Why is anyone surprised Christine Lagarde stepped in it? This is who she is, who she has been her entire career. The woman is a walking disaster, screwing up from one place only to be promoted into the next. Her Argentina debacle was merely the latest – before yesterday. In case you were distracted by events closer to home, the [...]
In a week replete with chaotic movements and arrangements, a puzzle has emerged. Conventional wisdom says that when stocks tank bonds rally. While the latter takes place regardless of the former, during those times when the NYSE finally pays attention to what might be herding financial agents into safety instruments the bond market typically rallies even harder. It sure did [...]
Jay Powell has a lot of catching up to do, and very little time to do it. He's squandered so much already. First his emergency rate cut blew up in his face and now his dud of a bazooka. Before the market got going, officials had already added a 25-day allotment (of bank reserves, of course) on top of the [...]
Another day, another big risk-off move. And yet, the world's great end-of-world hedge, gold, is getting pummeled even as it seems the world is edging closer to its end. Yes, another day another clear demonstration of collateral scarcity - as opposed to bank reserve scarcity which isn't a thing (sorry, Jay). If you have a moment, check out the intraday [...]
The eurodollar curve’s latest twist exposes what’s behind the long end. To recap: big down day in stocks which, for the first time in a while, wasn’t accompanied by massive buying in longer maturity UST’s. Instead, these were sold, too. Rumors of parity funds liquidating were all over the place, which is consistent with this curve behavior. Let’s start with [...]
Can we please dispense with all notions that monetary policy works? Specifically balance sheet expansion via any scale asset purchase programs. Nowhere has that been more apparent than Japan. Go back and reread all the promised benefits from BoJ’s Big Bang QQE that were confidently written in 2013. The biggest bazooka ever conceived has fallen short in every conceivable way. [...]
Basic recession economics says that when you end up with too much of some commodity, too much inventory that you can’t otherwise sell, you have to cut the price in order to move it. Discounting is a feature of those times. What about a monetary panic? This might sound weird, but same thing. In other words, if you have too [...]
Is the dollar rising, or falling? Does it matter? In one sense, obviously it does. The way in which the dollar behaves dictates how everything else goes. The potential mix-up and confusion start when we have to define exactly what we mean by “dollar.” Or rising. The rising dollar doesn’t always rise. If we are talking about the US currency’s [...]
An honest-to-goodness oil crash. For a time this morning, the front month WTI futures contract had fallen into the $20s for the first time since Euro$ #3. Up to now, that prior outbreak had been the more (in)famous as far as crude prices have been concerned. Over the intervening years, it was thought that supply and demand had been made [...]
The 3-month Treasury bill’s equivalent yield has plunged, absolutely plunged. It was 1.45% last Thursday. Today? All of 45 bps. A one-hundred bp drop in six trading sessions. One hundred. Six days. Rate cuts, right? Sure, that’s the premise. Like eurodollar futures, the front end of the yield curve is saying that there are more of them coming. The Fed’s [...]
Stay In Touch