Orthodox economic theory assigns recession to some exogenous “shock.” Without it, an economy is supposed to grow indefinitely along its trend or potential baseline so long as NAIRU (non-accelerating inflation rate of unemployment) is maintained. As you can imagine, economists and policymakers spend most of their time on that latter part which is one reason, though more so ideology, that [...]
The theme for Single Country ETFs over the last month is either countries that produce a lot of natural resources (commodities) or Countries in which sane people don't invest. Okay, maybe sanity isn't the proper metric but surely investors who can't afford to take a loss shouldn't be investing in Russia, Peru or Turkey, all three of which make the [...]
Credit Suisse released its annual report for 2015 today allowing us to update its progress through winding down its eurodollar activity exposures. As expected, the bank’s gross notional balance sheet offerings declined by quite a bit in Q4. Gross notional interest rate swaps fell by 15% from Q3 to just CHF 28.8 trillion, the largest quarterly decline (in percentage terms) [...]
There is one part missing from the narrative sketched out in home resales being subjected to monetary imbalance. It is a compelling explanation for what we find as the most striking aspect of existing home sales, namely the curious lack of depth among sellers. It’s as if despite rising prices there is a seller strike where a significant part of [...]
The fundamentals for crude oil continue to be atrocious. Production remains relatively stable if slightly reduced, which is about the only factor in favor of oil prices since the February 11 low. On the other side of the ledger, you don’t hear as much about how it’s all oil supply anymore other than the occasional reference to a “glut” that [...]
The pain of Credit Suisse and its holdover peers, such as Deutsche Bank, is incredibly easy to understand. There is no need for penetrating the depths of technical jargon in interest rate swaps, forward warehousing securities or even the whole varied business of investment banking. In its Q1 2014 quarterly report, Credit Suisse spells out everything you need(ed) to know: [...]
There is certainly not enough attention paid to the evolution of eurodollars and even less devoted to how it all started. In my analysis, those two facets are inseparable as the origins of the eurodollar space tell us a lot about how and why it became what it is. The Japanese, for instance, were being squeezed by really unrelated funding [...]
In late summer last year, just in time to accompany the first blast of contraindicated economic reality, Statistics Canada announced that Canadian GDP had contracted in Q2 2015. That followed an “unexpected” drop in Canadian GDP in Q1 which was supposed to be like oil prices and only a “transitory” deviation on the road to ultimate monetary policy success. Even [...]
By April last year, it had become clear that conditions in China were heading into dangerous territory. Even though most mainstream attention was fixed on the then-still growing stock bubble, there was so much that was wrong almost everywhere else. The economy would not stop slowing, and indeed still has not. The financial system was worse, so much so that [...]
Oil prices remain ebullient, relatively, compared to the dismal start to the year. Everything else, it seems, is driven by that background which means “dollar.” In that respect, we look to China or at least the Asian version of the “dollar” for guidance on triangulating funding conditions and future potential positioning. The CNY exchange is still within the post-Golden Week [...]
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