I’ve been writing since October when China reopened from that month’s Golden Week holiday that big dollar problems were imminent. You needn’t have taken my word for it, the PBOC said as much. Not directly, of course, but in interpreting the central bank’s anticipated behavior left little doubt. Over the next few months, more and more it seemed as if [...]
In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed with last year’s survey. For [...]
Two on the same day, likely not coincidence. The next stage of “dovishness” may be upon us. It won’t be rate cuts; those won’t happen until all other excuses have been exhausted first. Jay Powell’s confused gang won’t give in until kicking and screaming there’s really nothing else left. The Fed “pause” isn’t working. To up the ante a bit, [...]
What just happened in Europe? The short answer is T-LTRO. The ECB is getting back to being “accommodative” again. This isn’t what was supposed to be happening at this point in time. Quite the contrary, Europe’s central bank had been expecting to end all its programs and begin normalizing interest rates. The reaction to this new round was immediately negative: [...]
What gets them into trouble is how they just can’t help themselves. Go back one year, to early 2018. Last February it was all-but-assured (in mainstream coverage) that the US economy was going to take off. The bond market, meaning UST’s, was about to be massacred because the overheating boom would force a double shot down its throat. Not only [...]
They staked everything on inflation. In truth, central bankers had no other choice. Having backed themselves into such a narrow corner by doing the same thing over and over and over again, it was only going to be one or the other. Either it worked or for all time they would prove they really have no idea what they were [...]
For the magic trick to work, it has to be credible. The audience has to be given something concrete upon which they will suspend their disbelief. Quantitative Easing was just such a trick, though only the public held onto any basis for success. You still hear it all the time, how QE was “money printing.” That was the trick. It [...]
In the US Treasury market, the situation has been a little different. The BOND ROUT!!! theory posits that without the Fed to buy up additional supply, yields as a technical factor have to rise putting more upward pressure on rates than already exists from a booming economy. Add to that foreign selling in 2018, it left many expecting an epic [...]
The one thing the globally synchronized growth narrative had going for it was sentiment. It often had that in surplus. But therein lies a major drawback; are people happy because things are getting better, or do they believe things are getting better because “everyone” says so? There’s a difference and it’s a big one. And it may not matter much [...]
Like all sentiment surveys, Germany’s ZEW is susceptible to overzealousness on the part of the survey participants. The Zentrum für Europäische Wirtschaftsforschung is a think tank located in Manheim that has since 1991 carried out this broad questionnaire. Up to 350 analysts are included in the panel, each working at a bank, insurance carrier, or major industrial firm located in [...]
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