ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary Pressures continue to build in financial markets. Trading today opened like a typical relief bounce but ended with a thud. A breakdown in the S&P 500 flagged the seriousness of the selling. Fresh highs in a surging volatility index confirmed the magnitude of the pressures from a new fear and loathing for … Read more
Stock Market Commentary Federal Reserve Chairman Jay Powell, aka “J-Pow”, finally decided the time has come to drop the descriptor “transitory” from America’s current experience with inflation (see the 37:00 mark in the video below). J-Pow even acknowledged that “it is therefore appropriate…to consider wrapping up the taper of asset purchases…perhaps a few months sooner” … Read more
The Turkish lira is in freefall. On November 23rd, the U.S. dollar gained about 12% against the Turkish lira. USD/TRY is up 55% since the end of August and up 74% year-to-date. The current parabolic Turkish lira move culminates an epic battle that Turkey’s President Recep Tayyip Erdoğan is waging against monetary orthodoxy. Erdoğan has … Read more
The Bank of Canada (BoC) not only ended its quantitative easing (QE) program, but also the Bank refreshingly acknowledged the inflation issue in Canada. In his opening statement, Governor Tiff Macklem pointed out that higher energy prices and supply chain constraints are worse than previously assumed and are driving hotter inflation levels. Canadian inflation will … Read more
The Stock Market’s Value The U.S. Federal Reserve’s dual mandate is stable prices and maximum employment. Yet, when the Fed sets monetary policy, the most direct and immediate impact plays out in financial markets. When the Fed eases monetary policy, the dominant theme the last 20 years, asset prices invariably increase. Indeed, over the years … Read more
Federal Reserve Chair Jerome Powell served up the alley-oop and James Bullard delivered the slam dunk. While the latest statement on monetary policy had nothing to say about a hawkish turn at the Fed, Powell served up notice during the press conference. Powell noted growth and inflation prospects that exceeded prior expectations, which in turn … Read more
North American: The United States “What we’re seeing now is an economy that seems to be at an inflection point….we feel like we are at a point where the economy is about to start growing much more quickly, and job creation coming in much more quickly…we see strong growth and strong job creation starting right … Read more
Last November, the South African rand (USD/ZAR) finished reversing its pandemic related losses against the U.S. dollar. Along the way I pointed out the benefits of getting long the South African rand. This week, USD/ZAR dropped to levels last seen in January, 2020. The rand looks to strengthen further based on the confidence expressed by … Read more
A change in leadership at the Central Bank of the Republic of Turkey (CBRT) slammed the Turkish lira (USD/TRY). A little over a week later, the new governor, Şahap Kavcıoğlu, granted an interview with Bloomberg to discuss recent events and monetary policy. The CBRT published a transcript of the brief interview. Thus, I assume the … Read more
Financial markets hate surprises. Turkey’s President Tayyip Erdogan slammed currency markets to start the week. Two Days after the Central Bank of the Republic of Turkey (CBRT) hiked interest rates again (this time from 17 to 19%), Erdogan replaced the governor. The sacking occurred on Saturday, but the market clearly needed a lot more time … Read more