It seems the Establishment Survey is not all that convincing in FOMC circles. Actually, many of the committee members noticed that financial conditions had “tightened” in recent months and were worried a taper may accommodate further doses of that. As we know from the monetary textbook, tight financial conditions “could slow the economy if sustained.” Above all else, stocks are [...]
The headline of the article Joe Calhoun sent me this morning doesn’t quite square with the content that follows. It screams that, “BIS Debunks Claims of Collateral Shortage”. As is often the case, the editor responsible for the headline may have been engaging in intentional hyperbole that would not necessarily be agreeable to the BIS authors highlighted within the piece, [...]
The sudden upturn in GOFO led me to believe that there were changes in the gold dynamics from the relatively favorable period through mid-August. Given the repo action around the UST auctions this week and last, there can be little doubt the collateral shortage has been renewed. Starting August 27, several tenors of UST bonds went special in repo markets, [...]
There is a pocket of stability forming in US dollar funding markets after the “unexpected” weakness of the last Establishment Survey jobs report (particularly the large revision for July). It appears as if these dollar markets are a bit more sanguine about taper prospects, thinking that the Fed might blink next week. This would mark, if it holds, the fifth [...]
Now that the massive Verizon debt offering has been priced and sent out to Wall Street’s infamous sales force (the big banks bought it so they could sell it to their customers), the recriminations can begin. It’s not just that the size of the offering was so disproportionate as to be consistent with market top-like exuberance, there is the financing [...]
The JOLTS survey this week showed pretty much the same bleak employment environment as we have seen throughout 2013. On a seasonally adjusted basis, the rate of new job openings declined significantly from July (-180k), and now stands at a level first reached in March 2012. If job openings are at all indicative of corporate labor appetite, then there really [...]
The first paragraph of this article in the Financial Times reveals perhaps more about the inability of the policy to render any successful result than anything I have seen in a long, long time. It’s not just that policy is badly calibrated or miscalculated, those are simply symptoms of a discipline that has totally lost all focus or sense of [...]
Since monetary policy depends on credit to realize any kind of “wealth effect”, debt issuance and levels are thus secondary indications of non-organic consumer or household funds availability. Rising mortgage levels are not only consistent with rising home prices, but also the tendency of mortgages in that situation to allow home owners to capture and then use excess home equity [...]
Since it is an employment report Friday it seems appropriate to continue on the theme of dysfunction in the labor market. I’ve already covered the more recent occurrences of the structural change post-2009, here I want to examine the foundation for this paradigm shift. As part of its academic arm, the Bureau of Labor Statistics publishes a monthly review of [...]
Global trade is one of the primary “headwinds” facing the global economy, and it does contribute to the lack of dollar flow impeding exchange functions in troubled currency areas. A large part of the “solution” proffered by central banks is an appeal to currency devaluation in order to boost export activity. The primary impediment, something that flies in the face [...]
Stay In Touch