MacroVoices Podcast for August 18, 2016
Jeffrey Snider: All Signs Point to Global Systemic Reset
The Ritual of Summer
Domestic oil inventory rose in the latest week, updates from the US EIA show. That build broke a streak of nine consecutive weekly draws dating back to mid-May. It is not unusual for oil inventory to rise and fall in various weeks, but given the mechanics of oil prices of late there is an atypical edge and attention to any [...]
Evolving Characteristics Don’t Seem To Alter The Ritual of Summer
On February 6, 2008, oil prices (WTI) dropped to $87.16, the lowest price since the prior October. Oil had been rising as the market misunderstood and dramatically mispriced what was going on; buying on the idea of monetary policy accommodation in growing intensity, while at the same time not factoring the hidden monetary destruction that was far greater. It was [...]
How Markets Are Supposed To Work
In a regime where math acts as money, there are a few major potential chokepoints where shifts in math can become systemically important difficulties. In 2008, the most visible example was in repo haircuts, but the most devastating to the financial system certainly fixed income (MBS, in particular) correlation. The system could not survive rising correlation because nobody was prepared [...]
The Tragic Consequences of Quantity Theory
On July 21, 2009, then-Fed Chairman Ben Bernanke wrote an op-ed published in the Wall Street Journal seeking to allay any fears over balance sheet expansion. This was all relatively new, and at that time the recovery seemed a good bet and appeared to be underway in many places. Bernanke’s goal was to soothe any fears that “inflation” would get [...]
Disturbed in Japan
Japanese officials including those at the Bank of Japan have been acting very erratic of late, eschewing the more traditional financial setting of vagueness. First it was NIRP that immediately blew up in their face, leading to very loud rumors of additional bank “stimulus” to offset NIRP only to have the BoJ instead do nothing at its last policy meeting. [...]
Goldman, Eurodollar Dealers, And The (Possible) Consequences of Actual Liquidity
Goldman Sachs is cutting back more in its staff than previously announced. Though not yet confirmed, Bloomberg writes that the reductions in the fixed income business are being increased. After posting absolutely horrible results for Q1, the job cuts were expected. The continuation of them, however, seems to be more drastic than first thought even though “market” conditions improved into [...]
The ‘Mystery’ in TIC Is Likely Important Given These Big Numbers
The “first” part of the TIC data update for January was relatively straightforward, especially since the scale of the net transaction adjustments in both December and January really did match what happened in January (crossing into February). The Treasury Department’s estimate for foreign holdings of US dollar assets were nothing short of remarkable in all the ways that were expected [...]
The Perils of Citi: The Last of the Eurodollars Part 2
Part 1 is here. Even if the eurodollar paradigm had started shifting long before the full panic, this is not to say that various individual firms have not tried to rekindle the former construction; in fact, I have paid particular attention to those who at various points attempted the recreation. Citigroup is one of those though it isn’t clear what [...]
The Perils of Citi: The Last of the Eurodollars Part 1
Proprietary trading has taken on connotations that are extreme for some good reason owing to the events of 2008. It was there, called “principal transactions” on some balance sheets, that claimed the majority of accounting losses that perpetuated internecine banking struggles from liquidity to revenue and earnings. As with most things, there was much more to it than that rough [...]
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