I have been granted a junior commission by The Fly and iBC High Command has me seconded to the Peanut Gallery as another contributor. I thank Le Fly et Compagnie for the opportunity. I am grateful for the opportunity and hope I never let the site and crew down, lest I hear the faint transponder signal of a suborbital laser cannon approaching overhead.
AND NOW for my first chart and post. For me, from my weekly price bar, SFT trading (as in non-HFT, not water cooled servers in a datacenter) wheelhouse, the following notion has been among one of THE CHARTS to watch.
YEN $USDJPY $FXY $6J_F the UN-Renmenbi
I have been witness to and in disbelief of two monster ramps in this pair and I begin to wonder if finally the BOJ bullets are all gone or will Kuroda and crew relent and yet again push the button.
I read about the “Canary in the Coal Mine” South Korea stats from this morning’s noise/news and it made me wonder about China. Regarding the Middle Kingdom, post 5 year plenum, a giant economy, run by third generation billionaire cadres, making a turn from ghost city construction to a souped up baby-stroller, baby formula, soccer-camp, keeping-up-the-Wangs economy, with blue water naval capacity is a slow supertanker turn. It’s gonna happen but there will casualties. Caught in the wake of this turn is the former empire of the Rising Sun, with increasing senescence, xenophobia, aging shinjuku “dimes” looking to extend their adolescence and reproduction, and all of it eking out relevance with a bloated balance sheet, replete with JGBs courtesy of the dutiful masochistic salaryman/savers. Throw in the salutary effect of cheaper Euro on heavy industry and other products beating out Japanese exports and you have something to watch.
WTF do we care? Ok, you know about the carry trade. You know about the geopolitical order of interest rates. You know that every currency pair is also joined at the hip with rate policy. And that leads straight back to US, as in U.S.
Take a good look at this. It’s a weekly chart, just 2 averages and 2 indicators below. In two recent mega moves, where price moved far from the 50 week, the “trendiness/age” of the move, ADX, showed how price brushed aside RSI’s “overdone””too much””slow down” and kept going, courtesy of BOJ.
Here we are, prices are at the averages, ADX and RSI is tepid. We are wait and WATCH mode from a weekly perspective.
I am inclined to think things here in ‘Merica are somewhat more robust BUT I see the cracks already in VC land and an eager Private Equity sector ready to cash out (free at last, free at last, thank God almighty liquid at last shall be their refrain) which leads me to revisiting the stress we abandoned in September about Janet.
RE: Janet
Will she or won’t she? (The same question we asked ourselves in high school, or middle school, for some of you more criminal precocious types) but with interest rates. I am inclined to say no. “But it has been so long and we have waited for so long.”
If Mariner Eccles, a conservative, successful former businessman who helped build the Hoover Dam, who pissed of Keynes at Bretton Woods, and a fervent laissez faire guy, gave in as Fed Chair and got in touch with his inner Bernie Sanders to deal with the Great Depression, then I hold out no serious hope in today’s age that the Fed will hike. BUT could happen. BUT really it might not matter IF other Central Banks decide to keep on doing what they have been doing.
All you have to do is not run if everyone else is going backwards. You could almost stand still. And there it is.
I wait for signs for ramp-up or break down over the next few weeks in this pair. I wait for the BOJ or stand pat. As you see, this kind of thing can then play out for MONTHS.
More thoughts later on a variety of subjects.
I thank the honorable Fly and the iBC high command for being posted at the Peanut Gallery encampment. That is all.
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welcome
Thank you Fly, I am honored to be here.