Economic Reports Scorecard - 8/3/15 to 8/14/15 The economic reports since my last update two weeks ago are exactly equally split between better than expected and worse than expected. The narrative hasn't changed much, consistently inconsistent and wholly unsatisfying. Autos are doing well, funded by what appears to be increasingly shaky sub-prime financing, manufacturing in general though is doing poorly, [...]
Top News Headlines China devalues the Yuan. China lets Yuan float. China supports Yuan. Something happens in the Chinese currency market. Oil prices continue to fall. US raises flag over Havana. Dissidents' invitation gets lost in the mail. Tesla to sell more stock, profits elusive. Okay, very elusive. Okay, not frigging likely anytime soon. Dow chart gets a death cross; [...]
The repo rate today ticked slightly lower for the second consecutive day, suggesting, as the PBOC’s yuan fix last night, that the heaviest part of the “dollar” run has abated. The repo rates are still very high, though, which does not suggest a terminus in the “dollar” retreat; at least not yet. All three classes remain above IOER, with MBS [...]
European GDP disappointed for Q2, which was only surprising to those expected something out of QE. At +0.3% (Q/Q), the European economy is clearly stuck in the same mindless rut that has taken hold since the 2011 crisis re-flaring. While recent convention holds, in light of this year’s QE, that the ECB has been idle during this time that simply [...]
By the behavior of the Chinese yuan itself, given the financial size here, we can readily assume that any “dollar” problem that is clearly causing the PBOC’s actions are sizable. Currencies throughout Asia are being roiled not unlike 1997 and oil prices sunk to a new “recovery” low. While that all suggests far away turmoil relevant only to those foreign [...]
It’s amazing what will be ignored or forgotten in order to try to explain the state of the world when it strays so far beyond bounded conception. Commentary views the state of economic world as wholly separate dots, disparate systems only tangentially connected through nebulous trade terms and hard currencies. The world was once that way, though perhaps even then [...]
Retail sales for June were revised upward by a significant amount, almost $2 billion, which has had the effect only of shuffling that month’s order among the worst. With higher auto sales growth, June overall retail sales were 3.31% year-over-year which remains about half of what would be considered healthy. For July, retail sales decelerated again, to just 2.86%, which [...]
In March 2013, orthodox economists were brimming with optimism. There were some rough patches in 2012, to be sure, but the Fed stepped up with a QE3 in MBS and then a QE4 in UST. Since the power of monetarism is a central pillar of the orthodox outlook, the future could only be even brighter than it was. The lackluster [...]
Not that we needed another reminder about liquidity, but the GC repo rate (indexed) for MBS on August 12 was just posted at 30.7 bps. That is the highest non-quarter or month-end rate since just before QE4 in December 2012. The UST repo rate, as well as the agency rate, was of similar proportions and comparisons at just under 30 [...]
On this side of “dollar” funding, risk continues to drain, steadily, but rather methodical about it. While China is taking most of the attention, deservedly, credit markets are not enthused about any of what has taken place. Again, I think that is more the yuan’s relation to the “dollar” than of anything else interpreted for or about the PBOC. It [...]
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