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Quotable

“The winds and waves are always on the side of the ablest navigators.”

- Edward Gibbon


FX Trading – Have we stopped listening to Geithner yet?
The US Treasury Secretary has been in China, tip-toeing around yuan exchange rate reform, Chinese industrial protectionism-type behavior, etc. It was obvious Geithner was not there to point fingers – he’s probably been given a strict script to which he must stick ... after seemingly losing his cool on Capitol Hill months ago.

But, ahead of Geithner’s upcoming trip to the UK and Germany, Reuters brought this quip to light:

"I'm completely certain that Europe has the ability to manage this," ...

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Quotable
“The biggest category of contingent debt is made up of the various guarantees the eurozone has been handing out in the last couple of years. European Union governments have effectively guaranteed the liabilities of their entire banking sectors. They have guaranteed all bank deposits up to a certain limit. The eurozone member states have guaranteed Greek debt for three years, and they extended the scheme to the rest of the eurozone. And those guarantees will probably have to be doubled again.”
- Wolfgang Münchau


FX Trading – Finally we are getting some real company on our dollar call
- The dollar will probably become a “growth currency” during the next 10 years, shedding its haven status of ...

Key News

Britain posted its largest April budget deficit since monthly records began in 1993. (Bloomberg)

Quotable

“Do not worry if you have built your castles in the air. They are where they should be. Now put the foundations under them.”

- Henry David Thoreau

FX Trading – A lot to worry about
The stock market of late seems to be noticing them. But commentators seem to be looking right past them—systemic risks. Why do I say that? Well, it seems every time I flip on the TV to a financial show, one mutual fund manager after another is trotted out to tell me this is a great buying opportunity. They do it with such confidence. They are dressed so well. They are ...

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Key News

• Sweet Spot Found in Longest Maturities as Inflation Falls: Credit Markets (Bloomberg)
• Europe’s Rescue for Greece Brings Euro to New Normal (Bloomberg)
• Inflation at 44-Year Low (Wall Street Journal)

Quotable
“...the depth of the recession and the difficulty of recovery are attributable in large part to the decision to maintain the country’s overvalued fixed exchange rate.”
- Mark Weisbrot and Rebecca Ray, on Latvia’s economy

FX Trading – “Forget Latvia,” I’m told.
After my Tuesday note on Latvia, I received two very informative emails pointing out my errors, omissions, etc. ... as well as some additional noteworthy tidbits about the Baltics. I’ll get to those reader responses ...