Overstretch

by CantillonCH

Markets have paradoxically both been on edge – and in the throes of euphoria – since the repo shock in mid-September, being at the same time alarmed and yet strangely reassured by the Fed’s frantic backpedalling and the $400+ billion boost to its balance sheet which this entailed.

However, at a time when an already faltering flow of business revenues across the major nations has now to weather the unquantifiable, but potentially far-reaching, disturbance spread by the China coronavirus outbreak, the margin for error seems slim, indeed. Extreme levels of overstretch are everywhere apparent.

To download as a PDF, please click here: 20-02-21 Overstretch

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Bootleggers, Bootstraps & Bitcoin

by CantillonCH

Once upon a time, way, way back in early October [2017] when bitcoin was being exchanged for proper money at less than a third of the price it is today, I had my first opportunity to peek behind the curtain into the magical work of Cryptocurrency – and what a revelation it was!

Nestled behind a very professional looking website and housed in a cool incu-pod, shared office-space, the faultlessly polite, fresh-faced young men behind the venture took time out of reshaping the future of finance to explain some of the basics of the New Era to us two slow, old dinosaurs who had called upon them in search of enlightenment. [First published Dec 2017] Continue reading …

Fed’s a-Flutter

by CantillonCH

It was almost inevitable that, days after the front end of the US interest rate structure had undergone a 35 basis-point plunge, its sharpest one week fall in yield since the immediate aftermath of the Lehman Crisis, the key non-farm payroll data would also come in weak. [First published June 10th]
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Utterly Negative

by CantillonCH

Mario Draghi emerged last week from the much-awaited meeting of the ECB Governing Council meeting clutching a fairly bland official communiqué which extended the envisaged freeze on interest rates out to the latter part of next year (aka, ‘forward guidance’), pledged that there would be no shrinkage of the Bank’s securities portfolio (so-called ‘quantitative tightening’) for some considerable period after that ended, and gave details of the terms on which the next batch of loan socialization can be refinanced under the aegis of its TLTRO III programme. [First Published June 7th] Continue reading …

Turnaround Tuesday

by CantillonCH

After the excitement of the past few sessions, it was not entirely unexpected that what we old market stagers used to call, ‘Turnaround Tuesday’, would deliver its traditional mix of reflection, position rebalancing, and general counter-trend moves of either the stop-profit or the ‘Why do I always buy the top?’, buyers’ regret kind. [First Published June 4th] Continue reading …

Dog Chases Tail

by CantillonCH

The sharpening of the conflict between China and the US became all too apparent last week when Beijing released an official white paper in which it seemingly abandoned all hint of conciliation with a burst of accusations, exculpations, and a good deal of bluster. [First Published June 3rd] Continue reading …

Oil Change

by CantillonCH

When it comes to that key commodity oil, there are three main features of the market to watch alongside the price: namely, the spread between WTI and Brent and the shape of the two futures curves. Visible inventory levels provide the main and most frequent ‘fundamental’ data we have (though these are not always straightforward to interpret ) while the (delayed) weekly insight into futures positioning gives us another excuse to read the runes. [First Published May 29th] Continue reading …

A Crack in the Dam?

by CantillonCH

Back in 2017, a minor diplomatic spat erupted when seemingly credible allegations were made that billionaire Xiao Jianhua had been abducted by agents of Chinese state security from the Four Seasons hotel in Hong Kong where he was staying. Indistinct video showed the figure, said to be Xiao under the blanket covering his head, being spirited away in a wheelchair en route to being smuggled back to the mainland for interrogation. [First Published May 28th] Continue reading …

A Long March to the Bottom

by CantillonCH

Last week, as the Trade War with the US worsened – and as the assault on China’s flagship telecoms company, Huawei, was intensified – President Xi Jinping, accompanied by his chief trade negotiator, Liu He, made a highly symbolic visit to Jiangxi, the starting point of the Communist Party’s fabled  ‘Long March’ in 1934. [First published May 27th] Continue reading …