North American supply chain for PepsiCo subsidiary Frito-Lay, said that the company plans to deploy the Semis for shipments of snack foods and beverages between manufacturing and distribution facilities and direct to retailers ...
I started writing this post last Thursday before the US jobs report came out and the point I was going to make initially was that I expected good things from that report on the heels of some pretty robust jobless claims reports and 190,000 private sector jobs in the ADP report. Moreover, while we can’t expect 3% growth in the US to last indefinitely, there are no signs of weakness in the real economy in the US – or in Europe or Japan for that matter. Given where we are right now, I think this expansion will continue through the end of 2018. And so, I want to talk about what that means in the context of my last post and recent BIS warn...
As the global economic cycle heats up, it’s worth posing the question: when does “so good” become “too good”? It’s a reference to one of the principles in my analysis. My approach is to look at multiple factors, whether it’s valuations, monetary policy settings, sentiment, technicals, or the earnings/economic cycle. Each indicator and combination of indicators carry different signals at different stages of the cycle. When it comes to economic cycle indicators there is a point where it gets “so bad that it’s good” e.g. the 2009 bottom where economic sentiment was so morose that it r...