I probably should start by issuing the caveat that it is dangerous to compare anything of the modern age to the revolution in astronomy dating back to the time of Copernicus. This is not at all about the supposed lack of tolerance at the time, as it seems as if there was more than enough willingness to at least hear [...]
While this morning’s post was more about longer-term implications of “dollar” changes, there are a couple of observations pertinent to the shorter-term that I think need consideration too. For whatever reason, whether it was, like September 4, 2013, an anticipation of countertrend “dovishness” on the part of the FOMC, the eurodollar market gained a sudden appreciation of the economic downside [...]
There would be a lot more use for the Treasury Dept’s TIC flows and holdings data if it was released closer to real time, but even with that evident staleness about it I think there is a lot of use in how it frames what we see in the dollar and currencies (thus spilling over into “markets” everywhere). The dominant [...]
The big “trick” with liquidity is trying to discern and work out “where” and “when.” A good deal of that is about liquidity as it actually exists; not what you see today but what it may look like tomorrow. That vital disparity can be nothing but havoc, especially when conditioned to look at correlations as something durable – which is [...]
When speaking about the costs of having undertaken numerous QE’s in the US, there is not only the economic inefficiency and asset price psychology to account in the tapering and ultimately exit (hopefully a permanent one this time, though I increasingly doubt it). There is little doubt that repo market problems, that have become far too persistent to be comfortable, [...]
Following up with some further observations in funding markets, the change in character of the “dollar” has shown up in some of these places. As I have noted before, the eurodollar curve gained an upward bias in shorter term “dollar” rates, and thus “tightening”, while the rest of the curve continued to flatten out. Going from August to September, that [...]
Terminology and semantics have an important place in communication because we want to convey concise and accurate meaning as efficiently as possible. That is why I disdain the term “petrodollar” when speaking or writing about the global exchange standard that replaced gold in the Bretton Woods sense. The idea of a “petrodollar” conveys some of the “right” characteristics but leaves [...]
The pestilence of the wholesale “money” system, the eurodollar standard if you will, is that the “dollar” is no longer anything like one and that these “markets” for it are not directly observable. That leaves observers and interested parties to gloss and gleam related second or third hand accounts, hopefully piecing together the right parts at the right time enough [...]
There is an interesting dichotomy taking shape in credit markets, including those around the globe (that will be a separate post). Some of this, I think, relates to what FOMC member Richard Fisher related today about concerns over asset bubbles. I think the Economic Times of India summed him up the best: Already there are signs of financial excess in [...]
There is a growing bid for safety in almost every corner of the globe at this moment, save for a few outliers. Even the 10-year JGP sits at 50 bps today despite the spike in consumer inflation engineered by the Bank of Japan’s QQE. Of course, with BoJ buying up almost everything in sight, that may not be a relevant [...]
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