In September 1979, the Federal Reserve Bank of St. Louis published a paper that attempted to clarify the monetary and economic characteristics of repurchase agreements. The name itself offers little but further confusion as prior to the 1990’s repos could be classified as either collateralized loans or actual sales and purchases depending on individual circumstances. In some cases, the two [...]
As the monetary world prepares for the monetary equivalent of D-Day, it bears reminiscing about the true lack of confidence that permeates away from the direct public front of the central bank. Yellen has declared that monetary policy will be “data dependent” but that isn’t truly the case. Any such data will be filtered into the Fed’s models, which are [...]
Language itself being imprecise, it is often difficult to assign terminology that exactly fits the circumstances or processes being described. So often convention thinks and writes and speaks of monetarisms as if they were drugs like speed or heroin; the efficacious inducement toward uninhibited recklessness. Thus, “markets” are the addicts that only perform in the presence of the intoxicant. This [...]
Written Tuesday Oct 27 Even though oil production inside the United States has declined over the summer, it’s as if oil supply is all that continues to matter. With oil prices down significantly today, as well as since mid-October, the incessant appeal of oil supply blooms yet further even though there is so much more than that to take into [...]
Goldman Sachs just reported an extremely rough quarter, and not just for a bank that has earned a reputation as being on the “right” side of trading. The bank’s (and it is a bank, now) annualized return on equity put it next to BofAML and below Citigroup, of all indignities. The reason, as always, is FICC. Reported revenue there was [...]
The theme since August 24 in wholesale funding, eurodollar and Asian “dollar”, has been that even the global and intense liquidation was not enough to square the mighty imbalance that has been building. It’s a frightening prospect, but in money markets everywhere that is the only interpretation left. The media, unable to make heads or tails, finds small nuggets of [...]
It wouldn’t be a day ending in “y” without some funky news about what the PBOC is now doing. Today’s edition includes the unconfirmed rumors of forex deposits. Apparently the PBOC is going to require, starting October 15 (are they trying to force the bottleneck?), banks to reserve 20% of some figure which isn’t at all clear at the moment. [...]
I think it is worth re-examining at this point, with a lull in the “dollar” at the moment, the effects of dark leverage upon actual bank mechanics and thus actual “dollar” supply. The idea of liquidity in the wholesale system is multi-dimensional and often confusing as it relates to what is typically believed. For example, the week the world woke [...]
It seems increasingly to dawn on Chinese commentary that there is much more going on than “devaluation.” The latest has drawn in the Chinese hoard of UST assets, as it is clear that China is “selling” them though there is great confusion as to why or even what that actually means. The world of forex “reserves” is a bit more [...]
Let’s start by stipulating that the ECB’s operations are far more complex. This is the case both in terms of actual operations but also in trying to figure out what goes where and why. That is at the start unsurprising given the European monetary framework; even though the euro as a denomination is continental there are still national fissures in [...]
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