The central bank driver world macro structure is in full can-kicking mode. The fuels that have built up are almost too numerous to mention, though some issues continue to be recycled as if they were needed to explain the latest potential spark.
The New Boss Same as the Old Boss
Janet Yellen was on tap this week to lead her first official open market committee meeting as Fed Chairwoman. The perception of Fed confidence is crucial at this time in particular. In light of the recent policy tapering and the recent volatility in the emerging markets, her script will be watched carefully by all.
In terms of emerging or developing markets, the volatility has been intense, to say the very least. Argentina has defaulted once again on its sovereign obligations, devalued its currency, and caused a painful split between the official and street value of its currency.
For precious metals investors, the lesson from the Argentinian currency discrepancy foreshadows the likely future of precious metals valuation as the physical or street value divorces from the official paper price.
Middle Eastern Europa
We have also seen massive undertakings in Forex, most notably the shock overnight in the revaluing of the Turkish Lira. While the Lira may be a small market relative to the U.S. dollar, it lies central, almost as a mini reserve active in the Middle East and, of course, immediately adjacent to Europe.
Not to mention the recent recommendation out of the Bundesbank that European peripheral sovereigns should be expected to bail in themselves on the backs of its citizens. The Cyprus bail in template is being applied in lieu of the politically unacceptable austerity tourniquet.
In the U.S.
The debt ceiling redux is back and will once again pit U.S. policy makers up against the Federal Reserve. Although the two entities are connected politically, they must maintain the appearance that they are not. We should look for jawboning from the Fed, which in turn could offer some support to gauging confidence for the new Fed Chair.
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