EUR 8.84 For Business Accounts Only

The Morning Track reshuffling

- The Morning Track – Reshuffling by Bob Savage
http://track.com/articles/the-morning-track-reshuffling/

“Insanity is doing the same thing over and over again and expecting different results.” Neither Ben Franklin or Albert Einstein said this but this tattered wisdom is attributed to both. The reason many try to do the same thing isn’t insanity but a hope for quantum noise. If you wait, something different can happen – that is a key argument for central bankers and traders facing a low volatility, lower yields world – as in “time cures all wounds.” However, nothing is random, even a reshuffled deck. Einstein did say, “I shall never believe that God plays dice with the universe.” That doesn’t make him a true believer or a doubter of quantum physics just one that sees a greater system at play. Maybe that is the lesson for the day as we wait for more US economic data and hope a reshuffling of unemployment produces higher wages. In Japan, Prime Minister Abe reshuffled his cabinet Thursday buying political time but not enough to help wages there. In Australi
an, the RBA SOMP highlighted the risk that low real wage growth is a risk for household spending. The US Trump Administration has been reshuffling positions aggressively – just ask the Mooch – but today we will find out if US wages are higher and that seems to be all that matters as central bankers want the Phillips Curve to work. Low unemployment begets higher wages and that drives inflation being the insanity of the moment.
Overnight the focus started with the USD weakness extending with US bonds bid as the special investigator into Russian meddling Mueller called a grand jury. Then weaker Japan wages and a RBA SOMP drive prices to further risk-off but this moderated into Europe with better German factory orders, a modestly hawkish sounding BOE Broadbent and stalls as we all wait for the US wage data. Reshuffling positions in FX isn’t likely to lead to a new trend – the USD is still the main focus for markets and its risks remains in the 200-week breaking or 93.65 returning.