54a US TIPS Curve Inverts: An Economic Warning? ———Part 1 Summary———The US Treasury inflation-protected security curve has gone upside down. Indeed, it has NEVER been more upside down. What is the Treasury market telling us about the economy's prospects? Also, how long does reflation typically last? Are we closer to its beginning or end? ———Episode 54 Intro——— "The pen is [...]
I've been getting that question a lot these days. How high can rates go? It is asked in a way that seems to imply that the answer is obvious - not much. Why? The answer is almost always the same; the Fed can't and won't let rates go up. If they did, it would kill the economy and raise the [...]
53.0 Inflation? Depends on Where You Look for ItShould speculative ventures be included in calculations of inflation? What about productive investment? Housing? All transactions? Or just consumer prices? Jeff Snider reacts to a Wall Street Journal opinion column. ———WHO——— Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiArt: https://davidparkins.com/ Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, not spending money on haircuts. Art by Winterfell [...]
There is precedence for this, though not to this extent; it has reached a record. And when it happened before, oil prices were right in the middle of it, too. The 5-year TIPS breakeven rate has surged to equal its highest in a very long time. Considered by many evidence for an inflationary breakout – these are inflation breakevens, after [...]
52.3 US Oil Market Update + Texas Power Credit Crisis?What does the oil market (production, demand, inventory) in the USA tell us about the economic recovery in early 2021? Also, is a power market credit crisis in Texas causing a national run on banking-system collateral? [Emil’s Summary] The theme of Making Sense Episode 52 is how an environment reacts to an [...]
It’s understandable, even natural to focus on the amplitude of this or any BOND ROUT!!! and make comparisons to past reflationary trends on that basis alone. But what about frequency? By that, I don’t mean how frequently reflation shows up, though it has been fairly regularly if only because we never get any of that inflation and recovery predicted during [...]
The ISM reported its manufacturing index at highs on Monday, then today releases its non-manufacturing headline falling sharply. The result is an odd appendage to post-2008 history where these sentiment indicators are concerned; they are upside down to the usual configuration when it’s been more likely manufacturing suffers while services are to a greater extent immune to each successive suppressing [...]
52.2 Taper Tantrum II: Yield Curve Twists, Badly?The US yield curve has twisted as Bill yields fall and Bond yields rise. We review a similar situation in 2013 popularly known as "the Taper Tantrum", WHICH WAS NOT A TAPER TANTRUM! Then - like now - a collateral scramble in Bills and a relief sell-off in Bonds. [Emil’s Summary] The theme of [...]
According to the Federal Reserve’s latest balance sheet update (to last Wednesday, Feb 24), its remainder balance of bank reserves declined a touch from the week before. That week, Feb 17, had seen aggregate reserves rise to a record high of $3.38 trillion. These reserves are utterly abundant, no arguing that, but what does this mean?The other part of this [...]
China’s currency had been on fire for seven months straight. Rising nearly in a straight line, from May 27 last year until very early January this year, CNY had gone from a certain plunge into the devastating monetary abyss (unintentional devaluation) to a significant basis for Xi Jinping’s global boasting. This was no ordinary turnaround.The timing of it speaks initially [...]
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