The world is full of anomalies. It may seem like a paradox, but financial markets are particularly eventful places. Something happens, some people notice, and most often it goes…nowhere. It’s all the time and a constant part of analysis, trying to identify and separate what is truly contained. The global eurodollar monetary system grew so far and so fast in [...]
Credit where credit is due. In March 2018 for the third time in the last 71 months the PCE Deflator registered 2% or better. The year-over-year change just barely squeaked above that line, working out to about to 2.01%. I’m sure the FOMC will take it regardless. Baby steps. Core rates were slightly less, however. The Dallas Fed’s trimmed mean [...]
One equal part of inflation hysteria had been that as the US economy recovers and growth accelerates, foreign buyers would flee US Treasuries. The bond market would be hit with a double damning of higher inflation and and substantially reduced overseas purchases. Under such pressure, no way could yields hold under 3% for very long. To often make the case, [...]
In 1967, the US Personal Savings Rate averaged just a little more than 12%. That was pretty consistent with consumer behavior observed throughout the decades before, and the one that followed. What that meant, in terms of economic theory, was that if you as a central bank intended to accelerate the economy via the manipulation of expectations you at least [...]
The current expansion is already one of the longest on record. With another quarter entering the BEA’s books, it has been 35 since the last declared recession. At +2.3% for the current one, there won’t be another considered anytime soon putting this economy within reach. Yet, out of those 35 quarters only 10 have contained Real GDP growth meeting or [...]
Why isn’t Ford’s news getting a bigger reaction? This was no small announcement, essentially a retooling of its entire business. The company will, in effect, no longer build and sell cars; at least not cars as we think of them. The Mustang, it appears, will be the lone survivor among that category, but the Taurus and even the Focus are [...]
If we are analyzing funding risks of late, which is a perfectly natural thing to do given where things stand, we shouldn’t only focus on the technical aspects. Sure, there is LIBOR-OIS and all that jazz in Hong Kong. But there are other quite simple components to consider, too. If there is a cycle to these upturns and downturns, each [...]
No one seems able to account for the rise in LIBOR-OIS. I think it’s a vain effort, and focuses on the wrong segments, but nonetheless there is considerable uncertainty which always casts suspicions into the shadows. That is important. A few weeks ago, all the big bank analysts were alight with their theories. They couldn’t agree, as noted in this [...]
Since the announced conditional cut in China’s RRR won’t begin to show up in various figures (particularly for the MLF) until next month, the updated PBOC balance sheet for March 2018 is somewhat anti-climactic. Not only is it too early for what may follow given the policy shift, there are the usual if not more than usual Golden Week distortions [...]
On April 6, the Trump administration announced a new round of sanctions imposed upon certain Russian officials, persons, and businesses. Treasury Secretary Steve Mnuchin announced their purported purpose in a letter: “The Russian government operates for the disproportionate benefit of oligarchs and government elites.” Russia’s currency, the ruble (RUB), fell sharply after the announcement as well as over the days [...]
Stay In Touch