You get the impression often that these guys have no idea what drives the dollar. They cling to all sorts of theories, of course, from interest rate differentials to perceptions of economic strength. That seemed to be the case in 2017 and its “weak dollar” environment. Globally synchronized growth would mean potency pretty much everywhere, thus, in this view, a [...]
It’s hard to believe it was only about three months ago. Time flies when disaster unfolds all around you. In early June, Brazil’s central bank arranged a press conference where its President Ilan Goldfajn would set everyone straight. The currency was falling, he admitted, but it would be easily handled by closely following the Portuguese version of the global central [...]
The UST yield curve continues to flatten (as it does elsewhere). All sorts of mainstream articles have been published lately about it. Many of them often refer to academic pieces ostensibly trying assuage all fears about the yield curve’s threatening inversion. Fret not the distortion, they say. And they are right. As I constantly remind people, it’s not inversion that [...]
There is just something about August. It is irresistible, apparently, in all the wrong ways. For starters, there are big ones and small ones but somehow they all line up against liquidity and plentiful eurodollar money. In the former class there was, of course, August 9, 2007, August 9, 2011, and August 10, 2015. Even in the latter category there [...]
Argentina has had a good month of July. When last we checked toward the end of June, the peso was still plummeting. It would nearly close below 29, an absolutely astounding drop that made plain this wasn’t devaluation as “stimulus.” That plus the whole record IMF bailout and the immediate dollar funding that came with it. That was June 7, [...]
When I write, as I did again yesterday, Brazil may already be toast it’s not just Brazil who is likely to be on the painful end of the eurodollar. The balance of probability says that this one unfortunate South American country is potentially going to suffer more than most, for a second time, but they will not be unique in [...]
The reasons why the IMF stepped in to rescue Argentina were perfectly clear back on June 8. The peso was in freefall and though the Argentine government had spent two years fortifying the country’s reserve position, by borrowing heavily in the Eurobond market, that was merely orthodox thinking. Reserves are widely believed to be something like insurance. Insurance against what? [...]
We’ve noted over the past few weeks just how much things have changed since earlier this year. We started off 2018 in the grips of inflation hysteria, the more extreme corollary to globally synchronized growth. Things were going to be so good, they said, it would be bad. Now there’s just growing worries about only bad. In some cases, these [...]
The global economy is not falling off a cliff. There isn’t even evidence it is about to or is nearing such a situation. The most alarming that might be said of how things appear right now is that conditions aren’t getting any better. It’s hardly the stuff of severe global unrest. This is why individual developments are always cast as [...]
India was not alone in having its central bank unexpectedly act in attempted defiance of the “dollar.” There was Indonesia (last week) raising rates, too, and Turkey by a lot more. Argentina was handed the largest bailout (dollar funding) in the IMF’s history. And Brazil, well, that country’s monetary officials called you stupid. Yesterday afternoon, Ilan Goldfajn, Banco do Brasil’s [...]
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