It’s certainly not quite the “butterfly effect” but the reality of the overall arrangements of the global economy is shockingly simple. The details, methods and interactions of the “dollar” can be incomprehensible at times, especially since there is no directly observable and thus plainly unambiguous data, but once the “big” moves entrench all that complexity recedes in importance (at least [...]
It is Tuesday which only means that whatever oil trading takes place today will be easily overwhelmed by whatever interpretation about inventory levels released tomorrow dominates. However, the last week has been interesting in the respect of a shift in the behavior of the futures curve for WTI. Up until then, almost all volatility was concentrated in the front months, [...]
Stocks finally took a breather last week, down about 1.5%, mostly due to a downdraft Friday that was "blamed" on a good employment report. Jobs increased by 295k in February and the unemployment rate dropped to 5.5% (although that was mostly due to a drop in the participation rate) and that, according to the pundits, means the timeline for a [...]
The rock of the Swiss banking position was its still-heavy relationship with the global “dollar”, a proportion of funding that diminished only somewhat post-crisis. The hard place was the euro, whereby pegging the franc to it meant the SNB was balancing euro problems with banking disproportion. It seemed like a good bet, for orthodox monetarists, in September 2011 because they [...]
Newton's Third Law states that for every action there is an equal and opposite reaction. Economics is certainly not science so the application of Newton's law would seem inappropriate for analyzing the global economy, but in today's world I think it is apt; more growth here means less growth there, a zero sum game of aggregate demand ping pong. It was almost [...]
I continue to believe that the Swiss National Bank’s action on January 15 opened a “release valve” of sorts inside the world of the global “dollar.” Prior to that day, heightened bearishness all throughout dollar-denominated credit dominated trading. That included funding markets, especially eurodollars. The eurodollar curve itself ignored almost everything else, including the FOMC switch to “patience” in December, [...]
With Greece relenting on its game of chicken with the Eurozone noose, you have to wonder how much the ELA and the threat of total financial meltdown pushed that direction. From the view of credit markets in Europe, there was an unusual almost confidence in such an outcome from the moment of the election last month. Small wonder when Europe [...]
With the latest release of the Treasury Department’s TIC statistics there is a lot about December now that makes sense. Much of what is contained within the figures matches the theories I put forward contemporarily, including the severity of the “dollar” problem that month (leading to any number of downstream effects, including seriously heightened bearishness in US credit markets) and [...]
I’ve had my suspicions for some time that December saw a(n) (il)liquidity event throughout the “dollar” system. The problem with that supposition is the lack of corroborating price action in riskier markets where you would expect the most impact. That was the pattern revealed by the end of the last event on October 15, where risky credit, especially corporate junk [...]
The growing appeal toward unease about the terms of Greece’s ongoing strangulation is more than just a simple, fleeting sense of déjà vu. It is exactly the same process only pushed forward three years. At the height of the “last” challenge that began in earnest in 2010, and nearly re-ignited a global bank run (among only banks) for a second [...]
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