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Fed Dilema Resolved; Treasury's Just Beginning

May 26, 2006
Prior the US April jobs data, the Fed funds futures had been straddling the fence, with a roughly 50/50 chance of a hike/pause. The weaker than expected job growth resolves the dilemma and shifts the odds convincingly toward a pause. The Federal Reserve will signal to the market next week that it is prepared to pause, barring significant surprises…
Fed Dilema Resolved; Treasury's Just Beginning Fed Dilema Resolved; Treasury's Just Beginning Reviewed by magonomics on May 26, 2006 Rating: 5
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Inflation Pause at the Fed's Pause

May 19, 2006
Over the past six months, we have warned that the market has consistently under-estimated the magnitude and duration of the Federal Reserve’s monetary tightening cycle. Unwaveringly we forecast Fed funds to be at least at 5.5% by the end of this year and we recognized upside risks to our scenario. We had thought that the Fed would pause in June an…
Inflation Pause at the Fed's Pause Inflation Pause at the Fed's Pause Reviewed by magonomics on May 19, 2006 Rating: 5
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Rising Sun or Just Another Day?

April 07, 2006
Japan is emerging from an economic period that is largely comparable with the US Great Depression. The Bank of Japan has signaled an end to its quantitative easing strategy under which it provided something on the magnitude of 5-6 times the amount of liquidity Japanese banks required. It has slowly begun reducing that excess liquidity.
The gradual …
Rising Sun or Just Another Day? Rising Sun or Just Another Day? Reviewed by magonomics on April 07, 2006 Rating: 5
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Capital Thoughts as Q1 Winds Down

March 24, 2006
The first quarter is winding down. For most investors it has been a good quarter. The performance of the US stock indices have risen more than they did all last year. Major bourses in Continental European bourses, like Germany, France, and Italy rose 10% thus far. The UK’s FTSE posted a respectable 7% gain. Japan’s Nikkei was rallied nearly 40% in…
Capital Thoughts as Q1 Winds Down Capital Thoughts as Q1 Winds Down Reviewed by magonomics on March 24, 2006 Rating: 5
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Don't Discount the Dollar

March 17, 2006
The US dollar has fallen about 2.25% against the euro and the yen over the past week, its poorest weekly performance in a couple of months. Every one has their own pet theory to explain the move, but the risk is that the move has been exaggerated and that a more stable dollar tone will emerge in the coming days.
Many explanations of the dollar’s sl…
Don't Discount the Dollar Don't Discount the Dollar Reviewed by magonomics on March 17, 2006 Rating: 5
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The Dollar and Emerging Markets - Is the Rally Over?

March 10, 2006
As the first quarter winds down, the sharp rise in G7 interest rates, especially in the US and Europe, and expectations of future tightening of monetary policy, have undermined equity markets and sparked a violent sell-off in many emerging markets.
There are two key concerns for investors. The first relates to the outlook for the US dollar. Can the…
The Dollar and Emerging Markets - Is the Rally Over? The Dollar and Emerging Markets - Is the Rally Over? Reviewed by magonomics on March 10, 2006 Rating: 5
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New Dollar Update

February 28, 2006
The bullish dollar case I argued remains intact as February draws to a close. The bull case was based on a conviction of the underlying resilience of the US economy, which in turn would prompt more Fed tightening that the market appreciated. Widening interest rate differentials would lend support to the greenback.
At the end of last year, the marke…
New Dollar Update New Dollar Update Reviewed by magonomics on February 28, 2006 Rating: 5
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Great Another G8

February 10, 2006
Hosted by Russia, the leading industrialized nations will meet this weekend. There is no reason to expect new initiatives that would impact the global capital markets and especially the foreign exchange market. Energy and Iran appear more salient for policy makers than the markets per se.
There was trial balloon floated by the US for the IMF to tak…
Great Another G8 Great  Another G8 Reviewed by magonomics on February 10, 2006 Rating: 5
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Dollar Bull Case Updated

February 03, 2006
Last week we outlined a bullish case for the US dollar. It was predicated on US economic data confirming that the soft Q4 05 GDP was a fluke and that the economy was off to a sufficiently robust start of the year to absorb more the diminishing slack in the economy. This in turn would compel the market to re-think the likely trajectory of Fed tight…
Dollar Bull Case Updated Dollar Bull Case Updated Reviewed by magonomics on February 03, 2006 Rating: 5
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