It Sounds Good – Usually Speaking.

Thursday was another day that left everyone wondering what exactly they were supposed to be doing at work.

I don’t even know why the Western world bothers opening markets in the week between Christmas and New Year’s day. Especially considering cryptocurrencies and FX are always available for those who need to sate their trading appetite.

Stocks did manage to rise in the U.S. with the Dow closing at a new record. If the Dow holds on to a weekly gain, this will be the first time since 1954 that it’s risen in each of the last six weeks of the year:

The dollar was down for a second day (and for the seventh day in nine). It’s sitting at a one-month nadir.

This is shaping up to be the worst year for the dollar since 2004. Which means this is a great time to remind you about this quote from an April 12 interview with Trump conducted by the Wall Street Journal’s presidential fluffer-in-chief Gerard Baker:

I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.

Got that? The dollar was “getting too strong” because “people have confidence in Trump” and “usually speaking” the best thing about a strong dollar is that it “sounds good.”

Well “usually speaking,” Trump’s approval rating is about 38% (which doesn’t “sound good”), and so when you combine that with the President’s logic about what was behind dollar strength earlier this year, it makes sense that this has been the worst year for the Bloomberg dollar index since data started in 2004.

But again, that’s just “usually speaking.” Maybe you have an “unusual” take.

Treasurys pared this week’s gains, but obviously today’s moves look like a blip compared to Wednesday’s rally. With all the focus on the curve, we thought this was a good time paraphrase Deutsche Bank’s Aleksandar Kocic.

The upper bound is drifting lower, effectively making it easier to control inflation over time while the the lower bound (i.e. how far the fed cuts rates) is drifting lower as well, meaning it’s getting more difficult to stimulate growth during downturns.

With the range inside cycles compressing, asymptotically it could disappear (see Japan). You can see this reflected in the rates options market (declining averages for implied vol. at the short end and the long end):

Gold rallied to a one-month high and Bloomberg’s most recent trader survey shows bullishness is in the driver’s seat (Bullish: 5 Bearish: 0 Neutral: 3):

Interesting note on junk because we’re just looking for something to say on a slow day: Bloomberg notes that if it turns out to be accurate, the midpoint of total return forecasts for junk in 2018 would represent the worst performance since 2015, and would fall well short of the 9% average annual gain for the 2007-2016 period:

Copper has now extended its best winning streak since 1989 after rising for a 10th consecutive day:

Tough day for some of the equity crypto plays as the South Korea news weighed on make-believe space token sentiment:

And here’s how Bitcoin, Ethereum and Litecoin performed as the market considers the prospect of stricter regulation:

One more thing to note: Bloomberg’s Michael Regan reports that “NYSE customer margin account debt rose to a record of almost $581 billion and net debt of almost $287 billion climbed above 1% of companies’ market capitalization in November for the first time in data going back to 2003.” So maybe it’s time to worry about that.

Oh, and finally – just to piss off our conservative readers because we’re feeling particularly punchy today – here’s your next President going for a walk…

Six degrees outside? Bundle up for a walk! pic.twitter.com/dNBPwcEnvE

— Elizabeth Warren (@ewarren) December 28, 2017