The growing sense of an economic cliff is based on three major factors, all of them in massive markets as opposed to manipulated and ill-suited statistics. The most obvious are oil prices and the UST curve (and related curve mechanics) as they have turned to prices and shapes not seen since the worst of the last crisis. The third, “dollar” [...]
Commentary has not been able to ignore changes in the Fed’s balance sheet mechanics with all the potential systemic shifts occurring as QE ends and the FOMC contemplates going even further. As I said last week, the total balance of bank “reserves” declined but not due to anything other than an operational test of the Fed’s Term Deposit Facility (TDF). [...]
For months now, really going back to the summer, the obvious decline in Chinese economic function has produced a resounding expectation that the PBOC would come to the rescue. It was taken axiomatically such was this Pavlovian reflex. Everything the PBOC did over the summer was characterized in that context: the introduction of the PSL and its implementation largely with [...]
Inside the Treasury Department, the Office of Financial Research has grown to 225 employees, though that may be just a concerning (bureaucracy) as it is laudable (serious effort). Incorporated by Dodd-Frank, the agency inside the agency is dedicated to “Wall Street Reform”, at least that was the heading upon its old website. At its new virtual location, OFR projects its [...]
As the Eurozone absorbs yet another economic blow, the urge to engage in even more historic debasement via the ECB has heightened, to say the least. The talk about a European “QE” is near endless, as that is about all that is left for them to do. That is itself a powerful statement, lost upon those that are calling for [...]
There were already operational problems in September when the Fed capped the limit on its reverse repo program, so in retrospect it isn’t all that surprising that it is being downplayed now. As the FOMC supposedly moves toward a rate increase, it is confronted with a very real problem in that the federal funds rate, the interest rate that has [...]
There is so much depth that is missing from the ongoing discussion about the state of “markets” as the Federal Reserve purportedly moves toward “normalizing” its regime. That isn’t all that surprising given that most people still have never heard of these various moving parts, and certainly cannot easily grasp the concepts without some degree of studied initiation. While you [...]
I probably should start by issuing the caveat that it is dangerous to compare anything of the modern age to the revolution in astronomy dating back to the time of Copernicus. This is not at all about the supposed lack of tolerance at the time, as it seems as if there was more than enough willingness to at least hear [...]
Almost two weeks after the event, there is still more than a little nervousness about what took place on October 15 in UST trading – and for very good reason. Up to that point, proclamations about systemic liquidity degradations were just theoretical to most people. The reason was, and continues to be, that nobody seems to care about disruptions in [...]
The problem with being long gold, or even a fan of gold as anathema to central bank “flexibility” in central planning, is that you are often reminded the messiness of its modern nature. Gold as money, properly understood, meant money as property which is why physical metal fit so well for maybe all of “civilized” human history. However, the unassailable [...]
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