As the monetary world prepares for the monetary equivalent of D-Day, it bears reminiscing about the true lack of confidence that permeates away from the direct public front of the central bank. Yellen has declared that monetary policy will be “data dependent” but that isn’t truly the case. Any such data will be filtered into the Fed’s models, which are [...]
If the junk bond bubble was this week’s most visible inducement toward illiquidity, there have been more than enough indications that might corroborate and explain. With a few more days trading, the huge jump in BofAML’s CCC junk index rate has been confirmed – with another albeit smaller surge again yesterday. At now 16.74%, that is significantly above the prior [...]
For the tenth straight week, dating back to the week just before the global liquidations in August, reported domestic crude inventories increased. At 489.4 million barrels, the current level of oil stock (excluding the SPR) is only slightly less than the record high of 490.9 million barrels reached the week of April 24. “Transitory” is dead. The increase in oil [...]
To this point, I have refrained from presenting Morgan Stanley’s balance sheet reporting on gross derivative exposures because, quite frankly, it fits too perfectly. The bank follows the wholesale “dollar” narrative so closely that it almost seems too good (bad for the financialized economy) to be true, and thus almost diminishes the value of the evidence by extension. Because of [...]
Chinese stocks “unexpectedly” plunged last week in a fit of stormed selling that reminded of August rather than the placidity that has been claimed of China since. By mainstream account, China has fixed its bout of “selling UST” and “outflows” while also providing two double doses of “stimulus.” The PBOC had even taken to a higher fix in the middle [...]
Dealer banks are accomplishing their withdrawal from FICC and the eurodollar necessities of dark leverage in the typical corporate fashion. For one, there is attrition as past derivatives trades simply runoff or mature. Second, banks have been engaging in what are called compression trades to an enormous degree, the money dealing equivalent of synergy. Finally, dealers have been studious and [...]
Economics is a not a science. It tends to emulate the appearances by which outwardly hard sciences project in terms of rules and especially mathematical complications, but it does not conform. Karl Popper observed in 1972 that, “Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory [...]
As banks have trickled out their third quarter balance sheet filings, we gain more insight into the events of that quarter as well as some additional color as to the ongoing drama of the current one. Perhaps the most startling shift in an otherwise quite busy and at times despondent period was the universal compression of swap spreads into negative [...]
The deletion of “dollar” capacity in money dealing globally is not just a theoretical impugning upon asset prices alone. Corporate debt issuance has been obviously provoked to an increasingly smaller state. The numbers are starting to become serious, which may account for at least part of the economic misfortune that the Fed desperately wants the world to ignore. Where swap [...]
While the stock market had one of its best months in years, it was, like the jobs report, uncorroborated by almost everything else. The junk bond bubble, in particular, stands in sharp and stark refutation of whatever stocks might be incorporating, especially if that might be based upon assumptions of Yellen’s re-found backbone. Do or do not, corporate junk remains [...]
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