Leo Haviland provides clients with original, provocative, cutting-edge fundamental supply/demand and technical research on major financial marketplaces and trends. He also offers independent consulting and risk management advice.

Haviland’s expertise is macro. He focuses on the intertwining of equity, debt, currency, and commodity arenas, including the political players, regulatory approaches, social factors, and rhetoric that affect them. In a changing and dynamic global economy, Haviland’s mission remains constant – to give timely, value-added marketplace insights and foresights.

Leo Haviland has three decades of experience in the Wall Street trading environment. He has worked for Goldman Sachs, Sempra Energy Trading, and other institutions. In his research and sales career in stock, interest rate, foreign exchange, and commodity battlefields, he has dealt with numerous and diverse financial institutions and individuals. Haviland is a graduate of the University of Chicago (Phi Beta Kappa) and the Cornell Law School.


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Marketplace history of course need not entirely or even substantially repeat itself. In recent years, devoted central bank generals, via diverse strategies such as sustained yield repression and massive money printing, have battled fervently to ensure sustained economic growth, manufacture sufficient inflation, and slash unemployment. Politicians have fought fiercely to ensure recovery, especially by deploying their deficit spending arsenal.

However, recall the emergence and acceleration of 2007-09”s worldwide economic crisis. And ask to what extent the serious debt and leverage problems of the Goldilocks Era genuinely have been cured.

The recent sustained advance of the United States broad real trade-weighted dollar (“TWD”) warns of erosion in global economic output rates. The TWD probably will continue to appreciate.

The substantial depreciation of the Euro Area and Japan real effective exchange rates (“EER”) likewise flag weakening (and oncoming reductions in) worldwide real GDP rates. So does the slump in the Canadian EER; Canada’s dive partly reflects the murderous price collapse in the commodities sector. Though Australia is not a G-7 nation, like Canada it is a developed nation and a major commodity producer. Its EER likewise has tumbled.

The United Kingdom’s EER has been fairly powerful in recent months. In part, this probably reflects the comparative economic weakness of its key trading partner, the Euro Area.

Both the US dollar and Chinese renminbi real EERs marched higher during the darker days of the fearful 2007-09 disaster. Their present-day EER patterns, though not identical, likewise have been bullish; this intertwining further indicates the likelihood that growth rates in international GDP will surrender ground. Although the Chinese EER trend has been bullish in recent months, the renminbi has retreated against the US dollar; this renminbi cross rate weakness points to a slowing Chinese economy.

The essay, “Crumbling BRICS: a Currency Perspective” (2-11-15), studies the effective exchange rates for Brazil, Russia, India, China, and South Africa (plus Mexico). Its analysis supports the key arguments and conclusions related to the advanced nations.

On 3/6/15, the S+P 500 celebrates the sixth anniversary of its 3/6/09 major low at 667. The stock marketplace rally since March 2009 obviously has been explosive. However, the TWD’s current trend and level, when interpreted alongside the real EERs of other G-7 advanced nations and China (and alongside other factors such as emerging stock marketplace, commodity, and interest rate trends), indicate that the S+ P 500 probably has established a notable top (2/25/15 high 2120) or will do so in the near future.

“Crumbling BRICS” states: “Recall the acceleration of the worldwide economic crisis (and decline in the S+P 500) in 2008 as the broad real TWD appreciated. The S+P 500’s major peak occurred 10/11/07 at 1576, but its final high was 5/19/08 at 1440, close in time to the April 2008 TWD bottom. The S+P 500 collapsed from around 1313 (8/18/08)/1265 (9/19/08). The S+P 500’s major bottom at 667 on 3/6/09 occurred the same month as the broad real TWD pinnacle.”

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The Foreign Exchange Battlefield- Advances and Retreats (3-5-15)


Australia, Brazil, Canada, Russia, and South Africa produce and export substantial amounts of crucial commodities. Think of the petroleum, base and precious metal, and agricultural sectors. Marketplace guides label the currencies of these five exporting countries “commodity currencies”. The commodity shares within and the commodity export profile of these national economies varies.

In recent years, there has been a close linkage between trends in the S+P 500, commodities “in general” (use the broad Goldman Sachs Commodity Index as a weathervane), and the United States dollar. Remember the song guideline: “a strong dollar equals weak stocks (and feeble commodities), and a weak dollar equals strong stocks (and bullish commodities)”.

So despite the S+P 500’s new highs in 2012, and though the broad GSCI is not very far from its 762 springtime 2011 peak, suppose there is further weakness in commodity currencies versus the dollar. That probably will point to at least interim tops in commodities and the S+P 500.

What’s the bottom line prediction for the near term? The US dollar will strengthen against the commodity currencies (and the broad real trade-weighted dollar also will rally some). Commodities in general will decline (though the Iranian situation obviously is a notable risk). The S+P 500 (and equity marketplaces of commodity currency nations) will fall. As always, timing is everything. This trend probably will start around March/May 2012, though it may be delayed until summer 2012. The various currency, commodity, and stock (and interest rate) marketplaces of course do not have to peak (or bottom) at the same time. Thus the S+P 500 could peak after (or before) the broad GSCI.

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Commodity Currencies and the Economic Recovery Story (3-12-12)

THE HOUSE OF BRICS- HOW SOLID? © Leo Haviland, December 13, 2011

What does travel through the diverse forests of Brazil, Russia, India, and China (the so- called “BRIC” nations) reveal?

Though the BRICs are key sources of world growth, they also reflect global growth patterns. BRIC territories do not possess sufficient independent firepower to propel the overall world economy significantly and permanently forward. In recent months, BRIC stocks have declined substantially. This BRIC equity weakness warns of current and further upcoming economic slowdowns not only in those countries, but sluggishness and even downturns elsewhere.

BRIC currency trends relative to the US dollar interrelate with this story told by equity playgrounds. Recent weakness in these BRIC foreign exchange cross rates reflect and confirm the fragility in BRIC stock benchmarks.

The key point is that Chinese currency appreciation, which had been slow yet persistent, now seems to be taking a breather. In the context of China’s substantial bear trend in equities, and given China’s status as a major exporter nation with massive foreign exchange reserves (a large bankroll to solve minor problems), what does this currency “non-appreciation”/modest depreciation against the US dollar suggest?

It indicates difficulties facing China finally have become quite significant- and more substantial than most China watchers recognize. In other words, China’s economic challenges (such as inflation, rising wages, weak property prices, substantial local government debt) may have grown to become a “fairly big problem”, even if Chinese authorities have not confessed to this. However, China did cut its reserve requirement ratio recently. So even if China’s stock marketplace is not an ideal benchmark for assessing “the overall Chinese economy”, at some point its stock price level and trend, when interpreted alongside other variables, can identify (coincide with) noteworthy Chinese economic problems.

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The House of BRICs – How Solid (12-13-11)


Many influential storytellers dream that economies of nations such as Brazil, Russia, India, and (particularly) China are very- or at least sufficiently- independent of America and other so-called advanced realms. Moreover, the BRIC territories supposedly possess enough power not merely to sustain adequate domestic growth, but also- at least collectively- to help drive the overall world economy significantly forward.

However, this endearing fantasy regarding the house of BRICs confronts substantial real practical barriers. Audiences should not have faith in a tempting doctrine of BRIC independence and almost endless and inevitable strength. The BRIC fraternity and numerous other developing regions indeed have built and continue to construct growing economies. Yet as the recent worldwide economic crisis that emerged in 2007 demonstrates, awful problems in a major developed nation such as the United States can spread rapidly and deeply around the world. As this is so, noteworthy troubles in the BRICs or elsewhere can affect advanced nations significantly.

Slowdowns in advanced nations probably will help to cut- and by more than a little bit- individual and collective BRIC growth relative to the sunny IMF predictions.
If the fiscal and banking crisis related to the European periphery can spread through Europe and around the world, so can the unearthing and spread of a significant problem in a nation as crucial as China. China is no house of cards, but its deck does not hold only aces.

Prior to the financial fires that began burning more visibly in 2007, how many players, regulators, or armchair quarterbacks declared that the US housing boom was likely to suffer an unhappy ending? Is China’s local government debt only a local problem?

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The House of BRICs (The Money Jungle, Part Six)