In 1927, physicist Werner Heisenberg wrote in his paper defining the “uncertainty principle” that, “the more precisely the position is determined, the less precisely momentum is known in this instant, and vice versa.” It has also been called the “principle of indeterminacy” which simply means that you can only pick one variable. By doing so, you lose any chance for [...]
Speculators are a curious bunch, not in what they do or how they do it but more so in how and really when they attain notice. When the SEC in July 2008 banned naked short selling of GSE and primary dealer stocks, they were the obvious enemy creating “unnecessary” trouble that was amplifying what was supposed to be in the [...]
On August 30, the overnight SHIBOR rate jumped above 2.05% for the first time in more than a year. As the acronym indicates, SHIBOR is to Chinese RMB interbank liquidity as LIBOR is to eurodollars in London. In the summer of 2015, SHIBOR began rising steadily and often precipitously despite monetary policy “stimulus.” On June 27, 2015, the PBOC cut [...]
Speaking yesterday in Reno, Nevada, San Francisco Fed President (and CEO) John C. Williams delivered remarks on the normalization of monetary policy. So as not to put the cart before the horse, Williams noted that first the economy must do so before the FOMC can even consider the same for their self-assigned tasks. I’ll start with a quick overview of [...]
The simple fact of the matter is that 2012 wasn’t supposed to happen. By every orthodox prediction and theory about the set of tools deployed after the Great Recession (after it, the first clue) there was no reason to suspect anything but the usual cyclical occurrences. Sure, the recovery would be weak because the recession large, but retrenchment was never [...]
China’s State Administration of Foreign Exchange (SAFE) reported a slight decline, -$3.6 billion, in foreign “reserve” assets in July. That followed a $13 billion “inflow” in June, which was the largest since early last year, maintaining the same pattern that we have observed for some time. A positive month isn’t so much an “inflow” as very likely forward operations from [...]
Back in early July, Bloomberg published a rather curious article that sounded like it was written from within the People’s Bank of China - or any other global central bank for that matter. The most prominent correlation over the past year had been CNY and everything else; or, as I wrote earlier in the year, CNY down = bad. The [...]
Economists setting their expectations for China and PBOC “stimulus” should have been paying attention to retail sales; not Chinese retail sales, but American. They keep seeing a rebound that just doesn’t exist. US consumers, as the central marginal marketplace for the world economy of goods, have steadfastly refused the invitation of the unemployment rate to produce a worldwide economic resurgence. [...]
Under traditional “rules”, devaluing of a currency is supposed to bring about a measurable, even obvious increase in the export sector of the country undertaking the manipulation. The Japanese have been notorious for believing in the paradigm, and not just in the past four years under QQE and the whispers of it. Some people still believe that China is merely [...]
In early 2005, the US Senate began debating a bill seeking to impose a broad 27.5% tariff on Chinese exports to the United States. Congress was emotionally moved by the supposed problem of pegging the yuan to the dollar, then at about 8.28 CNY for every USD. In reality, the problem wasn’t so much dollars as “dollars”, meaning that because [...]
Stay In Touch