China is officially closed this week for its National Holiday Golden Week celebrations. These have been monetarily and financially eventful in the past because they represent challenges for RMB liquidity. This week appears to be no different, though this time it was the announcement of future policies that were no doubt written in the present tense of current monetary circumstances. [...]
Monetary officials continue to maintain that inflation will eventually meet their 2% target on a sustained basis. They have no other choice, really, because in a monetary regime of rational expectations for it not to happen would require a radical overhaul of several core theories. Outside of just the two months earlier this year, the PCE Deflator has missed in [...]
There is a difference between reflation and recovery. The terms are similar and relate to the same things, but in many ways the latter requires first the former. To get to recovery, the economy must reflate if in contraction it was beaten down in money as well as cyclical forces. In the Great Crash of 1929 and after, reflation was [...]
I wrote earlier today that I believe Ben Bernanke one of the smartest men around. Whatever you might think of the usefulness of his career work, it is quite clear it was accomplished with some great talent. He occasionally offered some good, novel insight. I’m not so sure about Janet Yellen. While her trademark deer-in-the-headlights look could have been explained [...]
China’s Communist Party concluded the Third Plenum of its 18th Congress in November 2013. It was the much-discussed reform mandate that many in the West took to mean another positive step toward neo-liberal reform. At its center was supposed to be a greater role for markets particularly in the central task of resource allocation. In some places, the Party’s General [...]
The nominal CMT yield on the benchmark 10-year US Treasury note hit its low on July 8 last year. It’s debatable, of course, as to what turned it around; I think “reflation” from there began in Japan and all those whispers of the “helicopter.” It didn’t really matter that the BoJ didn’t really consider the proposition, what did instead was [...]
The Communist Chinese established their independence on September 21, 1949. The grand ceremony commemorating the political change was held in Tiananmen Square on October 1 that year. The following day, October 2, the Resolution on the National Day of the People’s Republic of China was passed making October 1to be China’s National holiday. It typically kicks off the second of [...]
Five days ago, the Bank for International Settlements (BIS) published its Quarterly Review letter. Contained within it were the usual articles and releases of data that accompany every issue. There was the opening piece encouraged, as always, by the “strong outlook” though puzzled how it isn’t translating into inflation. And bowing to the enthusiasm and interest in things like Bitcoins, [...]
There wasn’t a whole lot that made sense about iron ore’s price surge through August. In the flipside of what is believed also to be moving copper, Chinese authorities have made it plain that they will take pollution control seriously this winter. For copper, that likely means shutting down mine production, tightening supplies, and could therefore be price positive, perhaps [...]
The framing is a bit clumsy, but the latest data in favor of the artificial CNY surge comes to us from Bloomberg. The mainstream views currency flows as, well, flows of currency. That’s what makes their description so maladroit, and it can often lead to serious confusion. A little translation into the wholesale eurodollar reality, however, clears it up nicely. [...]
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