Following up on what I wrote earlier, there were no Lehman’s or anything like it during March 2020. Does that mean there hadn’t been a crisis? According to some, yes. If you were talking specifically about a bank crisis, then, of course, that would be true. There was no bank crisis last month. It would be hard, however, to claim [...]
India like many emerging market countries around the world holds an enormous stockpile of foreign exchange reserves. According to the latest weekly calculation published by the Reserve Bank of India (RBI), the country’s central bank, that total was a bit less than half a trillion. While it sounds impressive, when the month began the balance was much closer to that [...]
Government securities have become so scarce that it is driving down repo rates. A collateral shortage that has become so acute, money dealers won’t part with their stock of government securities no matter what the price. Stop me if you’ve heard this before. Except, we’re talking about Japan and JGB’s here rather than UST’s. The trick is that both types [...]
The reasons why the IMF stepped in to rescue Argentina were perfectly clear back on June 8. The peso was in freefall and though the Argentine government had spent two years fortifying the country’s reserve position, by borrowing heavily in the Eurobond market, that was merely orthodox thinking. Reserves are widely believed to be something like insurance. Insurance against what? [...]
After the Soviet invasion of Afghanistan in 1979, the Russians became hyperaware of US and NATO countermovements. There was an increase in bellicose rhetoric on both sides, and the Andropov years had left the Soviet leadership weakened by economic stagnation increasingly worried that the US just might launch a first-strike attack. The Communists developed a systematic intelligence approach in response. [...]
Inflation hysteria and the boom hysteria may both seem like they are one and the same thing. They are related, sure, and they represent similar objects. However, there are subtle differences. The mania over inflation, for example, has subsided while the one about the economy reaches its own feverish pitch. In early June, Newt Gingrich appeared on ABCNews’ The View [...]
CNY has held up over the last few days after Chinese officials intervened. Central bank actions like these tend to work if only over the very shortest timeframes. The tentative calm there, however, hasn’t extended universally. Copper, for one, has fallen right out of its Reflation #3 range. Selling off solidly for almost a month now, today it was pounded [...]
Not a good day to be a global central bank. Competitive devaluations all around? Kidding aside, it’s getting serious in China. CNY DOWN = BAD, so says Big Mama. "The kind of dollar selling from that bank was so aggressive that we knew instantly that it must be from the Big Mama," said a Shanghai-based senior currency trader at an [...]
IHS Markit reported last week that its composite Purchasing Managers Index (PMI) rebounded slightly in its first reading for June 2018. In January, the index had managed nearly 59, the highest in a very long time. It was taken as a definitive sign that Europe’s economy was not only booming, that boom was sustainable. Global liquidations struck at the end [...]
When the Chinese yuan suddenly plummeted in mid-August 2015, the world looked on in stunned confusion. It didn’t make sense. The global economy was about to take off, they thought, and it wouldn’t be doing that without China’s vast anticipated contributions. Such a large move in such a short time frame for a major currency was another big “unexpected.” To [...]
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