The most remarkable aspect of the WTI crude oil futures curve this month has been its amazing ability to maintain its shape no matter which direction or by how much. Previously, as “dollar” pressures either built or ebbed, the futures curve would either steepen at the front (liquidation pressure) or flatten toward more normal backwardation (easing of the “dollar” difficulties). [...]
The massive wildfires in Alberta earlier this year had a tremendously negative effect upon not just the oil sector but all of Canada. Not surprisingly, Canadian GDP released today was abysmal. Falling 1.6% in Q2, that was the worst quarter since 2009. Fortunately for the Bank of Canada who had been “stimulating” again since last July when it cut the [...]
Repo fails in the past two weeks (the week of August 17 the most current figures) were both more than $192 billion. Though that level is highly elevated, those were actually the fewest fails since mid-June, and the fewest in consecutive weeks since early May. The 8-week average remains about $245 billion, a noticeable increase from even last year’s “dollar” [...]
A eurodollar futures contract affords the buyer the opportunity to obtain a $1 million eurodollar deposit for a three-month term at the expiration and execution of the contract. The rate to be paid for that deposit is 100 points minus 3-month LIBOR for spot settlement on the 3rd Wednesday of the contract month. If 3-month LIBOR on June 20, 2018 [...]
For a central bank, deflation is the starting point which makes inflation the emphasis. So long as there is a “small” amount of positive inflation then economists have suggested deflation, thus depression, becomes impossible. The reason for that belief is twofold, first having to do with the margin for “error”; that is a small positive inflation rate acts as a [...]
The only economic data of note today was the notoriously unreliable personal income and spending figures. The data series contained within the suite are subject to not just major benchmark revisions but significant revisions within just the high frequency time frames. Perhaps the most pertinent example of this is the personal savings rate which has been revised all over the [...]
One of the articles referenced in Janet Yellen’s Jackson Hole speech last week was a piece written for the Peterson Institute for International Economics by Senior Fellow Olivier Blanchard. Dr. Blanchard has, as noted earlier today, all the “right” credentials, which is why his conjecture gets included into the speeches of Federal Reserve Chairmen. Having taught at both Harvard and [...]
Central bankers have impeccable usually PhD level credentials from all the right places. Because of that, it is simply assumed that they are the preeminent experts of how any economy works. In reality, however, the term stamped on each of their doctoral degrees is highly misleading. Though it may say economics, it was really and truly nothing more than a [...]
In case you need any assistance in trying to figure out when Janet Yellen spoke, or at least when the text of her speech was released from embargo, here is a hint: It seems her stream of consciousness was somewhat consistent with the old Greenspan idea of “fedspeak.” People and investors appear to have taken from it what they wished, [...]
Second quarter 2016 GDP was revised slightly lower, from about 1.21% to just 1.09%. That changes nothing from the preliminary estimate, as real GDP has averaged now only 0.93% over the past three quarters since last summer’s major, global disruption. Since the FOMC declared risks “balanced” and heading toward “overheating” in late 2014, economic growth as measured by GDP has [...]
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