Economy

Chart of the Week: The Dreaded Full Frown

By |2018-12-28T15:44:44-05:00December 28th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I’m going to break my personal convention and use the bulk of the colors in the eurodollar futures spectrum, not just the single EDM’s (June) contained within each. The current front month is January 2019, and its quoted price as I write this is 97.2475. The EDH (March) 2019 contract trades at 97.29 currently and it will drop off the [...]

Uh Oh; In A Month Of Big Warnings, The Biggest Yet

By |2018-12-28T12:16:50-05:00December 28th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

All better now. It’s a Christmas miracle, the plunge erased by market closure as if FDR had just been re-elected and taken the oath. The Dow is on everyone’s mind, so trading on December 26 has understandably stuck. Stocks posted their best day in nearly a decade on Wednesday, with the Dow Jones Industrial Average notching its largest one-day point [...]

Unmixed Signals

By |2018-12-27T17:31:43-05:00December 27th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In mid-December, the Bank for International Settlements (BIS) published its regularly quarterly update. It was just in time for the current bout of “overseas turmoil” which included a lot that wasn’t overseas. The BIS noticed, I’m sure reluctantly. Financial markets swung widely, eventually netting a sharp correction, during the period under review, which started in mid-September. Asset prices fell across [...]

Wasting the Middle: Obsessing Over Exits

By |2018-12-26T17:07:58-05:00December 26th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

What was the difference between Bear Stearns and Lehman Brothers? Well, for one thing Lehman’s failure wasn’t a singular event. In the heady days of September 2008, authorities working for any number of initialism agencies were busy trying to put out fires seemingly everywhere. Lehman had to compete with an AIG as well as a Wachovia, already preceded by a [...]

Now This Is Decoupling

By |2018-12-21T17:31:13-05:00December 21st, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

They didn’t make a big deal out of it, tucked away in an attached note to the last FOMC statement was a second “technical adjustment.” The Fed says it wants to raise rates but not like this. IOER was moved another 5 bps lower within the approved policy range (now 2.25% to 2.50%, federal funds). The reason they gave: Setting [...]

Setting Up For More ‘Residual Seasonality’ Not Inflation

By |2018-12-21T16:30:28-05:00December 21st, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Without crude oil on an upswing, inflation can only be on the downswing. That may seem like a tautology of sorts, but it’s not. In fact, those advocating for the optimistic economic case have been predicting consumer prices being directed by something other than oil. I know it’s a broken record, but here it is again: labor shortage, competition for [...]

Rationing Rational Rationalizations

By |2018-12-21T15:30:06-05:00December 21st, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

What is the Greenspan or Fed put? It is an idea, the legend that says the US central bank will only allow a little downside in stocks. The 1929 crash despite being so long ago has been indelibly imprinted upon the machinations of policymakers. Some say they can’t see a big slide without the Great Depression. Therefore, they will do [...]

Third Stage Gold

By |2018-12-20T17:50:32-05:00December 20th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Rather than sticking gold in with my last one on collateral, I felt it deserved its own focus. Its duality often puts it on the side of deflation with collateral shortage as the main mechanism. Given that, it wouldn’t have been surprising if gold was collapsing now as it had been during the earlier eurodollar mess after mid-April. But, as [...]

Dealer Behavior Leads Us To Another Big (Collateral) Warning

By |2018-12-20T16:58:54-05:00December 20th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The latest liquidations began right after October 3. Oil shifted toward contango/crash, curves collapsed, even stock markets which looked like they had skated past disruptions early in the year were slammed. It was as if every market hit the same air pocket all at once, therefore identifying (global) liquidity as the major issue driven, of course, by reversing economic and [...]

Powell: Still Strong; Markets: AYFKM

By |2018-12-19T18:21:10-05:00December 19th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The official statement that accompanies each every FOMC policy action is by nature bland and sterile. Still, despite the sparseness of printed words those that are included can say a lot. Here’s its essence for what just wrapped up in December 2018: The Committee judges that some further gradual increases in the target range for the federal funds rate will [...]

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