Federal Reserve/Monetary Policy

The Continuing Incompatible State

By |2017-05-04T19:01:15-04:00May 4th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

As much as even the major labor market statistics have picked up on slowing, they wouldn’t have in the first quarter of this year presented enough of it to keep productivity positive. With a very low level of output, once again, calculated labor productivity was for the fourth time over the last six quarters negative. According to the BEA, total [...]

About Those Secondary Speculators

By |2017-05-04T17:01:08-04:00May 4th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Back when the WTI curve was at its steepest contango, who was it that was buying up all that oil? A sheer vertical curve is an invitation to almost free money, very much like other curves everywhere else during the “rising dollar.” You could simultaneously buy crude at spot and sell it for delivery years ahead using a futures contract, [...]

Noose Or Ratchet

By |2017-05-03T18:12:58-04:00May 3rd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Closing the book on Q4 2016 balance sheet capacity is to review essentially forex volumes. The eurodollar system over the last ten years has turned far more in this direction in addition to it becoming more Asian/Japanese. In fact, the two really go hand in hand given the native situation of Japanese banks. As expected, data compiled by the Office [...]

Ceremonial Authority

By |2017-05-03T16:48:55-04:00May 3rd, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In a world where everything is transitory, nothing is. The FOMC in its latest statement referred to that word yet again. As always, the context is weakness. But if such is always unexpected yet occurring, even if temporary, “transitory” doesn’t apply. Yet we go through the ritual each time anyway. The last (March) statement read: The Committee expects that with [...]

Auto Pressure Ramps Up

By |2017-05-02T18:46:59-04:00May 2nd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Los Angeles Times today asked the question only the mainstream would ask. “Wages are growing and surveys show consumer confidence is high. So why are motor vehicle sales taking a hit?” Indeed, the results reported earlier by the auto sector were the kind of sobering figures that might make any optimist wonder. Across the board, and for the fourth [...]

The Eurodollar’s Soul; Part 2

By |2017-05-02T17:15:44-04:00May 2nd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Part 1 is here. The story of the asset bubbles is one of eurodollars alone. We can tell so much of the history of the past few decades by examining its pieces. The primary component has been derivatives, these financial instruments that are largely misunderstood shrouded often by what can appear to be incomprehensible complexity. That their own purveyors more [...]

The Eurodollar’s Soul; Part 1

By |2017-05-02T17:16:26-04:00May 2nd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You could say that SunTrust dodged a bullet. The Georgia bank was itself an amalgam of smaller banks cobbled together during the deregulation of the 1980’s. On the one side were the Florida subsidiaries based in Orlando, what came to be known as the Sun Bank. On the other was the Trust Company of Georgia, both coming together in 1985 [...]

Blatant Similarities

By |2017-05-01T18:36:47-04:00May 1st, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Declines in several of the world’s PMI’s in April have furthered doubts about the global “reflation.” But while many disappointed, some sharply, it isn’t just this one month that has sown them. In China, for example, both the manufacturing and non-manufacturing sentiment indices declined to 6-month lows. While that might be erased next month as normal short run volatility, the [...]

The Actual Underside of ‘Solid’

By |2017-05-01T17:11:21-04:00May 1st, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One of the driving forces of populism is this very keen sense of dissonance. We are told one thing only to observe another, with the basis for that first thing being little more than the credentials of the person making the claim. If Janet Yellen proclaims consumer spending as “solid”, we are supposed to take her at her word without [...]

The Irony of Stable Inflation

By |2017-05-01T12:02:08-04:00May 1st, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In February 2000, the FOMC quietly switched from the CPI to the PCE Deflator as its standard for inflation measurement. There were various technical reasons for doing so, including the CPI’s employment of a geometric mean basis (which was in 2015 finally altered to a Constant Elasticity of Substitution formula). But it was one phrase that in hindsight did the [...]

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