When looking at cyclical inflections, GDP is the last to know about it. That has been the case at cyclical turns in each of the last three peaks, most especially how GDP treated the first half of the Great Recession. More recently, given the abomination of cyclical behavior, GDP finally after three years caught up with the 2012 slowdown. As [...]
With factory orders continuing to be much worse than they appear, it makes sense to try to measure the effect of over-optimism accounted by inventory. Recessions themselves were once almost exclusively set up by this one factor, as the difference between production and sales, caught up within the supply chain, eventually works out toward alignment. Companies are willing to hold [...]
Sticking with purely financial expression of the eurodollar standard it is easy at times to forget such monetary influence has very real consequences. That is true in the US in particular, as even though the recovery is both deficient and waning it isn’t the disaster it is in other, connected places. It was, after all, the rise of the eurodollar [...]
The simple narrative about QE is drawn from what is believed a simple process. The central bank buys bonds and by doing so it is simply assumed to be an “extra” bid on bond prices; therefore interest rates fall in whatever issue is being targeted by QE. Even in the US, QE has had trouble with that simple relationship. Instead [...]
Despite being the last FOMC meeting before the ever-expected rate hike in September , there was a whole bunch of nothing in markets before and even after the policy statement. Even the typical knee-jerk was less than on prior meetings. Maybe traders have come to expect so very little from the policy statement, focusing more on the inanities and silliness [...]
It will be a few more days before the major banks release their quarterly balance sheet figures for Q2. We already know from their earnings reports that money dealing is no longer much of a high priority for global banks, as it is, quite simply, no longer profitable. Commentary still dwells on that as a matter of Dodd-Frank, Basel III [...]
With almost everything turning lower this week under “dollar” pressure, it is imperative to keep in mind the apex asset class. In 2007, it was the ABX indices and various mortgage related structures that signified the how far along everything was; in this cycle it is clearly corporate credit. The disarray starts in the riskiest pieces and then moves inward [...]
If there is something different about the “dollar” in July it is that it has been in widespread pressure on funding. From early May to the beginning of July, the “dollar” was more hit and miss with only regional or limited disruption. Crude prices, for example, rising since the March FOMC, stopped but then traded sideways rather than appreciably lower. [...]
Sticking with the history of the “dollar” of these past two years, economists and gold de-buggers had to have been at least initially encouraged by what they saw outwardly of interest rates and related financial factors in 2013. Almost as soon as “taper” became a mainstream concept, right at the start of that May, the treasury curve steepened and nominal [...]
Goldman Sachs reported weak earnings today, following Bank of America Merrill Lynch yesterday. The core problem at each is their dealer businesses, though it is difficult to get at that central function in the lumpy, conglomerated mess that passes for (incomplete) financial statements. Goldman’s FICC “revenue” dropped by almost a third in the second quarter from a Q2 2014 that [...]
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