In December 1999, Princeton Professor Ben S. Bernanke wrote a relatively obscure paper largely denouncing the Bank of Japan’s shyness. Japan’s economy had by then been mired in its first Lost Decade, one which at that moment not everyone was sure should have been lost. It was fashionable at the time to pile on the BoJ. Dr. Bernanke argued for [...]
Yesterday, we spotlighted Brazil’s economy as perhaps a leading indicator for where things stand. Today, it’s China’s turn. Neither are very encouraging. Both offer instead only growing concern. The reason isn’t just the possibility of the world economy rolling over in 2018, rather it’s from what level any deceleration might have begun. Despite the characterization of especially the US economy [...]
Overshadowed by the “dollar” last week was the Bureau of Labor Statistics. The BLS reported the US CPI had increased in July 2018 by the highest rate since December 2011. Running at 2.95% year-over-year, consumer prices accelerated a little from June’s pace. Not only that, the CPI’s core rate of inflation sped up to 2.35%. That was the highest since [...]
There is just something about August. It is irresistible, apparently, in all the wrong ways. For starters, there are big ones and small ones but somehow they all line up against liquidity and plentiful eurodollar money. In the former class there was, of course, August 9, 2007, August 9, 2011, and August 10, 2015. Even in the latter category there [...]
A major part of any yield curve is inflation expectations. Nominal growth particularly toward the longer end of curves sets the agenda for trading. But further out there are several confluences that may cause distortions. For Economists, these are conundrums. There are times, however, when curve dynamics remain pretty simple. These are not usually the best of times. As my [...]
This year, we've got T-bills and Trump. Two years ago, it was 2a7 and money market funds. I wrote on this day in 2016: Since that point, encompassing both liquidation waves in August and then January and February 2016, the TED spread has been on a more determined upward track as well as being more much, much more volatile as [...]
On August 9, 2007, the eurodollar system cracked. Over the eleven years since that day, the crack has only become enlarged. No amount of QE nor the bank reserves those produced has been able to patch the system back up into functioning condition. The thing lingers on, limping forward through small ups and more serious downturns. One step forward, two [...]
Why is SHIBOR falling from an economic perspective? Simple again. China’s growth both on its own and as a reflection of actual global growth has stalled. And in a dynamic, non-linear world stalled equals trouble. Going all the way back to early 2017, there’s been no acceleration (and more than a little deceleration). The reflation economy got started in 2016 [...]
Globally synchronized growth has taken a beating so far in 2018. As a narrative, one factor after another has turned against it. Europe was booming and was even going to be in a leadership position for the global economy. Now? Not so much. The dollar would continue to fall just as it did in the years before Bear Stearns, a [...]
During the decade of the seventies, there was an opening. The Bretton Woods system had largely failed in 1960, but gold exchange lingered onward until August of 1971. Long before President Nixon acted in defaulting on US obligations, however, global currency liquidity had increasingly been supplied through other means. Those “other” means was an offshore ecosystem that though rudimentary compared [...]
Stay In Touch