Commentaries
From FXPedia
List of FXCommentaries
Obama Asks Congress to Overhaul Financial Accountability
Using the first anniversary of the collapse of Lehman Brothers as a backdrop, President Barack Obama delivered a speech earlier today at Federal Hall in Washington, highlighting his intention to ask Congress to increase government oversight in the US banking industry. more >
Treasury Prepares to Scale Back Stimulus Spending
The U.S. Treasury Department will begin winding down its stimulus spending according to details supplied by Treasury Secretary Timothy Geithner in testimony to the Congressional Oversight Panel in Washington yesterday. more >
Beige Book Paints Optimistic Picture of Recovery
Yesterday’s release of the Beige Book – a compilation of reports produced by each of the twelve regional reserve books – suggests that eleven of the twelve jurisdictions are either currently, or will soon, experience growth. more >
From Flash Orders to Dark Pools
Much has been written lately around two controversial trading approaches known as flash orders and dark pools. For the uninitiated, the recent focus on these practices may lead one to believe they only recently arrived on the scene, but in fact, they have been in use for several years. more >
Swiss Bank Outlaws U.S. Assets
Who hasn’t heard of the ubiquitous “secret Swiss bank account” – it is right up there in financial folklore with “off-shore tax haven” and “an account in the Caymans”. Switzerland has long been a preferred destination for those looking to keep a lid on their financial dealings – from the nobility of Europe during the French revolution, to the “new” rich of today looking to avoid taxes (or possibly even the source of their wealth itself). more >
How low can you go?
On July 8th, the Riksbank – Sweden’s central bank – changed its deposit rate to negative 0.25 percent thereby becoming the first central bank to implement a negative interest rate policy.* Despite the boldness of this policy move, the news seemed to elude mainstream notice, but you can be sure that other central banks were playing close attention. Perhaps some commercial bankers as well. more >
Dollar Weakness Could Be Way of Life for Years
A panel of currency strategists recently discussed the future of the US dollar and for those holding the greenback, the news was rather grim. The panel believed unanimously that the dollar is likely to experience sustained weakness as the global recovery gathers steam. In fact, it will be the recovery itself that will lead to this devaluation. more >
Dr. Doom Warns of “Double-Dip” Recession
You see Nouriel Roubini’s name in the news a great deal lately, and more often than not, he is warning of a “double-dip” recession that he believes is our combined fate. No, there is no “V” or “U” curve recovery for Mr. Roubini – he is of the “W” curve school and he believes that we have merely reached the mid-point of this fickle letter. more >
Score One for the Taxpayer as Goldman Sachs Repays Loans
Yesterday, Goldman Sachs quietly paid $1.1 billion to get out from under the thumb of – I mean – to redeem the US Treasury for the warrants held by the government since last fall. more >
Ireland Creates the Net Asset Management Agency
June 25th, 2009
Without question, the past two years have been difficult for Ireland, with little hope for meaningful relief anytime soon. Just yesterday, the International Monetary Fund (IMF) said that Ireland’s economy will continue to decline at an “unprecedented” rate, and could shrink by as much as 13.5 percent by the end of next year. more >
June 18th, 2009
Russia and China have served notice that as the US continues to struggle with crippling deficits and a rapidly growing debt, the two countries intend to take a far more active role in shaping international finance. According to figures supplied by Russia, trade with China was the highest ever last year at $57 billion. more >
Profit Taking, Reduced Contango Suggests Oil Prices Could Stabilize
June 8th, 2009
The last three months have seen a remarkable oil rally that has doubled the price of oil from around $35 a barrel earlier this year, to nearly $70 today. During this bull run however, there has been one nagging thought spoiling the fun of the traders cashing in on this rise – there is no real reason for oil prices to have climbed so high, so quickly. Demand has not suddenly shot up and the economies of the major oil consumers have not improved significantly, so why the price increase? more >
Geithner Assures China Reserves are Safe
June 4th, 2009
During the first few days of the Obama administration, newly-minted Treasury Secretary Timothy Geithner made quite the stir when he charged China with “currency manipulation”. The US has long believed that China follows a policy of deliberately devaluing the yuan in order to maintain its trade advantage with the US, but Geithner’s accusation marked a dramatic – and public – shift from predecessor Henry Paulson’s softer approach to dealing with China. more >
Is China Really on the Path to Recovery?
April 14th, 2009
If you subscribe to Federal Reserve Chairman Ben Bernanke’s “green shoots of recovery” theory – or believe that the recent speculation and run-up in oil prices provides further evidence that the global economic crisis is easing – then you will be further encouraged by news that China’s manufacturing output has increased for three straight months now. As the world’s third largest economy, China is heavily dependent on the sales of its exports so an early recovery in China must mean that its global trading partners are also seeing an end to the crisis. more >
March 24th, 2009
With the release yesterday of the Public-Private Investment Program (PPIP) Fact Sheet, we have not only another acronym to add to our alphabet soup of bank rescue plans, but finally some detail on this long-awaited program. US Treasury Secretary Timothy Geithner has remained consistently on-message with his contention that the main problem facing the US economy is a lack of liquidity due mostly to the inability of the banks to free-up enough cash to provide... more >
The Bank Nationalization Question
February 25th, 2009
Yesterday, Ben Bernanke assured the Senate Banking Committee that he saw no reason “to formally nationalize a bank when it just isn’t necessary”. President Obama and Treasury Secretary Timothy Geithner have also taken every opportunity to say that they do not want to nationalize the banks. more >
Commercial Bank Lending Update
February 23rd, 2009
In January, the Federal Reserve released its latest survey on the current state of the U.S. banking system. The survey – titled Senior Loan Officer Opinion Survey on Bank Lending Practices – contains a review of bank lending practices for the previous three months. more >
February 2nd, 2009
Milton Friedman never found it necessary to hide his feelings with regards to the creation of the Eurozone and the euro currency; he didn’t like it and he felt that it was unlikely to survive a serious economic test. more >
January 22nd, 2009
- Maybe it’s just me, but it seems there has been an unusually high number of investment-related frauds hitting the news lately. The elaborate $50 billion Ponzi Scheme orchestrated by Bernard Madoff could well be the largest swindle ever perpetrated, but for my money, Marcus Schrenker’s faking of his own death by parachuting from his plane just before it plunged into a swamp in Florida, ranks as the most inventive. more >
January 6th, 2009
- Ireland is no stranger to hard times. From the potato famine to the “troubles” between the English and the nationalists, it seems the economy was too often just an afterthought. But for two magical decades, Ireland set aside these distractions and from this period of calm, grew a true economic powerhouse - the Celtic Tiger - rivalling the rest of Europe in terms of economic growth and individual wealth. more >
Managing Economies in an Era of Low Interest Rates
December 5th, 2008
- When it comes to understanding the options available to a central bank for managing an economy where interest rates are very low, U.S. Federal Reserve Chairman Ben Bernanke wrote the book – well, a presentation paper actually, and, technically, he co-authored it, but no matter. more >
NAFTA Revisited May Now Be NAFTA Delayed
November 18th, 2008
- As the battle for the Democratic nomination between Hillary Clinton and Barack Obama intensified over the past eighteen months, both would-be candidates raised the renegotiation of the North American Free Trade Agreement (NAFTA) as essentially a fait accompli. more >
Auto Bailout Threatens to be Obama’s First Test
November 13th, 2008
- Immediately after winning last week’s election, President-Elect Barack Obama took great pains to let it be known that he would not be jumping into the maelstrom swirling in Washington until after his inauguration slated for January 20th. He even – politely, I’m sure – turned down President Bush’s invitation to attend the G20 meeting opting instead to send a couple of his key advisors to serve as observers. more >
Racing to the Bottom or Money For Nothing*
November 10th, 2008
- Despite the fact that news headlines for the last few weeks were dominated by the lead-up to the U.S. election and the election night itself, there were other newsworthy events going on in the world. For forex traders, it has been a full-time job keeping track of interest rates adjustments as central banks attempt to out-do each other in what some are now suggesting could be the prelude to a period of zero percent interest rates in the world’s major economies. Oh boy, free money for everyone! more >
Is This The End of the Yen Carry Trade?
November 7th, 2008
- With the global economy worsening and on-track for a world-wide recession – see yesterday's yesterday’s Forex News and Rumors for an update from the International Monetary Fund (IMF) - we may be witnessing the end of the yen carry trade for the foreseeable future. The reason for this is quite simple – as the G7 countries continue to lower interest rates, the advantages of carry trades based on the yen are greatly diminished. more >
Alan Greenspan – “It A’int Me, Babe”
November 6th, 2008
- Former Federal Reserve Chairman Alan Greenspan has spent a lot of time on the road since handing the reigns of the Fed over to Ben Bernanke back in February of 2006. more >
October 20th, 2008
- A few weeks back, Warren Buffet ended Bill Gates’ decade long hold on the title of World’s Richest Person when Forbes Magazine estimated his net worth at $62 billion compared to Gates’ $58 billion. Gates actually fell to third place just behind Carlos Slim Helú who as Mexico’s telecommunications czar, has amassed $60 billion. more >
Is the U.S. “AAA” Rating at Risk?
September 18th, 2008
- Reflecting on the recent events in the U.S. banking system, two questions spring to mind - “how did we get into such a mess?” and “how much worse can it get?” Well, if some of the subtle warnings emanating from the ratings agencies come into play, it could get a lot worse. more >
September 16th, 2008
- It’s official – the economic downturn is a global phenomenon – even China has been forced to make interest rate cuts and to provide concessions to banks to help with liquidity issues. more >
U.S. Heading for a Credit Card Bubble? - It's Deja Vu All Over Again
September 12th, 2008
- Starting in late 2006 as hints of how deep the subprime crisis could become – and during 2007 as our fears were realized – the mortgage-selling business in the U.S. basically evaporated. However, enterprising financial institutions soon found a way to keep the money rolling in more >
UK Housing Slump Adds to Recession Concerns
September 2nd, 2008
- The UK pound marked a sixth straight day of losses against the surging U.S. dollar as news of a continuing slump in property values hampered Prime Minister Gordon Brown’s attempts to avoid an all-out recession. more >
Will China Fall Victim to the Post-Olympic Jinx?
August 19th, 2008
- As we reach the mid-point of the 2008 Summer Olympics, it seems appropriate to review what hosting the Olympics has meant to China and what could be in store once the tourists leave and the athletes go home. Sure, there will be some snazzy, state-of-the-art venues left for the people of Beijing to enjoy for years to come, but they may first have to deal with the infamous post-Olympic Jinx. more >
Pipeline Fire Underscores Vulnerability of Russian Oil Supply
August 8th, 2008
- Even though it only represents about 1% of the planet’s daily oil usage, a fire at the BTC pipeline transporting crude from Azerbaijan to Turkey was cited as the reason oil jumped nearly a buck and a half on Thursday to top out at just over $120 a barrel. Kurdish rebels operating in northern Turkey immediately claimed responsibility but officials said it was too early to confirm that the fire was the result of sabotage and not simply a technical failure. more >
July 24th, 2008
- It is unlikely that an increase to the Federal Funds Rate will be announced at the next FOMC meeting on August 5th, but if the Fed decides to hold the line at 2% as expected, this will mark two sessions in a row where the rate was left unchanged. more >
July 15th, 2008
- When I was young, I used to spend a couple of weeks every summer at my Grandparent’s farm. In one of the buildings I remember a small sign that read simply, “Loose Lips, Sinks Ships” and I was always confused as to its meaning more >
July 7th, 2008
- December 2001 marked an important point in China’s economic revolution – on this date, after discussions spanning nearly two decades, China became a member of the World Trade Organization (WTO). By finally coming to terms with the other member nations, China signaled that it was officially committing to its policy of economic reform within the framework developed and mandated by the Western economic powers. more >
CFTC Moves to Close the London Loop
June 20, 2008
- The Commodities and Futures Trading Commission (CFTC) recently released a statement that it would require foreign exchanges dealing in U.S. oil futures to limit the number of contracts that could be held by an individual trader or firm. This is clearly an attempt to protect consumers reeling from what CFTC Commissioner Bart Chilton described earlier in June as “unusual price movements” in oil futures and other commodities. more >
Oil and Interest Rate Uncertainty Makes for an Interesting Couple of Weeks
June 16, 2008
- The next two weeks promise to be interesting on a couple of fronts. First off, oil prices may – and I repeat – may be headed for a holding pattern until a few things play themselves out. Don’t get too excited as this may be nothing more than a bit of a price hiccup as the world grudgingly accepts that we will not likely again see oil under $100 a barrel. more >
May 9, 2008
- Despite gasoline and other refined petroleum products reaching prices on par with the fallout of Hurricane Katrina in the fall of 2005, profit margins for the major refineries are well below historical levels more >
April 21, 2008
- It is hard to imagine any topic occupying the minds of investors and financial professionals to a greater extent these days than the price of oil… well, maybe the price of gold…oh, and the credit problems in the financial markets. OK – one of the items occupying the minds of investors and financial professionals these days, is the price of oil. more >
Who Will Insure the Bond Insurers?
February 6, 2008
- It all started with the mortgage lenders accepting billions of dollars of new mortgages from borrowers with questionable credit ratings more >
Where is the PPT When You Need It?
January 21, 2008
- Urban myth or super-secret government agency pulling the strings behind the market? Rumors of the mysteriously-named Plunge Protection Team (PPT) persist more >
Perfect Storm for the "S" Word
December 19, 2007
- Stagflation. There, I’ve said it – the economic malaise that most economists and all governments are too timid to mention by name. more >
December 13, 2007
- The Federal Reserve announced yesterday the creation of the new Term Auction Facility – or TAF – designed specifically to inject funds into the struggling U.S. commercial banking system still suffering subprime mortgage-related credit problems. While some have dismissed the new initiative as just another form of the Fed’s discount window lending facility, others see it as a way for cash-starved banks to build up much-needed reserves without taking on the stigma associated with the discount window program. More >
November 22, 2007
- For traders active in the forex markets, 2007 has been a fascinating year and 2008 promises to be just as exciting. Everyone has been caught up in the record retreat of the U.S. dollar against the major currencies, but it may be the Canadian dollar that has had the most interesting story lately. More >
Bank of England and Northern Rock Bank
November 15, 2007
- The subprime mortgage problems emanating from the U.S. impacted the U.K. economy in a high-profile manner in the fall of 2007. The Northern Rock Bank had invested heavily in Collateralized Debt Obligation (CDOs) instruments containing high percentages of questionable mortgages issued by U.S. lenders. As the number of mortgage defaults grew and the recognition of the scope of the problem became known, holders of these CDOs were finding it increasingly difficult to sell their stakes in the securities. More >
October 24, 2007
- It is said that you can tell a great deal about a person by how they handle themselves in times of crisis. For the U.S. economy, the recent subprime mortgage meltdown – which has dominated the news for much of the past eighteen months - can certainly be categorized a financial crisis. Ben Bernanke was no economic neophyte when he assumed the Chairmanship of the U.S. Federal Reserve Board of Governors on February 1, 2006, but even he must have had second thoughts as the full impact of the subprime mortgage fallout started to emerge around the time he assumed the top spot at the Fed. More >
October 22, 2007
- Much of the economic news regarding the U.S. has been centered around the subprime mortgage collapse and the effect this is having on not just the U.S. economy, but other countries as well. In the U.S., several high-profile lending institutions have failed and the Bank of England recently stepped in to prop up the Northern Rock Bank when the bank found itself with insufficient liquidity as investors started to withdraw savings en masse. Northern Rock was unable to borrow short-term funds as institutional lenders felt that the bank was overexposed in the subprime market, making them too great a risk in which to invest. More >
