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Marc Chandler

 
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  • Great Graphic: Relative Performance Real And Anticipated
    Today, 7:44 AM SPY, EEM, IEV 1 Comment
  • Short Note Ahead Of The Double Feature From Jackson Hole
    Today, 6:59 AM UUP, UDN, FXC 1 Comment

    Summary

    • Yellen speaks at 10:30 EST from Jackson Hole. She is the signal. Plosser and George do not represent a majority.
    • Draghi speaks at 2:20 pm EST. No new ground will be broken.
    • Canada reports retail sales and CPI. The latter is more important, but the former will solidify expectations for next week's Q2 GDP report.
  • Dollar May Lose Momentum Ahead Of Yellen Tomorrow
    Yesterday, 7:25 AM FXE, FXY, FXB Comment!

    Summary

    • Dollar is firm, but its recent strength may ease ahead of Yellen's speech at Jackson Hole on Friday.
    • UK retail sales disappointed.
    • Flash PMI in euro area and China were soft.
    • Japan's manufacturing PMI may be first sign economy is finding traction after sale tax increase.
  • EMU External Account Reviewed
    Wed, Aug. 20 FXE Comment!

    Summary

    • The large euro area current account surplus is not consistent with an over-valued currency, under traditional approaches.
    • Portfolio and direct investment inflows have slowed in recent months.
    • Speculators have also reversed their positions, adding to the weight on the euro.
  • Dollar Rides High
    Wed, Aug. 20 FXE, FXB, FXY 5 Comments

    Summary

    • The dollar is breaking out even though US yields do not have much traction and the equity market advance is stalling today.
    • Sterling is the exception after two dissents in favor of an immediate rate hike were revealed in the MPC minutes.
    • Do not expect such fanfare with the FOMC minutes, the highlight of today's North American session.
  • Sterling Tracks Interest Rate Expectations
    Tue, Aug. 19 FXB Comment!

    Summary

    • The BOE's forward guidance is confusing investors.
    • Officials have, though, succeeded in stopping sterling's rally.
    • The confusion has also injected some volatility into sterling, which officials also may find desirable.
  • Dollar Bid, While Soft CPI Sends Sterling Reeling
    Tue, Aug. 19 FXB, FXE, FXY Comment!

    Summary

    • Lower than expected inflation sends sterling to new lows.
    • Euro cannot distance itself from the $1.3335-45 two-week base.
    • Aussie is the firmest of the majors, though little fresh signal from the RBA.
  • Dollar Is Mostly Firmer, With Sterling As A Notable Exception
    Mon, Aug. 18 FXE, FXB, FXY Comment!

    Summary

    • Sterling gapped higher after Carney's seeming about face regarding rate hikes and wages.
    • Euro has neared its 20-day moving average, but has not closed above it since July 9.
    • Bond markets are under pressure, even Ireland which Fitch upgraded before the weekend.
  • Looking For The Signal? Expect No Fresh Help From Yellen And Draghi At Jackson Hole
    Sun, Aug. 17 FXE, FXY, FXB 2 Comments

    Summary

    • Four drivers in the week ahead: geopolitics, economic data, price action and Jackson Hole.
    • We continue to think markets are most vulnerable to geopolitical events in Ukraine.
    • US inflation and housing starts likely ticked up, while euro area PMI likely remains within this year's ranges.
    • BOE and Fed Minutes will be released and the former may have greater impact than the latter.
    • Yellen and Draghi are unlikely to provide fresh policy clues at the Jackson Hole confab.
  • Reassessing Fundamentals Is Not Conducive For High Conviction FX Trades
    Sun, Aug. 17 FXE, FXY, FXB Comment!

    Summary

    • US Dollar was mixed, which is consistent with a consolidative phase.
    • Bond markets rally as investors reconsider macro fundamentals.
    • S&P 500 bounce brought it to key technical levels.
  • U.S. Household Debt And Composition
    Fri, Aug. 15 SPY, DIA, QQQ 7 Comments

    Summary

    • Household debt has fallen by about $1 trillion since its peak.
    • Housing related debt accounts for a smaller share of household debt now.
    • Student and auto loans have picked up some of the slack.
  • Some Reflections On A Quiet Day
    Fri, Aug. 15 FXE, FXY, FXB 3 Comments

    Summary

    • Today is the anniversary of the end of the Bretton Woods gold-dollar standard.
    • Euro zone competitive challenges pre-date EMU.
    • Sterling found support near its 200-day moving average, while the euro remains confined to Wed's ranges.
  • Eurozone Stagnates, But Euro Doesn't Sell Off
    Thu, Aug. 14 FXE, FXB, FXY 2 Comments

    Summary

    • Germany's 0.2% contraction is just offset by the other euro area members.
    • The fact that the euro did not sell off suggests the market is over-extended.
    • Sterling also appears poised to post corrective upticks.
  • Fluid U.S. And U.K. Rate Expectations
    Wed, Aug. 13 FXB, UUP, UDN Comment!

    Summary

    • BOE forward guidance first sparked a sharp increase in rare expectations, and now a dramatic fall.
    • The pendulum may be swinging too far ahead of next week's CPI and MPC minutes.
    • The market still does not know what the Fed means by "a considerable period".
  • Dovish BOE Report Sends Sterling Reeling
    Wed, Aug. 13 FXE, FXB, FXY Comment!

    Summary

    • BOE's Quarterly Inflation Report was more dovish than anticipated. Sterling drops a cent.
    • Japan's Q2 GDP contraction deepest since 2011, but Q3 is key to policy response.
    • China's lending collapses - policy successful.
  • Geopolitical Concerns Ease, Allowing Poor Economic News To Have Sway
    Tue, Aug. 12 FXE, FXY, FXB 2 Comments

    Summary

    • Japanese, German and UK data disappoint.
    • Australia housing prices rise.
    • Sweden continues to wrestle with deflation.
  • Growing Currency Mismatch
    Mon, Aug. 11 1 Comment

    Summary

    • Many emerging market countries have increased their foreign currency borrowing to secure lower rates than are available domestically.
    • This currency mismatch could hurt if the US dollar appreciates.
    • This is evident among the frontier economies too.
  • Quiet Start To A Quiet Week
    Mon, Aug. 11 FXY, FXE, FXS Comment!

    Summary

    • Dollar is narrowly mixed; Scandi bloc is firm.
    • Russian markets are mostly firmer after no weekend escalation.
    • Erdogan's victory in Turkey has not help lift local markets.
  • What We Are Likely To Learn In The Coming Days
    Mon, Aug. 11 DIA, SPY, QQQ Comment!

    Summary

    • June data is mostly too historical to impact markets.
    • July data is likely to confirm what we already know.
    • Russia sending "humanitarian" aid into east Ukraine may spur a greater response by investors than events in Gaza, Iraq or the South China Sea.
  • Beware Of Corrective Forces
    Sun, Aug. 10 FXE, FXY, FXS Comment!

    Summary

    • There is a bullish divergence in the euro and Swiss franc.
    • S&P 500 are poised for a corrective bounce.
    • Treasury yields may firm.
  • Peak Driving
    Sat, Aug. 9 10 Comments

    Summary

    • Americans, when adjusted for population size, are driving fewer miles.
    • This is unusual as it is not happening during a recession.
    • It is suggestive of a larger shift taking place on this side of the crisis.
  • 2 Equity Stories You May Have Missed
    Fri, Aug. 8 SPY, DIA, QQQ 3 Comments

    Summary

    • Equity markets had a tough week, but the difficulties did not begin this week.
    • The SNB reduced some of its US equity holdings in Q2.
    • Japan's largest life insurer boosted its equity holdings by a third in Q2.
  • Short Squeeze Lifts Euro, While Falling Yields Weigh On Dollar
    Fri, Aug. 8 FXE, FXY, FXB Comment!

    Summary

    • Euro lifted by short squeeze not by Draghi.
    • Yen finally finds traction as US yields and equities fall.
    • Sterling continues to trade heavily.
  • U.S.-Russia Trade
    Thu, Aug. 7 UUP, UDN, RBL 13 Comments

    Summary

    • US bilateral trade deficit with Russia widened though overall the deficit narrowed.
    • Imports from Russia and exports from Russia fell in June.
    • It may be early to attribute it to the sanctions, but this is the direction of things to come.
  • Draghi Stays The Course
    Thu, Aug. 7 FXE Comment!

    Summary

    • Draghi says little new.
    • Next month's ECB meeting is more important, and forecasts will be updated.
    • Expects large participation in TLTROs.
  • Waiting For Draghi
    Thu, Aug. 7 FXE, FXB, FXY Comment!

    Summary

    • Next week's inflation report is more important than today's BOE meeting.
    • ECB won't do anything, but it won't stop Draghi from talking about it.
    • Australia's unemployment jobs above US for the first time since 2007, and send Aussie sharply lower.
  • U.S. Corporate Taxes, Inversions And Surplus Capital
    Wed, Aug. 6 SPY, DIA, QQQ 7 Comments

    Summary

    • Walgreen's decision to pursue an inversion may mark the beginning of the end of such strategies.
    • The effective tax rate by large US multinational corporations that are profitable is near 17%, half the max Fed tax schedule.
    • A key imbalance leading to financial crisis is surplus savings and retained earnings by corporations contributes to this condition.
  • Dollar Remains Firm
    Wed, Aug. 6 FXE, FXB, FXY 4 Comments

    Summary

    • Germany and Italy disappoint and this helps push euro to new lows.
    • UK data shows deflation in shop prices and weaker industrial output. Yields fall and drag sterling down.
    • Russia/Ukraine conflict still poised to escalate and more potential fronts opening.
  • Wages And Productivity
    Tue, Aug. 5 DIA, SPY, QQQ 91 Comments

    Summary

    • The major central banks agree that wages are too low.
    • Even in Germany, where labor is ostensibly strong, wages have not kept pace with productivity gains.
    • We again are struck with the idea that the biggest challenge of capital come from its strengths not its weakness.
  • Services PMIs In Focus
    Tue, Aug. 5 FXB, FXE, FXY Comment!

    Summary

    • UK services PMI surprises on the upside and offsets weakness in the manufacturing survey.
    • RBA left policy on hold and largely repeated past statement, but Australia did report a smaller trade deficit.
    • Factory inventories in the US may help shape expectations for Q2 GDP revisions.
  • Leading Industry Employer By State 1990 And 2013
    Mon, Aug. 4 5 Comments

    Summary

    • Healthcare and social assistance is the largest employer in most states.
    • This has come at the expense of manufacturing and retail services.
    • In 1990, manufacturing was the largest employer in 37 states. In 2013, it was the largest in 7.
  • Markets Look For Direction
    Mon, Aug. 4 FXE, FXY, FXA 6 Comments

    Summary

    • Currencies and equities are consolidating.
    • Bonds in Asia and European periphery play catch up to the post-jobs US Treasury rally.
    • Featureless North American session, keep focus on equity market and earnings.