Nothing will ever compare to China’s New Year Golden Week holiday for challenging economic statistics. Since the celebrations are not affixed to a specific point on the calendar, floating around back and forth some years between January and February, it makes making comparisons of those months particularly tricky. For the China’s Big 3 statistics, industrial production, retail sales, and fixed [...]
At last week’s ECB’s press conference, the central bank’s President Mario Draghi was both downbeat and upbeat. As to the former, he acknowledged that Europe’s economy wasn’t working out the way they’d all hoped (and repeatedly promised). Despite the disappointment, Draghi wasn’t completely deterred. This growth scare wasn’t really European, he said. China, trade, and a bunch of other things [...]
It had been 55 months, nearly five years since China’s vast and troubled industrial sector had seen growth better than 8%. Not since the first sparks of the rising dollar, Euro$ #3’s worst, had Industrial Production been better than that mark. What used to be a floor had seemingly become an unbreakable ceiling over this past half a decade. According [...]
The rest of the TIC data was relatively straightforward, at least in viewing it as a proxy for monetary conditions offshore (spilling over, as EFF, onshore). Through February 2019, the usual: shortage of balance sheet capacity, banks cutting back cross-border US$ liabilities (except for resales), foreigners selling US$ assets as a consequence. The official sector selling the most and most [...]
According to revised figures, things were really looking up for US industry. For the month of April 2018, the Federal Reserve’s Diffusion Index (3-month) for Industrial Production hit 68.2. Like a lot of other sentiment indicators, this was the highest in so long it had to be something. For this particular index, it hadn’t seen better than 68 since way [...]
They said May 29 was Italians. I say it was collateral. Offshore repo collateral, to be specific. Because we keep seeing May 29 show up everywhere, what happened that day matters. Getting the story straight allows us to properly analyze the craziness in between then and now. From that, we hope to get a better sense of what comes next. [...]
In September 2012, the Federal Reserve’s third QE wasn’t the only major “rescue” of note. The Europeans had benefited from Mario Draghi’s “promise” earlier that summer but that was a little too vague. So, the various governments cobbled together sufficient backing to launch the European Stability Mechanism (ESM). This replaced two other prior “rescues”, neither of which are worth mentioning. [...]
China’s Passenger Car Association reported last week that retail sales of various vehicles totaled 1.78 million units in March 2019. The total was 12% less than the number of automobiles sold in March 2018. This matches the government’s data, both sets very clear as to when Chinese economic struggles accelerated: May 2018. For decades, there was just one way for [...]
The repo rate above the federal funds rate is an assault on everything we’ve been taught. There is supposed to be a risk-driven hierarchy that governs financial markets, every single one of them. The global economy depends on it. If you are judged to be a higher risk, that’s who pays the higher interest rate. But repo is lower risk. [...]
We’ve seen this all before. Three times. When things started to look better in the Spring of 2015, for example, “better” was more so a term of art. Another way of saying green shoots is “not as bad” or “no longer accelerating to the downside.” These have very different connotations and therefore to make an optimistic case there needs to [...]
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