US Federal Reserve

Authored by Mark St.Cyr,

Since we are in the Thanksgiving lull of the “markets.” I wanted to express something that takes place in my own head around these times. Where I (and believe others) may also share some of the same conflicted feelings as we not only try to give thanks, we simultaneously ponder thoughts to what the future might portend, and how we are going to move with it. For in the game of business as is life: the decision process never rests.

Last week we posted the report by ADM ISI's Paul Mylchreest “Dollar Liquidity Threat is Getting Critical and the Fed is M.I.A” which summarized some of the key points in the ongoing, second phase of global dollar shortage, profiled here first in the start of 2015 and validated recently by the BIS. We discussed the bitter (and all too predictable) irony that the Federal Reserve doesn’t “get it”, having recently declared that that liquidity in financial markets was “adequate.”

It isn't.

Originally posted at ChinaDaily.com,

Recently, the Chinese currency fell to its lowest level since late 2008. The renminbi has been trading around 6.92 to the US dollar. The plunge is typically explained with the anticipated US Federal Reserve rate increase in December and president-elect Donald Trump's threat to label China a currency manipulator and slap tariffs on Chinese exports.

In reality, there is much more to the story.

A lot has changed since the November 2nd FOMC statement - most notably the world has suddently become awesome again. The relatively benign statement (and election result) has left rate-hike odds at 100% for December but comment from Fischer and Yellen since have hinted concerns at the need for Trump fiscal spendfest. The main risk going in to the minutes was a dovish tilt for the future, tamping the current 'nothing can stop us now' attitude (and we note the dollar leaked lower into the release).

European and Asian stocks rose after the early scare from the latest Fukushima quake dissipated when all Tsunami warnings were cancelled. The global risk on mood was spurred by another jump in crude, which was up 1% in early trading, with the commodity complex now enjoying its biggest three-day rally since May, after Nigeria signaled optimism that OPEC will agree a supply-cut deal next week in Vienna. S&P futures are up 0.3%, with the cash index set to open at new record highs.