Repo rates absolutely surged at month-end, LIBOR jumped a few more basis points and the eurodollar curve is bid almost everywhere in large chunks. Commodities continue to get smashed, especially crude oil, and currencies are devaluing in almost equally large portions. Even the treasury market is somewhat sporting the tell-tale collateral calls. In short, the “dollar” problems continue into this [...]
Headlines a few years back were about China's need to re-balance their economy away from a heavy reliance on exports and toward domestic demand. The thesis says that self-reliance will lead to a less volatile economy and lower cost of capital. China is succeeding with this goal, but the path is initially a very bumpy road. The MSCI China index [...]
The old cliché is that everything of significance in life is a marathon rather than a sprint. In Japan, such sentiment strains all reason as there is no way that any marathon, economic or otherwise, could possibly be expected to last more twenty-five years. But here it is in 2015, thirty years after the Plaza Accord and BoJ’s first massive [...]
The concept of a head-fake in stock investing is pretty well-established and well-known but it may have to be extended to economics. Every small increase in positive numbers for major statistics is extrapolated into grandiose projections for the final recovery that “everyone” knows has to be coming. Yet, each and every time those expectations are delivered, and swallowed without question [...]
The latest update for TIC “flow”, for the month of May, was mostly what was expected given the “dollar pause” at that time. Central banks were still active but not nearly as engaged as they had been through the worst parts of the “dollar” crisis in late 2014 and early 2015. Official accounts (central banks and foreign governments) had turned [...]
All that we see or seem is but a dream within a dream. Edgar Allan Poe All things are subject to interpretation. Whichever interpretation prevails at a given time is a function of power not truth. Friedrich Nietzsche I was walking down the street wearing glasses when the prescription ran out. Steven Wright I think one of the [...]
When US retail sales jumped in May on seasonal adjustments alone, economists and mainstream commentary lost all composure as they were certain that meant the “slump” was over and the dominant narrative would continue. The same occurred in Europe over a slight pickup in overall lending, not even in the household or business sectors, which was proclaimed as nothing but [...]
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 Shanghai Composite Index for shares on China’s somewhat stock market peaked on June 12, a Friday before a weekend in which every major analyst and China-watcher expected the PBOC to unleash rate cuts. It wasn’t a very good week in terms of economic data for China, which is likely why the call-to-action for the PBOC was nearly universal. For [...]
There weren’t any surprises in the “final” GDP update for Q1. Going back to -0.2%, the same interpretations still apply, especially and including the inventory contribution. Economists and policymakers want to talk particularly about how Q1 is prone to “residual seasonality” but that is missing the bigger part of the problem. Whether Q1 was -0.2% or +2% doesn’t really matter, [...]
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