Comment of the Day
Video commentary for June 14th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: equity sell off pauses ahead of Fed decision tomorrow, bond yield continue to march higher, US natural gas pulls back sharply on export outage, UK price jumps for the same reason, Yen extends decline, Chinese large cap tech outperforming because of better liquidity provision.
BOJ Ramps Up Yield Control Defense Against Global Debt Rout
This article from Bloomberg may be of interest to subscribers. Here is a section:
The jacked-up moves reflect the BOJ’s commitment to protect its yield-curve control policy even if it prompts further slides in the yen as the Federal Reserve accelerates its rate hike pace. Worse-than-expected inflation data from the US has been a catalyst behind the global market rout this week.
Governor Haruhiko Kuroda insists it’s too early for Japan to step back from keeping rates ultra low, with the economy still recovering from the pandemic and inflation stemming largely from higher energy prices. The vast majority of surveyed economists expect the bank to stick with its policy settings this week.
Still, as the pressure continues to build on the BOJ’s easing framework, speculation smolders on that changes will have to come eventually.
“There’s growing market concern over possible adjustments in yield curve control given the yen is weakening so rapidly,” said Hiroshi Miyazaki, senior economist at Mizuho Research & Technologies.
“The BOJ is likely to be able to keep yields low for 10-year yields, but it remains to be seen whether it can control longer maturities.”
My view - Japan has been trying to ignite inflationary forces for years. Arguably, it was impossible to succeed in that objective because the world was in a secular disinflationary trend. Now that inflationary pressures are ramping higher at the fastest pace in decades, Japan is not about to miss the opportunity to change the population’s psychology.
US Natural Gas Slumps as LNG Plant Shutdown Strands Supplies
This article from Bloomberg may be of interest to subscribers. Here is a section:
US natural gas futures plummeted and European prices surged after the operator of a key Texas export terminal said it may take three months to partially restart the facility following a fire last week.
Gas for next-month delivery in New York tumbled as much as 19% to $7.008 per million British thermal units as the shutdown threatens to leave supply stranded in US shale basins. European futures on the Title Transfer facility hub in Amsterdam jumped 18% to $30.14.
My view - The role of LNG in smoothing out the arbitrage between the North American and European gas is probably under appreciated by investors. The transatlantic LNG market did not exist five years ago. Today it is expected to compensate for Europe’s reluctance to continue to buy Russia supply. The loss of one plant, even temporarily highlight just how tenuous that plan is.
Email of the day on central bank activity in the gold market
Do you think there is much Central bank activity in the gold market? I can see countries like Turkey and Russia (?) selling to meet current requirements and on the other side countries ideologically opposed to the US wanting reserves which cannot be sanctioned. I guess data is kept secret but.....
My view - Thank you for this question which I suspect will be of interest to the Collective. Russia miscalculated how strong Europe's response would be to the invasion of Ukraine, so it does not have access to nearly as much of its reserves as it might like.
Eoin's personal portfolio Stock market short increased
One of the questions subscribers as most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.