May must have been the month of sevens. First, exports declined by 7% year-over-year, as did imports. Now the Commerce Department reports wholesale sales within the US fell by 6.8%, which is good enough in close rounding to be yet another seven percent contraction. In the case of wholesale sales, while those estimates are likely coincidence at all around -7%, [...]
When the IMF released its semi-annual World Economic Outlook in April, it was still caught up in the GDP/Establishment Survey frenzy of late 2014. Despite the fact that Q1 GDP was certain to be negative by the time of publication, the IMF was wholly undeterred preferring instead to view the US as still the global engine and hope. They even [...]
There is a lot about the crash in Chinese stocks that remains out of view. Of course, margin debt persists at the forefront of the reversal but I don’t think that begins to explain the depth and speed of the downturn. The timing seems to line up with very well with official policy measures intended to slow down the stock [...]
The FOMC policy statement released last month wasn’t improved by the “minutes” publicized today. If you believe the committee is “hawkish” then there is plenty for you to find agreement; the opposing equally so. From what I see, they spend an inordinate amount of time and words on the labor market, but after repeated emphasis that instead of fashioning confidence [...]
In April 2008, Nassim Taleb was becoming a household name criticizing the quant dominance in finance. Bear Stearns had just failed and the entire edifice of mathematical order was still breaking down, as the last bastions of credit default swap “supply”, the monoline insurers, were still rumored to be heading for insolvency (while the nightly news focused on whether that [...]
For the most part, the concept of leverage is straightforward and intuitive. In physics, a lever is something that multiplies force to gain mechanical advantage. That is why the word was transported to finance as it means to multiply the effort of a small capital base. The “mechanical” force applied in the form of financial leverage used to be borrowed [...]
If one were to measure the US economy by what it is, right now, there would be so little growth or activity as to question the actual cycle. In fact, about the only factor that seems to be out of recession is the expectation for the second half of the year (which is already trimmed from the “slump” sticking to [...]
There is little doubt now that the “dollar” is wreaking havoc upon the global financial complex. Commodities are being battered almost everywhere, and in a manner not seen since the last version of “dollar” trouble prior to the March 18 FOMC “dovishness.” This time, however, there is almost nothing of monetary policy in the moves, just plain and pure uncertainty [...]
The Federal Reserve under Alan Greenspan and then Ben Bernanke has escaped, largely, responsibility for the panic in 2008 mostly because there is no direct link between monetary policy and the housing bubble. The most stinging criticism that comes out of the era is Greenspan’s “ultra-low” interest rate setting for federal funds, but there is no smoking gun in the [...]
While the outward-facing pieces of the eurodollar puzzle show a little bit of Greek reference, the inward parts seem much more defined by the systemic erosion in liquidity and capacity quite apart from all that. LIBOR and other money rates continue to rise, as do risk spreads. Since the QE system was laid out roughly on liquidity as function, the [...]
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