How can a market “take into consideration all potential future events”? Obviously it can’t. That’s absurd. That said, stocks should be expected to discount what we might call “known unknowns.” That is, events that we know are likely to cause turbulence but that also admit of some indeterminacy regarding outcomes. Things that would fall into that category include the French elections and US tax reform.
Category: euro
Dollar On A Harker High, European Economy Hums Despite Political Turmoil, Kuroda Continues To Confuse
Well, that escalated quickly. It wasn’t hard to predict what would set the tone overnight.
“Run-For-Your-Life Affair” Continues In France, Fed’s Mester Hints At Hikes, US Vacations
“This weekend was an all-out, run-for-your-life affair.” That’s from Yves-Marie Cann, head of political studies at
“Euro Exit Would Ruin France,” More Russian Hacking, And Other Fun Overnight News
“Exiting the euro, presidential candidate Marine Le Pen’s project, would ruin France, Bruno Le Maire, adviser of French Republican candidate Francois Fillon, says on Europe 1 radio.”
“Has The Whole World Gone Crazy?!”
“Has the whole world gone crazy?! Am I the only one around here who gives a sh*t about the rules?!”
The Week That Was: “The Hardest Thing To Do Is Justify Hedging”
Well, it’s been one hell of a week. We started on a sugar high thanks
A French Kiss Leaves Global Risk Queasy On Friday
If you were looking for clarity with regard to President Donald Trump’s policies or for any kind
“What Are You Paying For?!” One Bank Asks Whether French CDS Is Worthless
What protection are you paying for? Marine Le Pen’s proposal to take France out of the euro is once again raising questions about whether CDS will “do what it says on the tinâ€. As on previous occasions, we fear the answer is “not necessarilyâ€
Entire World Scrambles To Figure Out Why The Hell The Dollar Isn’t Stronger On Thursday
So what gives? Well, probably not a lot. It could just be everyone is taking a breather. But, in a testament to Nassim Taleb’s “narrative fallacy” argument, we have an overwhelming tendency to ascribe “causes” where there are none.
Holy Sh*t Chart Of The Day
This may be “familiar behavior for the credit market”, but I can’t help but flag this as a pretty alarming indicator regarding the credit risk surrounding the upcoming French elections.
“Genuinely Scary Moments Are Ahead,” One Trader Warns
“Theoretically, Europe is set to avoid each of this year’s political pitfalls — but the scares will be genuine. The euro will continue to slide in line with the rising long- term risk-premium around the region, while the bond markets flare-ups will be acute ahead of specific dates.”
Goldman: Trump Threatens Europe With Strongman “Bilateral World Order”
So you know, the percentage of the European population that’s still sane (and that’s an ever dwindling number apparently) would have really appreciated it if Trump would have just been satisfied with the damage he’s already done rather than piling it on by dispatching Peter Navarro to weigh in on the legitimacy of the common currency.
Poetic Justice? Europe “Celebrates” 25 Years Of Integration With Descent Into Chaos
Proponents of the nationalistic fervor currently spreading across Europe will likely find some poetic justice in the fact that the dissolution of the EU could ultimately unfold just as the bloc celebrates a milestone in time.
I Like My Term Structures Kinky
I’ve talked quite a bit about how the US equity market is grossly mispricing political
Chart Check (Behind The Curve)
As usual…
1.7 Trillion Reasons Why This Whole Populist Thing Is A Terrible Idea
But while populist candidates spewing nationalist vitriol likely won’t do anything to change the fact that Mark Zuckerberg is Mark Zuckerberg and you’re… well… not, do you know what they will do? They’ll end up destroying what little everyday people do have by throwing the entire global order into chaos. And that’s not hyperbole.
Chart Check (The Trump Trade Fade)
“Is the reflation narrative dead or alive?”
Daily Kickstart (Chinese FX Reserves Fall Below $3 Trillion, Euro On The Back Foot, Senate Weighs Risk Of School Grizzly Attacks)
The “big” news overnight should have been Chinese FX reserves just like China should be back
Daily Kickstart (French Kiss)
“Let’s make it a bad souvenir”…
Currency Markets In Turmoil: A Pocket Guide For The Week Ahead
As political risk continues to dominate the headlines (even as US equities steadfastly refuse to
FEER-mongering
Tuesday’s most read post, oddly, was this one: “Trump’s Idiot Trade Czar Tanks Dollar With
Daily Kickstart (Fed, Dollar In Focus As Global PMIs, iPhones Boost Sentiment)
Quite a lot of people seem to be hanging their hats on Wednesday’s Fed statement
Trump’s Idiot Trade Czar Tanks Dollar With Absurd Attack On Germany
One wonders if Navarro’s comments might just reflect the political biases of Steve Bannon, whose Breitbart News has been fanning the populist flames in Europe for years in an apparent effort to bolster the prospects of nationalist politicians in France, the Netherlands, and yes, Germany.
A Cliffs Notes Guide To Europe’s Electoral Trial By Fire
While it’s certainly tempting to focus squarely on the political upheaval that’s sweeping the United
“This Is Not Sustainable”: Reversing The “Constant” Drop In Yields
Sh*t, we started in risk-free government bonds and before you knew it, we were the proud owners of diluted shares in a cash flow negative shale producer.
It’s Time To Start Worrying About FX Vol
I think it’s probably time to start getting concerned about FX vol. This morning’s dovish
Daily Kickstart (ECB Preview; Why Did Tarzan And Suicide Squad Suck So Bad?)
It feels quiet out there on Thursday morning. On Wednesday, a fairly potent one-two punch
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