The FOMC statement changes seem to have initiated knee-jerk reactions undoing the interpretations of the March statement. In other words, the first blush of FOMC obfuscation appears to be trending back toward “hawkishness” in clear defiance of last month’s clear “dovishness.” The basis for that seems to be the references to what the Fed is still proclaiming “transitory” factors, to [...]
With the PBOC’s apparent schizophrenia on display it is unsurprising that there would be another default. I don’t find any coincidence between the timing of that announcement, in Hong Kong, and the fact that the PBOC both “tightened” and “loosened” in the past few days. They have been pretty consistent about that going back to the initiation of “reform” in [...]
The question was never about what Chinese GDP would amount to, as that is as much an intentional projection as it is a measure of economic performance. That is true everywhere, but the Chinese have become masters of hitting their marks. They “predicted” 7% GDP and that is exactly what they got. It is more difficult, however, to do the [...]
It had been relatively quiet in China apart from the continued downtrend in economic activity and especially expectations for economic activity. Earlier, as industrial production and a slew of other economic accounts fell to multi-year (and multi-decade in some cases) lows, talk of the Chinese bubbles receded as it was viewed almost a surety that the PBOC would now be [...]
Under the traditional formula for viewing currency movements, a rising currency is believed to be a huge impediment for economic expansion as exports “become relatively more expensive” against trading partners and competitors. This is a two-dimensional view in three-dimensional space as it leaves out the very necessities of finance. It isn’t just straightforward that one causes the other, as the [...]
China remains an export economy no matter how hard they try to convince the world they are moving otherwise. The idea of creating internal “demand” as a means to extricate marginal changes from everybody else is undoubtedly a good idea, even a noble one, but the reality of China as it exists top-down isn’t conducive for such a transformation. Further, [...]
The confusing nature of the PBOC’s actions in the past year or so has led now to publications of theories over a potential power struggle at the central bank. While finally acknowledging that last year was all about “targeted” approaches to monetary “guiding” economic reality, this year is about to explode in personnel changes and therefore, supposedly, a reactionary course [...]
I continue to believe that the Swiss National Bank’s action on January 15 opened a “release valve” of sorts inside the world of the global “dollar.” Prior to that day, heightened bearishness all throughout dollar-denominated credit dominated trading. That included funding markets, especially eurodollars. The eurodollar curve itself ignored almost everything else, including the FOMC switch to “patience” in December, [...]
With the latest release of the Treasury Department’s TIC statistics there is a lot about December now that makes sense. Much of what is contained within the figures matches the theories I put forward contemporarily, including the severity of the “dollar” problem that month (leading to any number of downstream effects, including seriously heightened bearishness in US credit markets) and [...]
The amount of inconsistency is certainly consistent when viewing the trouble mainstream analysis has with trying to exclude the possibility of economic forces from explaining why things are the way they are. The latest trade data from China was deafening, too much to pass off as a simple case of a minor blip. Exports in January declined rather sharply, “unexpectedly” [...]
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