Markets

They’re Here: Negative UST Yields Finish The Collateral Case

By |2020-03-18T12:16:04-04:00March 18th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Negative Treasury rates are here. The front end of the yield curve fell below zero for the first time, the equivalent yield for the 4-week T-bill at -0.025% as I write this. The benchmark 3-month yield is straddling zero (while 3-month LIBOR jumps, as noted yesterday). These are not surprising developments. They are to Jay Powell and the people who [...]

Is GFC2 Over?

By |2020-03-17T19:47:28-04:00March 17th, 2020|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Is it over? That’s the question everyone is asking about both major crises, the answer is more obvious for only the one. As it pertains to the pandemic, no, it is not. Still the early stages. The other crisis, the global dollar run? Not looking like it, either. Stocks rebounded because of “major helicopter stimulus” or because that’s just what [...]

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, [...]

Unprecedented in China, Yes, But Then What?

By |2020-03-16T12:55:25-04:00March 16th, 2020|Markets|

These numbers are essentially meaningless. They aren’t completely devoid of content, of course, just that such substance is of limited use. The Chinese have confirmed that their economy had shut down in the January-February period. The estimates for the Big 3 accounts were way below any and every consensus, thus demonstrating the severity of the disruption. First, the figures: Industrial [...]

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 [...]