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Tag Archives: dollar short

The Potential For Yield Plunge As Dovish Theater

Two on the same day, likely not coincidence. The next stage of “dovishness” may be upon us. It won’t be rate cuts; those won’t happen until all other excuses have been exhausted first. Jay Powell’s confused gang won’t give in until kicking and screaming there’s really nothing else left. The Fed “pause” isn’t working. To up the ante a bit, in speeches yesterday Fed Governor Lael Brainard and Minneapolis branch President Neel Kashkari extolled the virtues of symmetry. Inflation has been...

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From TIC’s Big March Number Right To Powell’s Future Rate Cut(s)

Perhaps it shouldn’t come as a surprise. After all, during the first quarter of this year several key banks announced they had had enough. Goldman Sachs, Nomura, Credit Suisse, as well as others, they all broadcast cuts to key operations. The FICC stuff, or bond trading to put it euphemistically. The very place the world actually gets dollars. Only, they aren’t dollars so much as shadow dollars or eurodollars. A credit-based global currency therefore requires a credit base, meaning bank...

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China’s Dollar Problem Comes Out of the Shadows

Once you see the whole thing, you can’t unsee it. But therein lies the problem. It is so far out there away from mainstream convention getting anyone to recognize what their eyes are recording is an enormous task. Even when someone happens to uncover, for themselves, a significant piece it is often too unfamiliar to truly appreciate its significance. In Plato’s Republic, the philosopher tells of his brother being taught by Socrates through the allegory of the cave. Prisoners chained up living...

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Why 2011

The eurodollar era saw not one but two credit bubbles. The first has been studied to death, though almost always getting it wrong. The Great Financial Crisis has been laid at the doorstep of subprime, a bunch of greedy Wall Street bankers insufficiently regulated to have not known any better. That was just a symptom of the first. The housing bubble itself was more than housing. What was going on in the shadows wasn’t bounded by national borders or geography. Some called it “hot money”, to...

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Euro$ #4 Calls Off The Bond Rout, Even Though It Means Fiscal Situations Likely To Grow Worse Still

Critics of government debt, a group which really should include every taxpayer, like to point out how governments prefer to pay back that debt with hugely inflated currency. You don’t pay it off so much as inflate it away. Change the convertibility number for your local currency and, voila, a much more manageable credit profile emerges. Only, there are often grave economic consequences for turning in this direction. Many see this as inevitable, underlying a large part of the dollar-is-dead...

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Negative TIC Is A Rare Level of Negative

Even on a six-month cumulative basis, it is rare to find a negative number. These are reserved for the big ones, the market-shaking events that either perform an inflection or confirm one as it reaches pretty hard depths. The world being the way that it is, you just don’t see the whole forced into outright selling (on net) US$ assets. According to the Treasury Department’s TIC data, over the last six months up to and including January 2019, US banks reported that foreigners shed a net $36...

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The Big Minus Wasn’t Actually China’s Big Contraction In Exports

More important than the US GDP number, more substantial than the February jobs report, what will linger for longer in the public consciousness is China’s trade data. It seems as if the big drop in exports has garnered the most immediate attention, I suspect that won’t be the case moving forward. There are more important trends being captured where the data wasn’t so splashy. The month of February is always a tricky one, what with Golden Weeks moving around every calendar. As such, the latest...

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China Has No Choice

China’s central bank was given more independence to conduct monetary policies in late 2003. It had been operating under Order No. 46 of the President of the People’s Republic of China issued in March 1995, which led the 3rd Session of the Eighth National People’s Congress (China’s de facto legislature) to create and adopt the Law of the People’s Republic of China on the People’s Bank of China. This was amended in December 2003 by the 6th Meeting of the Standing Committee of the...

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China’s Big Money Gamble

While oil prices rebounded in January 2019 around the world, outside of crude commodities continued to struggle. According to the World Bank’s Pink Sheet, base metal prices fell another 1.8% on average from December. On an annual basis, these commodities as a group are about 16% below where they were in January 2018. The last time they had fallen by that much it was May 2016. Commodities are one key intersection between money and real economy. Both are forward looking. Physical as well as...

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Finally Some Real Data…For November

The payroll report wasn’t actually the first. The Treasury Department filed its Treasury International Capital (TIC) update yesterday, about two weeks late due to the federal government shutdown. However, since nobody follows it and the figures relate to a lot that’s beyond the US economy it doesn’t count in the mainstream view. That’s a shame because TIC will tell you so much more about the global economy and the changes taking place within it than the Establishment Survey and unemployment...

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