Currencies

GFC1 Aid vs. Stimulus: We’re Replaying 2008 Because 2008 Worked Out So Well?

By |2020-03-17T17:00:22-04:00March 17th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It barely rated notice, not even a mention. On Saturday, March 7, just before all Hell broke loose, Lebanon announced it wouldn’t be repaying a $1.2 billion Eurobond issue which was coming due right on March 9. Normally people only notice this tiny country for some terrorist action or recall much about it beyond the civil war which had devastated [...]

Powell Was Warned Last Year: Money Soon…Or Else

By |2020-03-16T18:17:43-04:00March 16th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The Fed unveiled what was supposed to be shock and awe. Instead, it was the predictable series of upsizing the bazookas, monetary armaments in name only. I’ll write it again: there is no money in monetary policy. Central banks are not central. That was the primary lesson of September’s repo rumble, and not for the first time since August 9, [...]

A Week We’ll Never Forget

By |2020-03-16T07:02:39-04:00March 16th, 2020|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Financial Planning, Markets, Real Estate, Stocks, Taxes/Fiscal Policy|

Last week was one of the worst weeks in the history of the US stock market. Thursday’s plunge was the worst one-day loss other than the crash of 1987. Friday’s recovery was stunning as well but big rallies are typical of bear markets and that is, unfortunately, where we now find ourselves. Obviously, the selling was about the coronavirus and [...]

Chaos Curve: Stocks And Long Bonds Aren’t Actually Diverging Right Now

By |2020-03-13T13:46:26-04:00March 13th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

In a week replete with chaotic movements and arrangements, a puzzle has emerged. Conventional wisdom says that when stocks tank bonds rally. While the latter takes place regardless of the former, during those times when the NYSE finally pays attention to what might be herding financial agents into safety instruments the bond market typically rallies even harder. It sure did [...]

Collateral, Friends

By |2020-03-12T10:27:58-04:00March 12th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Another day, another big risk-off move. And yet, the world's great end-of-world hedge, gold, is getting pummeled even as it seems the world is edging closer to its end.  Yes, another day another clear demonstration of collateral scarcity - as opposed to bank reserve scarcity which isn't a thing (sorry, Jay). If you have a moment, check out the intraday [...]

(Almost) Everything Sold Off Today

By |2020-03-11T19:48:44-04:00March 11th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The eurodollar curve’s latest twist exposes what’s behind the long end. To recap: big down day in stocks which, for the first time in a while, wasn’t accompanied by massive buying in longer maturity UST’s. Instead, these were sold, too. Rumors of parity funds liquidating were all over the place, which is consistent with this curve behavior. Let’s start with [...]

What Happens When Central Banks Buy Stocks (ETFs)? Well, We Already Know

By |2020-03-11T13:03:58-04:00March 11th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Can we please dispense with all notions that monetary policy works? Specifically balance sheet expansion via any scale asset purchase programs. Nowhere has that been more apparent than Japan. Go back and reread all the promised benefits from BoJ’s Big Bang QQE that were confidently written in 2013. The biggest bazooka ever conceived has fallen short in every conceivable way. [...]

Low Rates As Chaos, Not ‘Stimulus’

By |2020-03-10T17:28:21-04:00March 10th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Basic recession economics says that when you end up with too much of some commodity, too much inventory that you can’t otherwise sell, you have to cut the price in order to move it. Discounting is a feature of those times. What about a monetary panic? This might sound weird, but same thing. In other words, if you have too [...]