A few weeks ago the Federal Reserve announced its tentative plans to aid in exiting from QE’s balance sheet expansions. A new tool, that will not require additional statutory approvals or authority, called the “fixed-rate, full-allotment overnight reverse repurchase agreement facility” theoretically creates a new “risk-free” alternative to idle bank reserves. In the context of an exit from “emergency” measures, [...]
Labor unrest is an expected feature of a malfunctioning economy. The 1970’s, for example, were rife with labor problems up and down the economic scale and across industries. Agitation for wage growth was proportional and directly attributable to the public’s perceived ability to maintain some standard of living. The Great Inflation threatened to leave a good deal of the populace [...]
Repo markets are flashing warnings again, as conventional explanations fall short of full comprehensiveness. We learned today that US treasuries across the curve are once again trading very special in the repo market, meaning negative repo rates for US notes from 2 to 10 years in maturity. Technical factors play a role, as this week’s auctions will change over the [...]
Not really much different to report from the Durable Goods numbers. There is a curious near-stasis present in the trends and patterns in each of these data series. For some reason, they want to follow and match the Great Recession as if there existed an economic template or programmed auto-pilot – which would really confound policymakers since this is decidedly [...]
Last week it was Target’s turn to turn in a disappointing quarterly report. While being quite unique in blaming Canada, even the results in the US segment were lackluster, at best. Earnings expectations for the fiscal year were dimmed back in May, from a range of $4.85 to $5.05 down to $4.70 to $4.90. The latest estimates, concurrent with Q2’s [...]
Everything that happens has already happened at some point or another in history. The tortured history of crises occurs because no one was paying attention the first time. It is eerie, though, how similar the growing currency crises in BRIC’s and emerging markets are to the Asian flu of 1997-98. There is one primary difference; the cause of the dollar’s [...]
Monetary policy is rendered by the FOMC in Washington, but the operational end is conducted by the Open Market Desk at the Federal Reserve Branch in New York (FRBNY). The “desk” won’t conduct policy operations with just any counterparty, however. The Fed “carefully” screens potential banks for several characteristics that make them worthy of doing business. These chosen few are [...]
The Reserve Bank of India (RBI) was back in action yesterday, this time promising monetary measures in search of stability not just for the rupee but for collapsing bond and stock markets. “Markets have fallen despite steps taken by the government and the Reserve Bank to support the beaten-down bond market. The RBI relaxed rules on mandatory bond holdings for [...]
The stock market pulled back last week and we are now in the midst of a mild correction, down all of 3% from the all time highs set just a couple of weeks ago. It has been an extremely orderly retreat so far with the volatility index barely budging from its recent lows. The natural question is whether this is [...]
US and European markets have lazily ignored what is taking place in locales far and wide. This is not some strain of investor xenophobia, but rather the comfort created by the Federal Reserve and ECB’s twin policies of courting complacency. Through QE/OMT and their attendant processes, hedging and the appeal of hedging have been quashed as “tail risks” have receded [...]
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