We’ve got repo, erratic federal funds market, German 2s correlated with it, plunging bond yields, angry swaps (IR and FX), and economic data increasingly and more speedily in the wrong direction. Overseas official entities piled even more into the foreign repo pool, their payments dollar buffer, another definitive sign of a much more acute dollar shortage worldwide. Is it even [...]
Things that happen in one place happen in every place. That’s been the second hardest thing to get people to realize. The first is that central banks are not central. And the reason they aren’t is because of this other factor. It truly is a global system and it’s made that way by its very nature. Credit-based money means that [...]
You never fixate on a single employment report. It is a lesson that Jay Powell may not have yet learned. Either that, or he was desperately grasping for straws. The Federal Reserve is trying to thread a very fine needle; on the one hand, the rate cuts. On the other, he doesn’t want them to become a catalyst for people [...]
I see it as reality intruding. The myth of the Fed continues to linger in the popular media, the mainstream press will dutiful parrot the idea that rate cuts and an end to QT are “highly accommodative.” The FOMC told them yesterday what to write and say: These changes in the anticipated path of interest rates have eased financial conditions [...]
The FOMC yesterday reiterated their stance that the economy was strong. But they also hedged. A one-and-done rate cut is one thing, some insurance (allegedly) for keeping the good times rolling. What about QT, though? That’s the funny thing that you can’t help but get stuck on. Not bank reserves, mind you, they’re worthless (perhaps literally). Rather, Federal Reserve officials [...]
Perhaps too much attention was given to “one-and-done”, the knee-jerk disappointment over what everybody is saying was not enough “dovishness.” And while that may have been true as it relates to main star of the puppet show, rate cuts, the FOMC actually did deliver better theater at least with a secondary character. The latest official statement announced the Federal Reserve [...]
The insurance rate cut has been issued. Telling the assembled members of the press this is nothing more than a “mid-cycle adjustment”, Chairman Powell was cautious not to betray too much concern. The first rule of central banking is not to make anything worse. Subprime must always be contained. Yet, he has the unenviable task of explaining what is a [...]
In every likelihood, the Federal Reserve today is going to join other central banks around the world who have already cut rates. It is the synchronized signal completing the turn from globally synchronized growth into a globally synchronized downturn. To most people in the United States, at least, this is a puzzling shift. The unemployment rate says things are [...]
The problem continues to be, I’m sure, is one of perception. Economists, politicians, and mostly central bankers have been saying for years that the real economy is the one you see in the unemployment rate. Things are booming. The labor market is awesome, even epically tight. Between last year and this year, going by the unemployment rate the economy has [...]
I don’t think anyone really noticed the timing because nobody really noticed it had happened. What took place last year qualifies as a big deal in the world of central banking and moneyless monetary policy. The lack of clarity about it as well as what sure looks like indecision portrays an intellectual foundation at odds with public perception. First, the [...]
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