I always believed that at some point “markets” would view the announcement of yet another “extraordinary” monetary program with actual candor rather than conditioned disbelief more befitting a magician’s audience. The primary focus would be not about future conditions, which is the entire point of monetarism in the rational expectations age, but what the “need” for more “stimulus” says about [...]
There is more than a passing interest in the 1937 retrenchment or what amounted to a “depression within a depression.” Numerous large-scale similarities abound between what occurred in the middle of the 1930’s and what is shaping up in the middle of the 2010’s. That makes for reasonable study about the very core and basic elements of finance that seem [...]
Adding to the disfavor in real estate and housing, the National Association of Realtor’s projection for existing home sales (resales) in November was just as ugly (if not more so) as home construction estimates. Resales were down a rather steep 6.5% from October (SAAR’s), and were up only 2.1% compared to November 2013. I say “only” because the calendar has [...]
As the Eurozone absorbs yet another economic blow, the urge to engage in even more historic debasement via the ECB has heightened, to say the least. The talk about a European “QE” is near endless, as that is about all that is left for them to do. That is itself a powerful statement, lost upon those that are calling for [...]
The problem with European monetarism is not that it is trying to swim against the tide of fragmented “markets” and national boundaries that represent very real hurdles in terms of legal and systemic bottlenecks. For the most part, everything that the ECB has tried, including a great deal that predates the bright spotlight on Mario Draghi, has led to precisely [...]
There are “portfolio effects” for individual investors, bank balance sheets and even interbank tendencies, or at least that is according to central bankers. The rather tame ECB announcement this week did highlight and clarify what Mario Draghi and his euro monetarists wish to accomplish. The new measures will support specific market segments that play a key role in the financing [...]
The ECB’s experimentation with negative nominal interest rates is exactly that – an experiment whose range of conclusions spans the full spectrum of possibilities. I have absolutely no doubt at all that they have done enough regression calculations and monte carlo simulations to have estimated “central tendencies”, but at the same time I highly doubt recent developments fell within them. [...]
While the credit markets were looking elsewhere these past few weeks, funding markets are again off their axis as repo fails spiked significantly one more time. The current level of fails is not quite that of June, but it is enough to engender some more pause about financial plumbing. For the most part, explanations have been offered on the supply [...]
It seems as if there is a little more complexity taking place in mortgage finance, and therefore the housing “market”, as the simplified idea of rates running the show isn’t holding water. On the surface, the general theme is one that contours to the outline of conventional mortgage interest as it ran through last year’s selloff. It stands to reason [...]
What happens at the quarterly window dressing periods for the domestic banking system (which includes foreign subsidiaries chartered for US business) is essentially a gaming of the leverage ratios. As with everything inside the Basel paradigm, banks make themselves look less risky for their reporting periods. In terms of funding markets, that means massaging short-term liabilities, particularly repo. To do [...]
Stay In Touch