If you haven't had a chance yet, head over to MacroVoices for my latest presentation with Erik Townsend. A rerun of our Harvard appearance, it's an overview of the major points from how we got here to really understanding and appreciated where is here. Here is the MacroVoices page. And the same on Youtube. Some depth and details behind the [...]
If the “equation” CNY DOWN = BAD is valid, and it is, then what drives CNY downward in the first place? In conventional Economics, authorities command the currency to affect the level of exports. In reality, that’s not at all how it works. The eurodollar system of shadow money is almost purely calculated risk versus return. Before August 2007, everywhere [...]
It is the shadows what really matter. A big enough problem in them would affect pretty much everything, including far off, out-of-the-way places like federal funds. Thus, if we observe weird things going on there we can infer more serious issues back where it does mean something. In 2013 and 2014, the Federal Reserve was hugely optimistic. FOMC officials didn’t [...]
As noted yesterday, what’s typically behind these hopes about “green shoots” is a central bank, more often than not more than one central bank. In 2019, the Fed’s pause isn’t the only supposed dovish turn. The ECB is back at it, having canceled its rate liftoff. And the PBOC is doing things that nobody ever cares that much to truly [...]
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. [...]
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