When the Federal Reserve through its Open Market Desk engages in a transaction under QE or the current balance sheet stabilization (reinvesting maturing securities) with a primary dealer, the direct effect is to increase the dealer’s account with the Fed while decreasing that dealer’s stock of securities. On the other side, absent any offsetting absorptions (either intentional or autonomous), FRBNY’s [...]
The advance estimate for Q4 GDP was not appreciably different than the preliminary figures, changing +0.6% into +1.00033%. It wasn’t anywhere close to enough of a revision to meaningfully alter the picture of the 2015 economy. The average growth in 2015 was just 2.40% (until the next revision next month) compared to 2.43% in 2014; while the average of SAAR [...]
So thorough is the unwinding, they don’t know what to do about it. By “they” I mean policymakers, economists, the media, etc. For years, monetarism has been described as money printing, therefore all that was necessary was just the threat. Then the events of August 2007 intruded, and what was implicit became explicit. Central banks globally responded, since the wholesale/eurodollar [...]
Anything with a positive number and the mainstream will jump. The latest was durable goods which only featured a positive number in the seasonally-adjusted series. Still, it was enough to send out the usual notices that the worst is over even for manufacturing. The U.S. manufacturing sector could be on the mend after struggling for the past year with a [...]
All the warning signs were there, especially the backup in the CNY exchange rate. Chinese stocks had stood for a good run while the PBOC had flooded internal channels, but how much of that was real liquidity versus the appearance of stuffing funding into the narrow coffers of the largest state run banks? Increasingly it seemed far more the latter [...]
Back in September 2015, FactSet estimated that EPS for the S&P 500 would grow by almost 5% in Q1 2016. Their latest update is now -6.9%. Energy, of course, gets most of the blame but according to their latest breakdown it is widespread if of a smaller magnitude. For Q4, earnings are on track to contract by about 4%, and [...]
Unfortunately for Treasury Secretary Lew, the world keeps skewing closer and closer to the version suggested by “markets”, moving further and further from the one he and Janet Yellen declare the only valid possibility. The order and transmission of excuses has been entirely predictable, starting right with his “strong dollar.” 1. Dollar doesn’t matter, indicates strong economy relative to the [...]
The last time I had occasion to notice Jack Lew was last January when he was in Davos assuring the world there was nothing wrong with either its economy or markets. He even went so far as to reiterate the “official” Treasury position about the dollar. He didn’t say it explicitly, but his meaning, much to do with the timing, [...]
Score one for Chinese consistency. Back in December, Chinese officials suddenly announced that they were pulling back the Minxin PMI’s of smaller and mid-sized businesses in both manufacturing and services. Broadcasting the need for “major adjustments”, China Minsheng Banking Corp. and the China Academy of New Supply-side Economics had previously estimated a huge decline in economic activity suggested by their [...]
Standard Chartered reported a massive yearly loss for 2015, the bank’s first in almost thirty years. The results were so bad that the company has publicly stated it might even “claw back” bonuses from about 140 executives. If the firm is truly interested in assigning blame, however, it might first look to Ben Bernanke and Janet Yellen (as primary representatives [...]
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