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Posts Tagged ‘when will Fed tighten’

The Best Sense on Cents: Strongly Recommended

Posted by Larry Doyle on May 24th, 2010 10:25 AM |

Thanks to a loyal Sense on Cents reader for sharing amazing insights and perspectives from some of the best and brightest minds in the world of global finance today.

Like who? Harvard professor Kenneth Rogoff, unparalleled investor Jeremy Grantham, outspoken hedge fund manager Cliff Asness, SEC chair Mary Schapiro (ok, one exception), the extremely private but on Wall Street the extraordinarily highly regarded investor Baupost’s Seth Klarman, internationally renowned Eurasia’s Ian Bremmer, the distinguished Van Hoisington, and noted short seller Jim Chanos.

Their views were put forth at the recently completed CFA Institute annual conference in Boston.¬†There is so much good material here that I beg readers to tag this post and refer to it often. Given the wealth of thoughtful opinion and analyses covering literally every angle of our global economic landscape, one would be hard pressed to digest and process this in one reading. Do yourself the favor, though, and revisit. The wisdom provided here is precious and not commonly found. (more…)

Dollar Carry Trade Remains in Vogue

Posted by Larry Doyle on December 4th, 2009 3:47 PM |

Today’s price action in the markets is very telling. What is it telling us? The dollar carry trade remains in vogue and technicals continue to dominate overall flows much more than fundamentals. Let’s navigate.

Recall that the weakness in the U.S. dollar has facilitated a large number of hedge funds, market speculators, and to a less extent investors to borrow dollars and buy a variety of risk based assets. What assets? Equities, a wide array of bonds, a basket of commodities, primarily gold. How are these sectors performing?

After an initial spike of 1-1.5% across the equity markets, these major market averages have retraced and are now effectively unchanged to slightly better on the day. Is that a sign of investors not believing in the details of the employment report? No, anything but. In fact, I believe the equity performance today is quite strong given the fact that the dollar has increased by 1.6%.

Bonds have traded in a very narrow range. Interest rates moved higher by approximately 12 basis points (.12%) and have sat there almost all day. The question that now comes back front and center is when the Fed will decide to raise rates. While most analysts had written off the possibility of an increase in rates prior to 2011, now analysts are projecting that the Fed may raise rates by mid-2010.

If rates do rise here, what does that do for our greenback? It will do better and it is doing just that today. As I referenced the U.S. Dollar Index has increased by 1.6%. (more…)






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