Flash PMI’s from IHS Markit for the US economy were split in October. According to the various sentiment indicators, there’s a little bit of a rebound on the manufacturing side as contrary to the ISM’s estimates for the same sector. Markit reports a sharp uptick in current manufacturing business volumes during this month. The manufacturing index came in at 51.5, [...]
When we talk about money dealers (not just primary dealers) and liquidity, we aren’t just zeroing in on the repo market. Money market conditions such as what we can observe in the part of the global repo market that ends up hitting the tape can be helpful in assessing overall liquidity. It isn’t, however, the complete picture. If money dealers [...]
While things go wrong for Jay Powell in repo, they are going right in housing. Sort of. It’s more than cliché that the real estate sector is interest rate sensitive. It surely is, and much of the Fed’s monetary policy figuratively banks on it. When policymakers talk about interest rate stimulus, they largely mean the mortgage space. Homebuilders, at least, [...]
The second most frustrating aspect of trying to analyze global shadow money is how the term “shadow” really applies in this case. It’s not really because banks are being sneaky, desperately maintaining their cover for any number of illicit activities they are regularly accused of undertaking. The money stays in the shadows for the simple reason central bankers don’t know [...]
After having gotten one bailout terribly wrong, when she takes over at the European central bank Christine Lagarde is set follow in the traditional path of her predecessors like Mario Draghi who keep moving up no matter what level of disaster they leave in their wake. Crafting the biggest national “rescue” in history while leading the IMF, Ms. Lagarde can [...]
China’s growing troubles go way back long before trade wars ever showed up. It was Euro$ #2 that set this course in motion, and then Euro$ #3 which proved the country’s helplessness. It proved it not just to anyone willing to honestly evaluate the situation, it also established the danger to one key faction of Chinese officials. The entire world [...]
It’s not that they are different types, these are only differences in time and timing. As I wrote yesterday, the US economy is on the same spectrum following in behind Europe’s lengthy head start. American Industrial Production peaked a year later and only now has turned negative year-over-year, while European Industrial Production peaked way back at the end of 2017 [...]
Despite the name, the Fed doesn’t actually intervene in the US$ repo market. I know they called them overnight repo operations, but that’s only because they mimic repo transactions not because the central bank is conducting them in that specific place. What really happened was FRBNY allotting bank reserves (in exchange for UST, MBS, and agency collateral) only to the [...]
December 16, 2015, was perhaps the perfect synopsis of Janet Yellen’s mercifully brief tenure. First Ben Bernanke and then Yellen had spent 2014 telling everyone the US economy was in more danger of overheating (best jobs market in decades, they said) and therefore not only would the FOMC taper and terminate QE there would be rate hikes to follow closely [...]
Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics. The reported numbers aren’t good [...]
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