No inflection is ever expected in the real economy since everything is always extrapolated in straight lines by orthodox economists using econometrics. Similar interpretations are being used in stocks, and not just in the “earnings recession” that is already declared “unexpected.” In terms of share prices, there is little doubt about what is holding up the S&P 500 and larger [...]
If you go back and review the academic literature from the 1960’s up until the 1980’s as it related to monetary policy and recession, you find a rather solid foundation for credit as a means of deconstructing contractionary forces. The interface between expectations and actions had typically occurred within the realm of business credit, whereby deepening pessimism was “passed off” [...]
The Chinese lunar year always offers difficulty with Chinese economic figures, and this year was perhaps heightened in that respect since the New Year fell rather late on February 19. That suggests less dependable interpretations especially about February figures. So after rising a suspicious 48.3% in February, Chinese exports (in US$’s) are down 15% in March even though they were [...]
The effects of a strong US currency are vast. Much of what is being reported in main stream media are the negative domestic effects. A wider view shows some positive evolving trends as well. Yes, a higher US dollar has killed oil prices. This has lead to lower broad Index earnings and earnings expectations which is highly concentrated in the energy [...]
I should have known better than to write an article about the possibility of a correction in US stocks. I took a lot of abuse from the bulls this week as the US stock market shrugged off - again, for now - the weak economic data that just keeps coming. That light at the end of the tunnel the Fed [...]
We ran into this complication during Bernanke’s partial “confession” about his brand of QE, namely that what failed was not the power of the Fed overall but rather to extend the power of the Fed beyond merely the financial. He is trying to claim that QE wasn’t really impactful after having totally assured anyone who would listen contemporarily that it [...]
Since November of 2014, the S&P 500 Index (IVV) has been traded within a range of 150 or so points. During that time, it has broken the 50-day moving average a total of 7 times, but has yet to break support at the 200. If it's able to break the short-term downtrend line at the 2100 level, we're looking at new [...]
GC Repo rates for MBS actually ticked higher despite a sizable decline in total par volume offered, coming in just barely shy of 25 bps. Agency repo rates followed, unsurprisingly, while UST repo rates declined by a few pips. Unusual elevation continues.
The primary challenge of trying to unravel wholesale finance is the innumerable and often impenetrable layers. Making important distinctions is quite tricky, as you have to account for additional dimensions above and beyond what might pass for reasonable expectations. The repo market offers a good example of that, as you have supply and demand for cash “helping” set the repo [...]
The wholesale sales and inventory figures were significantly revised this month going back more than a decade. The largest revisions were evident after 2007, which changes slightly the depth of the Great Recession and the “briskness” of the stunted recovery thereafter. Though both sales and inventory figures are much higher than previously believed (until they get revised again), the economic [...]
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