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Cool Video: Squawk Box: Near-Term Bullish Euro, Skeptical of ECB This Week Cool Video: Squawk Box: Near-Term Bullish Euro, Skeptical of ECB This Week Reviewed by Marc Chandler on April 30, 2013 Rating: 5
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Letta's Italy?

April 30, 2013
The first left-right coalition in Italy since 1946 has survived its first confidence motion in both chambers. As difficult as it may have been to break the political logjam, the hard work lies ahead for Prime Minister Letta.  
A new government often has a honeymoon period.  There are two tells that Letta's honeymoon will be short-lived.  Firs…
Letta's Italy? Letta's Italy? Reviewed by Marc Chandler on April 30, 2013 Rating: 5
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Great Graphic: Euro Area and US Consumer Prices

April 30, 2013
There is much talk of an ECB rate cut on Thursday. Many economists have forecast a cut after a disappointing series of German data last week. Even if the German economy did not contract in Q1 after contracting in Q4, it is off to a poor start in Q2. 
The case for an ECB rate cut, which we think the odds are greater for a June move than this week…
Great Graphic: Euro Area and US Consumer Prices Great Graphic: Euro Area and US Consumer Prices Reviewed by Marc Chandler on April 30, 2013 Rating: 5
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FX: Fire but No Light

April 30, 2013
The US dollar is little changed in thin month end activity in Europe, ahead of tomorrow's May Day holiday and the ECB meeting on Thursday. The broader capital markets are firm. The MSCI Asia Pacific Index rose nearly 1% to finish April at its best level in nearly 5-years. The Nikkei slipped by almost 0.2%, while the Topix gained 0.3% to fin…
FX: Fire but No Light FX: Fire but No Light Reviewed by Marc Chandler on April 30, 2013 Rating: 5
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Great Graphic: The Evolution of the China's Renminbi

April 30, 2013
These Great Graphics comes from a slide show put together by SWIFT, the Society for World Wide Interbank Financial Telecommunications, which is the messaging system that provides indispensable linkage in the foreign exchange trading..
The first chart shows the increased use of the China\s renminibi or yuan for payments.  It documents what is alre…
Great Graphic: The Evolution of the China's Renminbi Great Graphic: The Evolution of the China's Renminbi Reviewed by Marc Chandler on April 30, 2013 Rating: 5
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This Week's Emerging Market Highlights

April 29, 2013
(from my colleague, Dr. Win Thin)
China official manufacturing PMI will be reported Wednesday, and is expected to drop to 50.7 from 50.9. HSBC final manufacturing PMI will be reported Thursday, and is expected at 50.5 vs. flash reading of 50.6 and 51.6 final in March. We continue to believe that China growth will stabilize around the 8% level, bu…
This Week's Emerging Market Highlights This Week's Emerging Market Highlights Reviewed by Marc Chandler on April 29, 2013 Rating: 5
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European Depositors Don't Take Fright from Cyprus

April 29, 2013
At the end of last week, the ECB reported that bailing in of Cypriot depositors did not scare other euro zone depositors. In fact, the ECB noted that deposits rose in March across the region, including in countries that have been suggested as potential candidates for the next aid package, including Slovenia, Malta, and Luxembourg.
Cyprus was the …
European Depositors Don't Take Fright from Cyprus European Depositors Don't Take Fright from Cyprus Reviewed by Marc Chandler on April 29, 2013 Rating: 5
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Dollar Softens at Start of Eventful Week

April 29, 2013
The US dollar is trading heavily against the major and most emerging market currencies.  Even though Tokyo markets were closed, the dollar extended its pre-weekend losses against yen in Asian activity before steadying in the European morning.  The euro and peripheral debt markets have reacted positively to the new Italian government and the appare…
Dollar Softens at Start of Eventful Week Dollar Softens at Start of Eventful Week Reviewed by Marc Chandler on April 29, 2013 Rating: 5
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Weekend Developments: Signal and Noise

April 28, 2013
The weekend has produced five talking points. The leaked French Socialist draft document that was critical of Germany (and the UK) and the Bundesbank's letter to the German Constitutional Court objecting to the ECB's Outright Market Transactions do not really reveal anything new and we do not expect them to influence trading in the new w…
Weekend Developments: Signal and Noise Weekend Developments: Signal and Noise Reviewed by Marc Chandler on April 28, 2013 Rating: 5
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Great Graphic: Feminization of Consumption

April 27, 2013
This Great Graphic comes from a post by An Hodgson on Euromonitor International.  It depicts the growth in real disposable annual income per capita for three high income countries by gender in the 2007-2012 period. 
The key take away is that women's disposable income is rising in absolute terms and relative to men's throughout the high in…
Great Graphic: Feminization of Consumption Great Graphic: Feminization of Consumption Reviewed by Marc Chandler on April 27, 2013 Rating: 5
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Currency Positioning and Technical Outlook: Fundamentals Needed to Clarify Charts Currency Positioning and Technical Outlook: Fundamentals Needed to Clarify Charts Reviewed by Marc Chandler on April 27, 2013 Rating: 5
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How is China Faring?

April 26, 2013
(from my colleague Dr. Win Thin)
Despite the weaker economic data in China, the PBOC continues to guide USD/CNY lower. Earlier today, it was fixed at another cycle low of 6.2208. At this point, we do not think that China has embarked on another significant appreciation cycle for the yuan, as we saw back in 2005-2008 and 2010-2011. Our base case …
How is China Faring? How is China Faring? Reviewed by Marc Chandler on April 26, 2013 Rating: 5
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Spain Update: Running from the Bulls?

April 26, 2013
There have been three recent developments in Spain: the new record high unemployment, the earnings reports of several large banks, and the government's new fiscal forecasts and strategy.  
Spanish 10-year yields continued to trend lower over the course of the week.  The roughly 35 bp decline in yield brings the drop since early February to a…
Spain Update: Running from the Bulls? Spain Update: Running from the Bulls? Reviewed by Marc Chandler on April 26, 2013 Rating: 5
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Calm FX, Yen Strengthens

April 26, 2013
The US dollar is little changed against most of the major currencies in choppy and directionless activity. The main exception is the Japanese yen which has strengthened across the board, ahead of the Golden Week holidays, which will close the Tokyo markets Monday and Friday next week. The dollar fell to new lows for the week near JPY98.20. It h…
Calm FX, Yen Strengthens Calm FX, Yen Strengthens Reviewed by Marc Chandler on April 26, 2013 Rating: 5
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Thoughts on the FX Price Action: Is Today a Failure ?

April 25, 2013
The price action in the foreign exchange market is disappointing. Early on in North America the euro approached the lower end of our initial target of $1.3000-30, but then has come off hard to record new session lows. The selling pressure, which peaked as Europe finishing up, ran into some bids ahead of $1.2980. A close below $1.3020 would fur…
Thoughts on the FX Price Action: Is Today a Failure ? Thoughts on the FX Price Action: Is Today a Failure ? Reviewed by Marc Chandler on April 25, 2013 Rating: 5
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Pain Trades: A Discussion of Two Troikas

April 25, 2013
In an unusual occurrence, both the Federal Reserve and the European Central Bank will hold policy making meetings next week.  Most recently a consensus has emerged in favor of an ECB refi rate cut next week. In the US, spurred by a reading of the FOMC minutes, many observers have been talking about the tapering off of the Fed's long-term ass…
Pain Trades: A Discussion of Two Troikas Pain Trades: A Discussion of Two Troikas Reviewed by Marc Chandler on April 25, 2013 Rating: 5
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Dollar Heavy, Sterling Leads Charge

April 25, 2013
A shift in the news stream, with more disappointing US economic news and some positive developments in Europe seemed to have begun weighing on the dollar and that shift has been solidified today. Although the dollar extended yesterday's pullback in Asia, it was the stronger than expected UK GDP pushed it through support.  
The UK is the firs…
Dollar Heavy, Sterling Leads Charge Dollar Heavy, Sterling Leads Charge Reviewed by Marc Chandler on April 25, 2013 Rating: 5
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Two Short-term FX Ideas: Euro-Cad and Aussie

April 24, 2013
It has been a relatively quiet session in the foreign exchange market. The euro has been largely confined to a 20-tick range on both sides of the $1.30 level. However, even this seems impressive, given that nearly all the major houses now anticipate the ECB to deliver a 25 bp cut to the refi rate next week. 
Due to the widespread use of industr…
Two Short-term FX Ideas: Euro-Cad and Aussie Two Short-term FX Ideas: Euro-Cad and Aussie Reviewed by Marc Chandler on April 24, 2013 Rating: 5
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What Next For Italy?

April 24, 2013
Italy is getting closer to putting together a grand coalition government. This has always seemed to us the most likely scenario, but the route to it has been circuitously torturous. Three considerations have led to President Napolitano granting the prerogative of forming a government to the deputy leader of the center-left, Letta.  
First, the u…
What Next For Italy? What Next For Italy? Reviewed by Marc Chandler on April 24, 2013 Rating: 5
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Currencies Firm Despite Market Stricken with Rate Cut Fever

April 24, 2013
The economic reports and official comments have heightened expectations for rate cuts by the ECB, Reserve Bank of Australia, and possibly the Norges Bank. However, the respective currencies have recovered from the initial weakness. Their resilience may be an important tell that the US dollar is set to trade heavier.
Following yesterday's…
Currencies Firm Despite Market Stricken with Rate Cut Fever Currencies Firm Despite Market Stricken with Rate Cut Fever Reviewed by Marc Chandler on April 24, 2013 Rating: 5
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Great Graphic: Japanese Uridashi Issuance

April 23, 2013
(This Great Graphic and the following analysis is provided by my colleague, Dr. Win Thin.  He focuses on Uridashi bond issuance in Japan, which are bonds sold directly to households. The data comes from Bloomberg and the Japan's Ministry of Finance.)

With all the talk about Japanese money going into EM, we thought it would be interesting to lo…
Great Graphic: Japanese Uridashi Issuance Great Graphic: Japanese Uridashi Issuance Reviewed by Marc Chandler on April 23, 2013 Rating: 5
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Great Graphic: Foreign Ownership of US Assets

April 23, 2013
This Great Graphic focuses on elements of the US net international investment position. It was posted on Business Insider by Joe Wisenthal, who got it  from Slate's Matt Yglesias who spotted in at the Bureau of Economic Analysis.  
It is interesting to note that although foreign investors own more American assets than American own foreign asse…
Great Graphic: Foreign Ownership of US Assets Great Graphic: Foreign Ownership of US Assets Reviewed by Marc Chandler on April 23, 2013 Rating: 5
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Narrowing Spreads Fail to Lift Euro, Dollar Holds Below JPY100

April 23, 2013
There are two main developments today.  The first is the disappointing flash PMI readings from China and the euro zone.  The second is a continued rally in European bonds in both absolute terms and relative to Germany.  The reduced risk premium in Europe has not coincided with gains in the euro, but to the contrary, the euro has fallen to two wee…
Narrowing Spreads Fail to Lift Euro, Dollar Holds Below JPY100 Narrowing Spreads Fail to Lift Euro, Dollar Holds Below JPY100 Reviewed by Marc Chandler on April 23, 2013 Rating: 5
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Cool Video: A Review of Per Capita GDP Performance

April 23, 2013
This Cool Video is from the Economist.  In a little less than 90 second, it presents the different growth performance of high, medium and low income countries on a per capita basis.   So far in the new century, low income countries are seeing better per capita growth than the high income countries.  This was true before the crisis and persists no…
Cool Video: A Review of Per Capita GDP Performance Cool Video: A Review of Per Capita GDP Performance Reviewed by Marc Chandler on April 23, 2013 Rating: 5
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Japan's Largest Life Insurer Plans and other Flows

April 22, 2013
Nippon Life, Japan's largest lifer insurer, provided some broad details of its investment strategy in the new fiscal year. Meiji Yasuda Life Insurance and Sumitomo Life Insurance will hold a briefing Wednesday. The market is arguably paying more attention to the plans of the insurance companies, one of the institutional investors in Japan (a…
Japan's Largest Life Insurer Plans and other Flows Japan's Largest Life Insurer Plans and other Flows Reviewed by Marc Chandler on April 22, 2013 Rating: 5
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Contours of the Investment Climate

April 22, 2013
The foreign exchange market has begun the new week quietly, but the global bonds and stocks are firm, while gold and oil continue to recover from their recent dramatic slide. The dollar has traded in narrow ranges just below JPY100.  The euro briefly slipped though the pre-weekend low in early European turnover, but is little changed as North Amer…
Contours of the Investment Climate Contours of the Investment Climate Reviewed by Marc Chandler on April 22, 2013 Rating: 5
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Great Graphic: ETF Flows: Into US and Japan, Out from Europe and Emerging Markets Great Graphic: ETF Flows: Into US and Japan, Out from Europe and Emerging Markets Reviewed by Marc Chandler on April 22, 2013 Rating: 5
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Five Shocks Push Investors Off Balance

April 21, 2013
Archimedes said that if he had a lever long enough and a place to put his feet, he could move the world. Investors have access to incredible pools of capital and can lever immensely. They thought they had some place to put their feet.

The foothold was made of several planks. The unorthodox monetary experiment and large deficit were inflationar…
Five Shocks Push Investors Off Balance Five Shocks Push Investors Off Balance Reviewed by Marc Chandler on April 21, 2013 Rating: 5
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Cool Video: Why There are Deserts? Explained in 2 minutes 20 seconds Cool Video: Why There are Deserts? Explained in 2 minutes 20 seconds Reviewed by Marc Chandler on April 20, 2013 Rating: 5
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Currency Positioning and Technical Outlook: Mostly Cloudy, Chance of Rain

April 20, 2013
There are times that we find the technical picture for the currencies to be clearer than the macro economic fundamentals.  This is not one of those times.  A key challenge for traders is to determine whether it is a trending market or a sideways market .  The problem is that presently it is simply not clear.   
We begin with the Dollar Index.  Ba…
Currency Positioning and Technical Outlook: Mostly Cloudy, Chance of Rain Currency Positioning and Technical Outlook: Mostly Cloudy, Chance of Rain Reviewed by Marc Chandler on April 20, 2013 Rating: 5
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Is Sweden Concerned about the Krona?

April 19, 2013
The Swedish krona is somewhat firmer today but it is the biggest loser among the major currencies this week.  It has lost about 2.3% against the dollar and 2.1% against the euro.  According to Bloomberg, this is the single biggest weekly decline of the krona against the euro in about a year and a half.

There were two factors that have weighed on …
Is Sweden Concerned about the Krona? Is Sweden Concerned about the Krona? Reviewed by Marc Chandler on April 19, 2013 Rating: 5
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Great Graphic: VIX and the Yen

April 19, 2013
Following the post yesterday that showed that the yen's inverse correlation with the S&P had increased to its highest level in a year, some readers pointed out a piece in the Financial Times that argued the opposite.   The author of FT piece looks at the correlation between the yen and the VIX, rather than the S&P itself.  
This Great …
Great Graphic: VIX and the Yen Great Graphic: VIX and the Yen Reviewed by Marc Chandler on April 19, 2013 Rating: 5
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Yen Drops, Lifts Other Currencies

April 19, 2013
The weakness of the yen is the main development in the foreign exchange market. The dollar resurfaced about JPY99 for the first time this week. The ostensibly driver is the realization that, as we anticipated, Japan's aggressive monetary stance has not sparked much of a reaction from the G20. The leaked draft statement appears to give it a …
Yen Drops, Lifts Other Currencies Yen Drops, Lifts Other Currencies Reviewed by Marc Chandler on April 19, 2013 Rating: 5
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Emerging Markets: What Has Changed?

April 19, 2013
(from my colleague Ilan Solot)
This is what has changed in the EM space, in our view: 1) Brazil is hiking, but reluctantly 2) Turkey is cutting, and resolutely 3) China will further relax the FX trading band 4) Philippines will further relax FX trading limits 5) Korea announces a big stimulus package 6) Colombia announces a medium stimulus packa…
Emerging Markets: What Has Changed? Emerging Markets: What Has Changed? Reviewed by Marc Chandler on April 19, 2013 Rating: 5
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Great Graphic: Euro and Yen Correlation with S&P 500

April 18, 2013
This Great Graphic was created on Bloomberg. The top chart is a graph of the rolling 60-day correlation between the euro and the S&P 500.  The bottom chart does the same for the yen.  As investors, we are most interested in the correlation of returns, so the study is done on the basis of the percent change.
Many observers claim there has been …
Great Graphic: Euro and Yen Correlation with S&P 500 Great Graphic: Euro and Yen Correlation with S&P 500 Reviewed by Marc Chandler on April 18, 2013 Rating: 5
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Not to be Bitten by Same Dog Twice: Slovenia Update

April 18, 2013
Since the Greek private sector debt restructuring, many understood that Cyprus was vulnerable. The timing and policy response is that took most by surprise.   The experience spurred investors to look for the next potential candidate for aid and many have settled on Slovenia.  
The general story is now well appreciated.  It is a small economy.  La…
Not to be Bitten by Same Dog Twice: Slovenia Update Not to be Bitten by Same Dog Twice: Slovenia Update Reviewed by Marc Chandler on April 18, 2013 Rating: 5
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Markets Stabilize, Japanese Continue to Sell Foreign Bonds

April 18, 2013
The global capital markets have stabilized after yesterday's moves.  The major foreign currencies and most of the emerging market currencies are consolidating yesterday's moves.   Asian equities followed the US lower, with the MSCI Asia-Pacific Index off almost 1.25%, but European bourses are higher, led by technology and health care secto…
Markets Stabilize, Japanese Continue to Sell Foreign Bonds Markets Stabilize, Japanese Continue to Sell Foreign Bonds Reviewed by Marc Chandler on April 18, 2013 Rating: 5
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Great Graphic: Another Look at the EMU Transmission Mechanism

April 17, 2013
This Great Graphic comes from the just released Global Financial Stability Report, with a hat tip Fabrizio Goria, a reporter for Eurointelligence, who posted it on twitter.  
The left hand chart shows the changes the changes in interest rates on new bank loans between December 2010 and January 2013.  It illustrates the divergence between the perip…
Great Graphic: Another Look at the EMU Transmission Mechanism Great Graphic: Another Look at the EMU Transmission Mechanism Reviewed by Marc Chandler on April 17, 2013 Rating: 5
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Japanese Investment and A Couple of Caveats

April 17, 2013
There is keen interest in how Japanese investors are going to respond to the new, more aggressive, Bank of Japan monetary policy. Although disappointed that last week's Ministry of Finance data showed that Japanese investors were not only net sellers of foreign bonds, but that they sold the most in a year, market participants have not given u…
Japanese Investment and A Couple of Caveats Japanese Investment and A Couple of Caveats Reviewed by Marc Chandler on April 17, 2013 Rating: 5
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Fragile Tone Continues

April 17, 2013
The global capital markets that stabilized yesterday, still seem fragile today.  The yen was sold in Asia for the second consecutive session and gold also continued to post corrective upticks, but there are signs that the animal spirits have not been rekindled.  Japanese government bond yields are higher, ahead of tomorrow's 20-year bond auct…
Fragile Tone Continues Fragile Tone Continues Reviewed by Marc Chandler on April 17, 2013 Rating: 5
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Cool Video: Squawk Box--Gold and Yen Cool Video: Squawk Box--Gold and Yen Reviewed by Marc Chandler on April 16, 2013 Rating: 5
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Great Graphic: Gold and Yen

April 16, 2013
This Great Graphic is meant provide talking points about the yen and gold. The charts here were created on Bloomberg. The first shows the price of gold in yen terms.   Gold hit a record high in yen terms in the middle of last week. 
The following day, three pieces of data hit investors.  The first was that rather than buy foreign bonds, as many…
Great Graphic: Gold and Yen Great Graphic: Gold and Yen Reviewed by Marc Chandler on April 16, 2013 Rating: 5
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Market Finds Fragile Balance

April 16, 2013
The financial markets have found semblance of order.  The US dollar is mostly softer, but as we have argued in recent days, the main axis in the capital markets is the yen.  The yen was sold in Tokyo and JGB yields fell back.  The dollar has dipped below JPY96.00 in thin pre-Asian trading following the tragedy in Boston, the recovered to around J…
Market Finds Fragile Balance Market Finds Fragile Balance Reviewed by Marc Chandler on April 16, 2013 Rating: 5
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This Week's Emerging Markets Highlights

April 15, 2013
 (from my  colleague, Dr. Win Thin)

Given that the weak China Q1 GDP report has led to renewed concerns about growth there, the HSBC flash PMI reading that comes out this Saturday has taken on greater importance. HSBC measure rose to 51.6 in March from 50.4 in February, but the official PMI rose to only 50.9 from 50.1 in February. This will be t…
This Week's Emerging Markets Highlights This Week's Emerging Markets Highlights Reviewed by Marc Chandler on April 15, 2013 Rating: 5
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Great Graphic: Household Debt/Income

April 15, 2013
This Great Graphic was distributed on twitter by Kate Mackenzie (@kmac)and she credits Ben Rabidoux at The Economic Analyst blog, who in turn, attributes the calculations to JP Morgan.  
It shows the debt/income ratios for households in a select number of countries. As we have noted,  Canada's has the dubious honor of the not just being at the…
Great Graphic: Household Debt/Income Great Graphic: Household Debt/Income Reviewed by Marc Chandler on April 15, 2013 Rating: 5
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Macro View

April 15, 2013
The new week has begun off like the last week ended.  The yen and the dollar are firm against the major and emerging market currencies.  The sell-off in the precious metals continues.  Japanese bond yields rose and the yield curve steepened.  The 10-year yield spread between the US and Japan continues to narrow and now near 107 bp is the lowest si…
Macro View Macro View Reviewed by Marc Chandler on April 15, 2013 Rating: 5
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Great Graphic: Non-Performing Loans in the EU

April 15, 2013
This Great Graphic comes from a post on Vox by Nadege Jassaud and Heiko Hesse. It compares the non-performing loans as a percentage of total EU loans for a select number of countries. The read line is was the average NPL in December 2007 and the blue bar is the average at the end of H1 12.

Clearly, most countries' banks have experienced an …
Great Graphic: Non-Performing Loans in the EU Great Graphic: Non-Performing Loans in the EU Reviewed by Marc Chandler on April 15, 2013 Rating: 5
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Two Weekend Developments

April 14, 2013
There have been two developments over the weekend that may impact trading when the markets reopen on April 15 in Asia. Technically, they both took place on Friday, but after many markets were closed.  
We begin with the largest drop in gold prices in two months. The expansion of central bank balance sheets was supposed to lead to the debasement o…
Two Weekend Developments Two Weekend Developments Reviewed by Marc Chandler on April 14, 2013 Rating: 5
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Great Graphic: Bank Holdings of Sovereign Debt

April 14, 2013
This Great Graphic comes the the IMF's latest World Economic Outlook. For a selected group of countries, it shows the bank holdings of government debt in Q1 2006 (pre-crisis) and Q3 2012 as a percentage of overall bank assets.

There are several countries included where sovereign holdings in Q3 12 are a smaller part of bank assets than in Q1 …
Great Graphic: Bank Holdings of Sovereign Debt Great Graphic: Bank Holdings of Sovereign Debt Reviewed by Marc Chandler on April 14, 2013 Rating: 5
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Cool Video: Meet Our Microbiome--the Other 99%

April 13, 2013
This Cool Video is from the PBS Digital Studios, (with a tip of the hat to Maria Popova from Ex.Plore for spotting it).



The discovery of the microbiome is simply mind-blowing. Over time, it will dramatically change the way we think of illness and therefore medicine. We will have to re-think fundamental concepts about life and its evolution. It …
Cool Video: Meet Our Microbiome--the Other 99% Cool Video: Meet Our Microbiome--the Other 99% Reviewed by Marc Chandler on April 13, 2013 Rating: 5
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Currency Positioning and Technical Outlook: It is not about the Dollar

April 13, 2013
The yen has replaced the dollar as the key fulcrum in the foreign exchange market presently.  The yen bears have been frustrated by a series of developments.  They were unpleasantly surprised by news that the Japanese themselves were large sellers, not buyers, of foreign bonds in the first full week of the new fiscal year.   In addition, more ofte…
Currency Positioning and Technical Outlook: It is not about the Dollar Currency Positioning and Technical Outlook: It is not about the Dollar Reviewed by Marc Chandler on April 13, 2013 Rating: 5
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