The Economics of Christmas

A lot can be argued to the point that the true meaning of Christmas is slowly slipping by us; because many people instead focus on seemingly more-important facets of this gift- giving holiday, or so it goes.

There are plenty of people out there venting their frustrations and pointing fingers on this topic. So I\u2019ll leave you to go find those sermons elsewhere \u2013 in fact I encourage it. But rather than lecture you on why the real reason for Christmas has fallen by the wayside, let\u2019s just talk about the consumption dynamic prevalent most notably during the Christmas season.

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Published: 23 December 2008
Written by Editor
Forex  

Can we rest? Gold may lead the way.

The volatility has been humongous in currencies, you might have noticed. The huge run in the euro recently seems to have a lot of Johnny Come Lately dollar bulls changing their tunes, and now suggesting the dollar move is done. It's time for the dollar dirt nap again seems to be the new lament. But it's a very tough call in a market where volatility is spiking to all-time high levels to suggest a multi-day move means this or that.

Our fundamental story hasn't changed, as you know. And today's news (above) that China is cutting rates and Germany will contract more than expected are a big part of our dollar story global demand has evaporated (Japan recently reported that November exports dropped at the sharpest rate on record). But....open we must remain because price action we must respect.

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Published: 22 December 2008
Written by Editor
Forex  

Underestimating the power of deflation is dangerous!

Sometimes we are a bit absurd in this morning missive in an attempt to make a point. Looking back at a recent issue, from the 2nd of December, titled \u201cCan you say 1% Treasury Bond Yield?\u201d we noticed the 30-year bond futures price has risen a bit since then; yields have fallen. Yes, yields have plunged faster than expected\u2014by us, and I imagine by many others.

If you pay some attention to this stuff, barely a day goes by now when you aren\u2019t being told by someone that Treasuries are the next major bubble. It will burst soon so it\u2019s time to start getting short.

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Published: 19 December 2008
Written by Editor
Forex  

Consuming Forces Shaking Ukraine, Germany ... and China

You're probably kicking yourself for holding on to those hryvnia for a couple days too many.

If you don’t know what I’m talking about, I’ll tell you: Ukraine’s currency – hryvnia – took a nosedive. In the last two days its value has plunged 17%. And even though Ukraine’s President pledged to support the currency, it fell to an all‐time lows versus the US dollar.

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Published: 18 December 2008
Written by Editor
Forex  

I Love the Smell of Rate Cuts in the Morning

Interest rate decision out of the FOMC today – Mr. Ben Bernanke and his busy policy‐ makers announce their latest decision on interest rates this afternoon in the US. Will Ben schmooze the media like Trichet? Doubtful. Estimates say rates will drop another 50 basis points, down to 0.50% from 1%.

Unless Benny B. decides to save some of what little ammo he’s got left for future FMOC get‐togethers, I expect the consensus estimate of 50 basis points off will prove accurate. But what will that do to the market?

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Published: 16 December 2008
Written by Editor
Forex  
  1. Currency Currents - 12/15/2008
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  3. Currency Currents - 12/04/2008
  4. Currency Currents - 12/02/2008
  5. Currency Currents - 12/01/2008