What got Urjit Patel fired (involuntary resignation) from his job atop the Reserve Bank of India was that he pulled a Trichet. Foolish enough to believe in the hype, Patel began a course of raising interest rates into the face of a gathering global dollar storm. The ECB’s Jean-Claude Trichet had done the same thing in the middle of 2011. [...]
Supply glut or demand disappearing? We are back to asking that question again after four years. In late 2014 and early 2015, the conventional answer was shale. The US had begun producing so much oil there was a glut of supply. Without an outlet for it, all the crude began building up primarily in Cushing, OK. All that was true [...]
It’s another one of those things that just blows up the whole convention, another pretty clear sign that the mainstream has it all backward. We are seeing it play out right now with China. The Chinese are being accused of unfair currency manipulation, the sort of “competitive devaluation” that fills whole chapters in the Keynesian Economics textbooks. The idea is [...]
The JOLTS series had always been a seemingly superfluous set of labor numbers for the Bureau of Labor Statistics (BLS). The agency wanted to go deeper into employment when it originally presented these other series in 2002. The unemployment rate seemed accurate enough, but it came at the labor market solely from the view of labor supply. As the BLS [...]
As of today’s close, there are only 22 trading days in the entire history of Japan’s government bonds (JGB) where the yield (or “yield”) on its 10-year paper has been more negative. Those 22 all came clustered together in June and July 2016. In other words, Japan’s bond market is today comparable only to that one period at the utter [...]
Right on cue, the Chinese have restarted “devaluation.” Because no one ever learns, and because trade wars are a conveniently timed distraction, CNY’s dramatic plunge below 7.00 is being written up as currency manipulation. It is manipulation, just nothing like what’s being described. PBOC Governor Yi Gang is a passenger here, not the man pulling the levers behind the scenes. [...]
We’ve got repo, erratic federal funds market, German 2s correlated with it, plunging bond yields, angry swaps (IR and FX), and economic data increasingly and more speedily in the wrong direction. Overseas official entities piled even more into the foreign repo pool, their payments dollar buffer, another definitive sign of a much more acute dollar shortage worldwide. Is it even [...]
Things that happen in one place happen in every place. That’s been the second hardest thing to get people to realize. The first is that central banks are not central. And the reason they aren’t is because of this other factor. It truly is a global system and it’s made that way by its very nature. Credit-based money means that [...]
You never fixate on a single employment report. It is a lesson that Jay Powell may not have yet learned. Either that, or he was desperately grasping for straws. The Federal Reserve is trying to thread a very fine needle; on the one hand, the rate cuts. On the other, he doesn’t want them to become a catalyst for people [...]
I see it as reality intruding. The myth of the Fed continues to linger in the popular media, the mainstream press will dutiful parrot the idea that rate cuts and an end to QT are “highly accommodative.” The FOMC told them yesterday what to write and say: These changes in the anticipated path of interest rates have eased financial conditions [...]
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