The three legged stool of Bernanke, Dudley and Yellen all support the language of 2014 and believe the data is too mixed to change it. Don’t be confused by the other member forecasts on rates and alternative policy paths The only three that matter are BDY (Bernanke, Dudley and Yellen).… …READ MORE

Overnight, there were two important sets of commentary from Europe: France’s Sarkozy and the ECB’s Weidman (head of Germany’s central bank). First, French President Sarkozy: “If the euro rises too much then our exporters can’t sell and they lose money not because they’re not competitive but because the euro is too expensive….These are debates that we should have with the governor of the European Central Bank.” (RTRS) This is important as the ECB is the de facto manager of the currency due to its ability to manage monetary policy. European political leaders lost their traditional sovereign role to manage the … …READ MORE

Today, China announced a surprise trade surplus of $5.35B vse. -$3.15B. The rumor of this positive number initially drove risk higher with the EUR/JPY rallying, equities rallying and bond yields going up. However when the numbers were released, the details were troubling as exports rose 8.9% vse. 7.0% and imports were up 5.3% vse. 9.0%. This means that China is struggling to transition from an export driven economy to a consumer driven economy. Clearly, this switch will take time and will mean that China will not be ready to provide an engine of import growth to the rest of the … …READ MORE