Trade war stuff didn’t really hit the tape until several months into 2018. There were some noises about it back in January, but there was also a prominent liquidation in global markets in the same month. If the world’s economy hit a wall in that particular month, which is the more likely candidate for blame? We see it register in [...]
Overseas turmoil continues in October. The Chinese government released its Purchasing Managers Indices (PMI) for both manufacturing and services. Each one came in at a multi-month low. The National Bureau of Statistics calculated that the manufacturing version was just 50.2 this month, the lowest level since July 2016. The Non-manufacturing PMI fell sharply to 53.9 from 54.9 in September. October’s [...]
On February 12, 1999, the Bank of Japan announced that it was going full zero. Japan’s central bank would from that day forward push the overnight uncollateralized lending (interbank) rate to the zero lower bound. Further, it pledged to keep it there until Japan’s economy recovered. The economic slump in the nineties had been by 1999 almost a decade in [...]
Data dependent, they claim. They aren’t. Mario Draghi at his last press conference admitted, “incoming information, [is] somewhat weaker than expected.” There is so much riding on the word “somewhat.” Because of the weasel, the head of the ECB told the assembled media policy normalization was unimpeded. He did so with a straight face. Good. Europe’s QE experiment needs to [...]
Why Eurodollars Might Be Key to the Market Sell-Off (Podcast) There’s a huge market out there that doesn’t get much attention: Eurodollars. These have nothing to do with the euro-dollar exchange rate. Instead, eurodollars are U.S. dollar-denominated deposits at foreign banks and overseas branches of American banks. They’re effectively a source of dollars that operates outside the control of the [...]
The word contagion is easy enough to understand. Whether the spread of disease or disaster, sometimes it is difficult if not impossible to contain. In financial terms, contagion is often thought of along the lines of 2011; Greece started it and it spread throughout the rest of Southern Europe. The euro was coming apart, and what “it” was didn’t seem [...]
Paul Volcker caused a minor stir last week releasing a book he has been working on. The aging former Federal Reserve Chairman apparently has a lot to say about the current state of affairs. “We’re in a hell of a mess in every direction,” he told Andrew Ross Sorkin of The New York Times. No kidding; that about sums it [...]
Inflation hysteria was as much crude oil as anything else. After all, it was the sudden spike higher in oil prices that would eventually push the US CPI, PCE Deflator, Europe’s HICP, and even Japan’s moribund inflation index. Central bankers were giddy, as was mainstream commentary extrapolating these trajectories into actual economic acceleration. For a time, even the unbreakable skepticism [...]
It’s one thing if China registers a low ceiling or Brazil. That wasn’t going to be possible this time in the developed world. Europe and the US were finally going to lead. That’s what they said last year, anyway. Markets are freaking out about the growing evidence for so many growth ceilings. The other term for it is an “L” [...]
Jerome Powell may be hawkish, relatively speaking, but his case rests on one data point alone. There is nothing other than the unemployment right now indicating he’s got the right forecast in mind. This wasn’t true just months ago. At the end of 2017 and for a few months in 2018, inflation was moving upward and above targets and benchmarks. [...]
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