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US Stagnated, but that was Yesterday; Tomorrow's Outlook Brighter

April 30, 2014
The US economy all but stalled in Q1. The 0.1% annualized expansion was weaker than any quarter last year. However, it is not a harbinger of things to come. Rather, it is a distortion that is not about to be repeated.
There were two main forces at work. First, as anticipated by many economists, including the Federal Reserve, there was a corre…
US Stagnated, but that was Yesterday; Tomorrow's Outlook Brighter US Stagnated, but that was Yesterday; Tomorrow's Outlook Brighter Reviewed by Marc Chandler on April 30, 2014 Rating: 5
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Great Graphic : Ukrainian and Russia Equity Performance This Year

April 30, 2014
The US and EU announced new sanctions on Russia this week. This much chin-wagging about the ineffectiveness of the sanctions.

We suspect there is a misunderstanding of the goal of the sanctions and how they work. There is really little chance that these sanctions and threats of more will change Putin's course very much. 
A regional power Rus…
Great Graphic : Ukrainian and Russia Equity Performance This Year Great Graphic : Ukrainian and Russia Equity Performance This Year Reviewed by Marc Chandler on April 30, 2014 Rating: 5
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Euro Shakes, but Doesn't Break, Focus Turns to US

April 30, 2014
The euro recovered from a dip to three week lows near $1.3775 after the flash CPI was not as soft as feared after the disappointing German report yesterday. The 0.7% year-over-year increase compares to the 0.5% rise in March, which had spurred more talk of QE. The decline in energy prices is still being felt as the core rate was in line with ex…
Euro Shakes, but Doesn't Break, Focus Turns to US Euro Shakes, but Doesn't Break, Focus Turns to US Reviewed by Marc Chandler on April 30, 2014 Rating: 5
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Local vs Foreign Emerging Market Debt

April 29, 2014
(from my colleagues Dr. Win Thin and Ilan Solot)

In the current state of gradual and uneven recovery of EM assets, we favour a rotation from foreign to local currency fixed income instruments in many emerging markets, especially in countries where the interest rate cycles is peaking.  Here are a five reasons why:

(1) The risk in US treasury yields i…
Local vs Foreign Emerging Market Debt Local vs Foreign Emerging Market Debt Reviewed by Marc Chandler on April 29, 2014 Rating: 5
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ECB Squeezed and EBA Posts Stress Test Scenarios

April 29, 2014
The news stream is not quite what the ECB had hoped.  Money supply growth was weaker than expected, and credit extension to the price sector continued to contract.  EONIA is elevated, climbing almost 7 bp to near 40.

This deterred banks from buying the short-term reverse repos that the ECB issues to sterilize the past sovereign bond buying for 24 …
ECB Squeezed and EBA Posts Stress Test Scenarios ECB Squeezed and EBA Posts Stress Test Scenarios Reviewed by Marc Chandler on April 29, 2014 Rating: 5
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Great Graphic: GDP Per Employed Person

April 29, 2014
This Great Graphic is part of an interactive chart posted on Bruegel by Michele Peruzzi, Marco Antonielli, Silvia Carrieri and Carlos De Sousa.   It depicts the output per employed person, which is a similar, but different than GDP per capita.  It is a purer measure of productivity. 
The graph is not that surprising.  We know US output is higher n…
Great Graphic: GDP Per Employed Person Great Graphic: GDP Per Employed Person Reviewed by Marc Chandler on April 29, 2014 Rating: 5
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Much Noise, but Little FX Movement

April 29, 2014
The US dollar is a little softer against most of the major currencies, but despite the greater news stream, narrow trading ranges persist. The euro has been in about a 30 tick range and sterling a little more than 50 ticks. Tokyo markets were closed, and this may have helped keep the dollar in 20 tick range against the yen.
Perhaps the most imp…
Much Noise, but Little FX Movement Much Noise, but Little FX Movement Reviewed by Marc Chandler on April 29, 2014 Rating: 5
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TPP Update

April 28, 2014
President Obama's visit to Asia does not appear to have jump started the free trade talks under the rubric of the Trans-Pacific Partnership.  The US and Japan are not only the two largest countries negotiating, but unlikely the other countries, it is the only one with which the US does not already have a  free trade agreement.  
Both the US and…
TPP Update TPP Update Reviewed by Marc Chandler on April 28, 2014 Rating: 5
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Emerigng Markets: Preview of the Week Ahead

April 28, 2014
(from my colleagues Dr. Win Thin and Ilan Solot)

Korea reports March current account on Tuesday. It then reports March IP on Wednesday, expected to rise 3.7% y/y vs. 4.3% in February. April CPI comes out Thursday, expected to rise 1.5% y/y vs. 1.3% in March. We will also get our first glimpse at global trade in April, as Korea reports its data T…
Emerigng Markets: Preview of the Week Ahead Emerigng Markets: Preview of the Week Ahead Reviewed by Marc Chandler on April 28, 2014 Rating: 5
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Great Graphic: Decline in Peripheral Yields; What is Real?

April 28, 2014
This Great Graphic, composed on Bloomberg, shows 10-year European peripheral yields since the beginning of last year. Italy is in white. Portugal is depicted by the yellow line and Spain, the green line. Greece is the pink line and is the outer scale.  
While yields have tended lower since the middle of last year, Portugal's convergence tow…
Great Graphic: Decline in Peripheral Yields; What is Real? Great Graphic: Decline in Peripheral Yields; What is Real? Reviewed by Marc Chandler on April 28, 2014 Rating: 5
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Dollar Heavy

April 28, 2014
The US dollar is heavy to start the week. Its gains are concentrated against the European currencies, whereas the yen weakness is a notable exception. Sterling has been lifted to new multi-year highs, with the help of more M&A reports (Pfizer and Astra Zeneca) and ahead of Q1 GDP data tomorrow that is expected to show a modest acceleration in …
Dollar Heavy Dollar Heavy Reviewed by Marc Chandler on April 28, 2014 Rating: 5
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US and EMU Dominate the Agenda in the Week Ahead

April 27, 2014
The week ahead is eventful. The key issue is whether the events will be sufficient to either significantly change our information set, or inject fresh volatility into the foreign exchange market. While market participants face headline risk around the events, we suspect that, at the end of next week, the investment climate is unlikely to change.
…
US and EMU Dominate the Agenda in the Week Ahead US and EMU Dominate the Agenda in the Week Ahead Reviewed by Marc Chandler on April 27, 2014 Rating: 5
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Cool Video: Robots that Milk Cows--The Future is Now

April 27, 2014
This Cool Video is from National Geographic.  It shows how technology has been applied to milking cows.  It is not only labor saving, but the cows appear healthier and live longer.  Ironically, it works in part because the cows themselves can decide when they want to be milked as opposed to the farmers schedule.  I want to write more about the bro…
Cool Video: Robots that Milk Cows--The Future is Now Cool Video: Robots that Milk Cows--The Future is Now Reviewed by Marc Chandler on April 27, 2014 Rating: 5
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Cool Video: How Coffee Affects Your Brain

April 26, 2014
This Cool Video was posted by Piled Higher and Deeper (PHD comics).  If there is a socially acceptable addiction, it is coffee.  Many businesses provide coffee free to their employees, not out of generosity, but a sense that it boost productivity, especially given the WEIRD (as in people from Western, Educated, Industrialized, Rich Democracies) te…
Cool Video: How Coffee Affects Your Brain Cool Video: How Coffee Affects Your Brain Reviewed by Marc Chandler on April 26, 2014 Rating: 5
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Currency Positioning and Technical Outlook: Is the Status Quo Dollar Negative? Currency Positioning and Technical Outlook: Is the Status Quo Dollar Negative? Reviewed by Marc Chandler on April 26, 2014 Rating: 5
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Great Graphic: Euro Fuel

April 25, 2014
This Great Graphic was posted on the Wall Street Journal's MoneyBeat by Neelabh Chaturvedi, who got it from Morgan Stanley. It shows how the euro movement (yellow line) has been tracking portfolio flows in the euro area, excluding Germany (blue line).  
This is another way to illustrate how flows into the euro periphery, including Spain and It…
Great Graphic: Euro Fuel Great Graphic: Euro Fuel Reviewed by Marc Chandler on April 25, 2014 Rating: 5
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Four Things to Know Before the Weekend

April 25, 2014
Extremely narrow trading ranges have prevailed in the foreign exchange market as what has been an extremely quiet week draws to a close. The biggest mover of the week has been the Australian dollar, which has lost about 0.6% against the US dollar as sentiment reversed following the softer than expected Q1 inflation reading. The other dollar-blo…
Four Things to Know Before the Weekend Four Things to Know Before the Weekend Reviewed by Marc Chandler on April 25, 2014 Rating: 5
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Denmark Abandons Negative Rate Experiment to Support Krone

April 24, 2014
Denmark has surprised many today by abandoning its two year old experiment in negative deposit rates. Today it hiked its key rate to 5 bp from -10 bp. It has had negative since July 2012.
Part of the reason it is a surprise is that the ECB itself has been touting the possibility that it could adopt negative interest rates or launch an asset…
Denmark Abandons Negative Rate Experiment to Support Krone Denmark Abandons Negative Rate Experiment to Support Krone Reviewed by Marc Chandler on April 24, 2014 Rating: 5
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Emerging Markets: What has Changed

April 24, 2014
(from my colleagues, Dr Win Thin and Ilan Solot)

1) Talks in Geneva have not yielded a de-escalation of the Ukraine crisis 2) Net foreign equity inflows into Korea for the year have turned positive just this week 3) The Chinese government has moved forward on more SOE reforms 4) Colombia bought 80% more dollars than usual in its daily spot market…
Emerging Markets: What has Changed Emerging Markets: What has Changed Reviewed by Marc Chandler on April 24, 2014 Rating: 5
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The Dollar Goes Nowhere Quickly

April 24, 2014
The US dollar is little changed, though with a slightly heavier tone against most of the majors and emerging market currencies. Weekly initial jobless claims and durable goods orders today are expected to be consistent with the expanding US economy, but not sufficient to generate much of a change in the statement by the FOMC at the conclusion of …
The Dollar Goes Nowhere Quickly The Dollar Goes Nowhere Quickly Reviewed by Marc Chandler on April 24, 2014 Rating: 5
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