This isn’t surprising, but events in China are accelerating. Just as the West heads into year-end coma, there is much to be concerned about on the other side of the Pacific. For, one, either the PBOC has taken off whatever means it has been using to suppress SHIBOR or the strain has become too much to bear. As much as [...]
The Fed’s control over money markets has always been tenuous, a myth more than anything, it just wasn’t so obvious at one time. That observation extends to its grasp of even basic operations, a spectacular fail revealed by its 2000’s treatment of the Discount Window. On January 9, 2003, the FOMC altered decades of monetary history by switching the Discount [...]
I haven’t reported much on the housing market this year because frankly it has been vastly surpassed by everything taking place (globally) with the “dollar” and the economy that seems stapled to it. However, November’s resale figures from the National Association of Realtors (NAR) have alarmed several lines of commentary normally more assured (friendly to the orthodox recovery). The rate [...]
The ongoing money market adjustment remains ongoing; perhaps that tautology is the most that can be interpreted from continuing mixed signals to this point though the longer nonconformities continue the more innocence is threatened. Recognizing again that this is still early in the process, there are some indications that resistance is real and even understandable. That begins first with the [...]
It doesn’t work as the math is surprisingly simple. That is why “sweeping” changes and reform have to be considered at each point of escalation. Taking account of what has occurred only damages further the credibility and faith that is supposed to be the keystone for everything that happens. Instead, the only way to solve the historical deficit is to [...]
Picking up on the money market(s) discussion from this morning, bill rates once again were suggestively shallow. The 4-week T-bill was just 14 bps in “yield”, well below the Fed’s new “floor” of 25 bps; the 3-month bill was just 24 bps and behaving nothing like what would be expected. Federal funds remain well-behaved but that isn’t a major component [...]
There are a few correlations that I find particularly compelling. The first is Chinese RMB (or CNY) next to WTI crude oil, as both are proxies in their own way of multi-dimensional crosscurrents between global “dollar” finance and real economy function. Since March, that correlation has come into renewed and tight focus. In the past few days, the CNY has [...]
Over the weekend, Charles Schwab issued a “tool” for investment advisors to help them “feel good” about what is expected for 2016. With investors increasingly talking about risk, and stock market risk at that, there is a counter-rush to reassure. Some of that is expected in places like this, but increasingly the disparity between the form of that encouragement and [...]
When decrying the state of monetary policy that relies on essentially a “dead” money market, what does that actually mean? The FOMC, after all, is using the federal funds rate to “tighten”, ostensibly, even though there isn’t anybody there. They have developed other tools to go along with the federal funds rate, but all that does is highlight the central [...]
Immediately after the Fed hiked interest rates last Wednesday – after sitting at 0% for 7 years – markets acted pretty much as one might expect. The Fed tightens monetary policy when the economy is strong so rising stock prices, rising interest rates and a strong dollar are all things that make sense in that context. I am sure there [...]
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