The Market Radar

We anticipate, monitor, and comment on market moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t  afford to ignore us.

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Party Like It’s 1999: U.S. – German 2-year Yield Divergence

What does this mean for capital flows?  Euro should weaken, but it ain’t!

ECB timid and waaaay behind the curve.

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Bond Yields and Equity Prices

Interesting chart which reflects what we have been preaching for years. Central bank distorted and repressed bond yields result in a mispricing of all other assets.

This chart goes a step further and quantifies it, though it assumes “all other things being equal” — ceteris paribus in economic parlance — which they never are.

Bond Yields and Equity Marketss

Source:  TheVolawatcher

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Merkel Fails To Form Government

After almost two months since the September 24th general election German Chancellor Angela Merkel and her alliance of Christian Democratic Union and Bavaria’s Christian Social Union has been unsuccessful in forming a new coalition government. Merkel needed the support of the two ideologically diverse parties, the pro-business Free Democrats and the leftwing Green party.

Here are the main reasons for the rupture in negotiations:

Among the core differences was the issue of refugee and asylum policy and, in particular, the issue of whether refugees should be allowed to bring their families to Germany.

In 2016, at the height of the Syrian refugee crisis, Berlin suspended that right. But the freeze on family reunifications runs out next year, raising the prospect of a spike in new arrivals.
Among the core differences was the issue of refugee and asylum policy and, in particular, the issue of whether refugees should be allowed to bring their families to Germany.

The Bavarian CSU, the sister party of Ms Merkel’s CDU, was determined to prolong the suspension, broadly backed by the CDU and the FDP. The Greens, in contrast, insisted that refugees must be allowed to bring their spouses and children into the country, citing humanitarian reasons.

Other areas of disagreement were Germany’s response to climate change and the Green demand to shut down a significant number of coal-fired power plants, which are among the biggest producers of carbon dioxide emissions.

Tax policy, too, was a bone of contention, with the FDP demanding a rapid phase-out of the so-called solidarity tax that is raised to fund the economic development in eastern Germany. – FT

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Sector ETF Performance – November 17






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Global Risk Monitor – November 17



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How Xi Jinping Went From Feeding Pigs to Ruling China

How did Xi Jinping go from being a provincial politician to China’s paramount leader in such a short period of time? In this Bloomberg Profile, we look at the life of China’s 7th President and his campaign against dissent. ———- Like this video? Subscribe to Bloomberg on YouTube:…

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QOTD: Extrapolate This Late?

Most of the time the future is indeed like the past, and so extrapolation doesn’t do any harm. But at the important turning points, when the future stops being like the past, extrapolation fails and large amounts of money are either lost or not made.  – Howard Marks


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QOTD: Vive la France!

“France is a paradise populated by people who believe they are in hell,” the writer Sylvain Tesson said in a radio interview earlier this year. – Bloomberg 

(QOTD = Quote of the Day)

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Five markets charts for investors – FT

The FT markets team’s focus this week: a Chinese stocks rally, the sovereign debt market being crowded by central banks’ bonds re-purchasing programmes, trades with zero yield climb to $11tn, and US money supply growth might mean the bull market continues.
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Tweets of the Day: Trickle Down

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