FOMC Minutes from meeting of October 28. Read them for yourself.

 
 
 

Here is a link to the FOMC Minutes

 

http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20151028.pdf

IMF Elevates Renminbi to SDR Status

You may not have noticed because of all the hoohah in Paris, but this is likely to be more influential.

Statement by Ms. Christine Lagarde on IMF Review of SDR Basket of Currencies

Press Release No. 15/513
November 13, 2015
Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF) issued the following statement today:
"The staff of the IMF has today issued a paper to the Executive Board on the quinquennial review of the SDR. A key focus of the Board review is whether the Chinese renminbi (RMB), which continues to meet the export criterion for inclusion in the SDR basket, also meets the other existing criterion, that the currency be “freely usable”, which is defined as being “widely used” for international transactions and “widely traded” in the principal foreign exchange markets.
"In the paper, IMF staff assesses that the RMB meets the requirements to be a “freely usable” currency and, accordingly, the staff proposes that the Executive Board determine the RMB to be freely usable and include it in the SDR basket as a fifth currency, along with the British pound, euro, Japanese yen, and the U.S. dollar. The staff also finds that the Chinese authorities have addressed all remaining operational issues identified in an initial staff analysis submitted to the Executive Board in July.
"I support the staff’s findings. The decision, of course, on whether the RMB should be included in the SDR basket rests with the IMF’s Executive Board. I will chair a meeting of the Board to consider the issue on November 30."

Hans Redeker's Perspective on Asian FX



 

 

The head of global FX strategy for Morgan Stanley explains



 



 

This is worth watching.

What Will Yellen Do Next Week?

Goldman's Guess

Gundlach's Crystal Ball

Dalio's Idea

Dudley's Tapdance

Tom thinks she's unlikely to raise rates in September.

 

Good Article from Barrons on the Currency Wars

Read this article.  I think it will help.

Yuan Devaluation

The Latest from Jeff Gundlach

I like his reference to Chuang Tsu

Oil Prices Not Listening to Goldman Sachs Head of Commodities--Move Higher

Ole Hansen, head of commodity strategy at Saxo Bank has an explanation that may last at least until the Crude Oil Inventories number comes out at 9:30 central time.

https://www.tradingfloor.com/posts/crude-oil-soars-as-focus-switches-from-opec-to-the-us-5139337

Shenzhen Market P/E Ratio 66--Classic Asset Bubble. Get ready for a correction

Bill Gross comments make news at Bloomberg.

http://www.bloomberg.com/news/articles/2015-06-04/bond-rout-not-enough-for-gross-as-china-stocks-seen-next-to-drop

Shenzhen Exchange Web Page

http://www.szse.cn/main/en/MarketStatistics/MarketOverview/

No way I know for Joe Blow to trade the Shenzhen Composite yet.  But here are a handful of China ETFs to look at.  EWH, FXI, ASHR, PEK, and CNXT.

Goldman Forecasts Oil Price at $50 by year end

Jeff Currie ventured his year-end forecast of $50 after this week's OPEC meeting.  West Texas Intermediate Crude spot price is currently $58.88.  If he is right, there would be no rush to buy USO shares yet.  The 30-week moving average and the current price are converging, but may not cross for several months if the oil price heads lower between now and the end of the year.

http://www.benzinga.com/media/cnbc/15/06/5573006/goldman-sachs-oil-will-be-at-45-in-october-and-50-by-year-end

Oil Bottum Revisited

Trying to show the USO chart with 30-week moving average

 
 



Negative Duration--The Long and Short of It

When interest rates eventually start rising, the price of bonds will fall.  The longer the duration of the bond, the steeper the decline.  Portfolio managers are using some tools to decrease the "duration" of their portfolios.  The following link introduces this subject of negative duration and how it is possible.

Morningstar Article on Negative Duration

Gundlach and Gross are Drooling about Shorting the German Bund

Tom says check it out.


http://www.bloomberg.com/news/articles/2015-04-29/euro-area-bonds-decline-before-13-billion-of-debt-auctions

http://www.bloomberg.com/news/articles/2015-04-21/janus-s-gross-says-german-10-year-bunds-short-of-a-lifetime-

Crude Oil Continues to Bottom. Could be time to buy soon.

Although there is no magic in the 30-week simple moving average,  there must be some kind of bottom in place for a price to cross over this moving average from below.  The price of USO fell below its 30-week moving average last July and has remained there for the nine months since.  But now the indicator has moved down below $22, while the price closed today around $20.50.  I expect to see the price of USO cross back over its 30-week average in a few weeks.  When this technical event occurs, it might be a better time to buy crude oil than it has been for quite some time. 

Crude Oil Inventories Number Moves Market Again

The market was expecting an increase of 3.5 million barrels of oil inventories this morning, but the Energy Information Administration revealed a smaller increase of 1.3 million barrels at 9:30 CDT.  This was bullish for the price of crude.  Within 10 minutes of the news release, the price increased by $1.25 a barrel.  The price continues higher and at 10:36 is trading $2 higher for the day.

This weekly report is getting a lot of attention these days, and moves the market.   Please make a note of it.

Crude Inventories and the Tentative Bottom

 

 

Analysts were expecting an increase of 3.3 million barrels of oil this week, but according to the Energy Information Administration release at 9:30 central time:

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.9 million barrels from the previous week. At 482.4 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.

As a result of this supply side surprise, the price of crude oil quickly fell by one dollar a barrel to $52.88, a drop of 4%.  Since then, the price has continued a bit lower. 

Oil had rallied the first two days of this week from $50 to $55, a gain of 10%.  The price remains above the 50-day moving average price of $49.07 for several days now.  This is the first time the price has held above the 50-day moving average since oil prices began falling last summer.

Stan Weinstein, a market technician I remember from the early 1980s when I was working in Beverly Hills, would probably caution against buying oil until the price crosses above the 30-week moving average.  This could take awhile

(See Secrets for Profiting in Bull and Bear Markets, p. 97)

World Bank Lowers Forecast for 2015 Growth

Here is the three-page version.  Maybe just look at the pretty picture.
They are blaming this report for the market correction yesterday and today.

Global Economic Prospects

For extra credit, you can read the full report (216 pages) here.

Global Economic Prospects--Having Fiscal Space and Using It