Francesco Checcacci

Cfa, portfolio strategy, macro
Francesco Checcacci
CFA, portfolio strategy, macro
Contributor since: 2013
Not terribly related but despite lower commodity prices Japan isn't doing much better. Perhaps it has reached the limit of intervention?
Having said that a devaluation now would not make China necessarily much more competitive. China pays its raw materials in dollars and its salaries have gone up significantly in the last few years. Besides, if a devaluation works by definition its effects cannot last.
Exactly what I am trying to say here. For once I agree with the Chinese.
I am still waiting for the opening of a larger percentage of the stock exchange for international investors. Let's see.
I agree Germany will back the Euro, but I think it is for political reasons. The mark might skyrocket in the beginning but eventually a fair price is a fair price. All it takes is hard talk from a central banker...
Apparently you haven't seen on what platfor Syriza got elected. They are hoping their spending will be essentially funded by other country's money, which I doubt will happen. That they will have to renege their promises as a consequence should be obvious, but it doesn't look like it is to Mr. Tsipras.
In my view the problem with Greece is not even whether part or all of its debt is forgiven.
The problem is what they are going to do next.
If the idea is hiring more civil servants and paying them more money they will be in trouble again very soon, and having defaulted on their debt while in the process penalising all other Euro countries, will have serious trouble finding anyone willing to lend to them.
If, on the other hand, the idea is to make red tape faster and less corrupt and allowing investors who want to create wealth to do their job then is it still the case that they cannot repay their debt?
I think this is to be viewed with the eyes of game theory, which will help a lot more than macroeconomics to make sense of the situation.
Your theory seems plausible at first sight, but I am afraid, apart from the obvious fact that Germans leaders have indeed been protesting too much, it does not hold in front of data.
Effectively Germany has undoubtedly benefited in the first years of the monetary union from a laxer monetary policy than the Bundesbank would have allowed. At that time it had to pay for reunification and put in place those policies which have made it the competitive country it is today. Restrictive fiscal and monetary policy at the same time would have made the job harder.
Now, however, their homework having been done, Germans do not particularly need a weak currency. People would not refrain from buying a BMW if retail costs went up 15-20%. Incidentally the same goes for Ferrari, which proves that Italy does not need a lower currency too: it needs more high value added production (it has quite a lot already: otherwise where would the primary budget surplus come from?).
So in a nutshell, Germany protests too much, not for the benefits it is enjoying now (which are limited), but for those it has enjoyed in the past when it needed them.
Thanks a lot.
Hello. Thanks for your question.
Sometimes I tend to take things as 'common knowledge'.
Anyway you will need to work a bit starting form the following data:
-Fed balance sheet (here:
-Flow of funds (here:
-BIS flow data:
Also you can find several papers and studies from research institutions.
Hope this helps you.
If you would like to have trading tips you should contact a registered advisor in your jurisdiction. I cannot give you investment advice since I cannot take responsibilities. Sorry but this is the law in most jurisdictions and the guideline of the CFA Institute.
The range is not very likely to be broken on the lower bound, as the cost of mining on average is apparently something above 1200 USD/oz. In that case most companies would just stop digging, supply would shrink and price would adjust upward.
On the upper bound, on the other hand, the range could be broken for all sort of reasons. The current geopolitical situation and its possible (temporary?) disruption of globalisation is, IMHO, not a very high percentage probability, but not fully priced in at the moment.
For a take on this, you can have a look at my previous article on SA:
Very good and informative article.
Some days ago I gave my two cents on the same topic. Essentially I think there was a massive dollar carry trade which benefited emerging stocks and precious metals, and this is now likely to be reversed.
If anyone is interested in the full text, it can be found here:
Interesting question about the yen. Without looking into it thoroughly I will just say what comes to mind first: there are loads of assets denominated in dollars (it is the world's reserve currency) but virtually none in Yen. The exception is Japanese Government bonds, which in fact are arguably still strongly underpriced. Essentially the sheer number of dollar-denominated assets available could have made people hold less dollars than they otherwise could have pushing the USD down. Again, these are just some thoughts which would need to be verified, so take it as an initial working hypothesis.
As for saying the commodity super cycle is over, I would be more careful and say it is definitely taking a breather while prices adjust towards reality, especially for precious metals. As for instrumental commodities, such as oil and base metals, it would depend on where the world's growth is heading. I would add that there is the possibility, if the Fed gets the QE exit even slightly wrong, that commodities might not be denominated in dollars in some years, at least not exclusively. Very difficult to predict what will happen even to world growth, especially given what is happening in China. Interesting times ahead, indeed.
I tend to agree with you on most things. I would still doubt the Fed will disregard the wealth effect on consumers coming from a significant retrenchment of US equities. By the way, there is a Fed equity model to show the Fed positively is looking at equities (although the use of the model is controversial and I have my doubts on its absolute validity). FYI:
Although I agree with the general idea that debasing the currency leads to higher commodity prices, I would also consider that this time, unlike in the 1970s, the US is implementing fracking technologies which seem likely to structurally reduce the energy bill.
In this case gold would be better positioned to rise than energy, as i see it currently behaving as currency.
Further, some analysts are predicting an energetically independent US in 15-20 years. If that is the case, it might not be the end of the bull market.
What are your views on the above?