Since some markets seem to be waiting on either longer lingering in ZIRP (US) or renewed and heavier QE (Japan, Europe) it is worth examining exactly what they are anticipating. Obviously, that desire doesn’t extend into the real economy since the downward fluctuation in 2015 pretty much dissolves and absolves any direct monetarism correlation. What is left is a high [...]
Most people would look at a 40-month deviation as being rationally altering, maybe even something so permanent. The Fed, on the other hand, along with economists, have convinced themselves that somehow three and a half years is but a temporary detour. And so monetary policy and the recovery outlook itself are supposed to somehow straddle that inconvenience while still emitting [...]
Even a quick glance at recent t-bill rates commands further attention. There is obviously a lot going on in the bills market just in the past few months, which may only be unexpected in the sense that there isn’t a plain connection between US government bills and the fireworks elsewhere. T-bills used to be, however, the primary source of repo [...]
I think it worth noting one more reason Yellen was out front yesterday. Not only is liquidity suffering still globally but that is having an immensely negative effect on asset prices, especially at the bubble points. The S&P/LSTA Leveraged Loan 100 had not been updated since last Friday, which suggested (to me) continued pricing difficulties in leveraged loans. The combination [...]
Why was Janet Yellen’s speech yesterday so highly touted? My last post might be more relevant to that appearance than what is presented here. After all, each FOMC meeting begins with a presentation from the head of the Open Market Desk usually pertaining to comprehensive liquidity (or as much as the orthodox view of it allows). For all the smiles [...]
With global economic perceptions finally creeping toward financial perceptions (not stocks) despite the enormous and mostly ongoing “stimulus” almost everywhere, it is useful to review once more the assumed general mechanisms. Step 1 is really the most basic and traditional element of central banking, as liquidity, broadly speaking here, is currency elasticity in its more modern format. Increasing liquidity is [...]
When something deviates so far from expectations, the last thing you would do is dismiss it as unimportant. Yet, that is exactly what has happened in 2015 among the cabal of economists that claim to be able to control monetary levers of economic interjection. It’s not just that the FOMC will not act as it was so sure it would, [...]
When the difference between your rhetoric and your actions is wide, inconsistency is pretty much axiomatic. However, Janet Yellen’s press conference was much more than that. I understand it’s a lot to charge blatant dishonesty, but almost everything she said is cow manure. And I make that assertion not on my own reading of the situation, but on hers. The [...]
There has been a quiet Tobin revival which mirrors the unsuitability with which monetarism has found itself in a serial bubble world. I am referring to James Tobin, who did some great monetary theory back in the 1960’s when IS-LM and the “exploitable” Phillip’s Curve were groping for monetary relief. Specifically, money was believed to be a constraint in the [...]
I am more convinced than ever that the FOMC is simply trying to scare a recovery into existence. The June update to the Fed’s models for central economic tendencies were, in a word, atrocious. The economy was marked down in almost every facet, and not by a little. The upper boundary on the central tendency for GDP was dropped by [...]
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