Tuesday , May 17 2022
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Tag Archives: Economy

Dollar Now Leads, Rest Of The Market Pack Now Follows

The US$ continues on its rampage, particularly zeroed in on China for simple if misunderstood reasons (that have nothing to do with “devaluation”). What about the rest of the marketplace, the other stuff which identifies the eurodollar’s various cycles? You know about T-bills, which, yet again today, are more like what the dollar is suggesting. Other than those, what’s the yield curve, eurodollar futures, swaps, even the forward Treasury spread up to?In March – seasonal low point – these...

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Far From Stellar, Employment Likely Went Negative In April

It appears as if most reactions to today’s April 2022 payroll were quite positive, maybe enthusiastic when they should not have been. Though the Establishment Survey – the CES headline number most people pay attention to – gained 428,000 over March’s tally, it was the “other” one which crashed down like last week’s negative GDP thud.From the CES view, you can understand the optimism. Not only +428,000 for the second month in a row, this also marked the twelfth consecutive month...

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All The Dead Horses, And All Powell’s Men, Can’t Make Sense of Europe – Again

As a preface to this update ostensibly on Europe, it’s all really about Euro$ #5 sadly rounding into form. In this first part, I’m going to have resurrect the quotation marks surrounding the term “rate hikes”, or bring back RHINO (rate hikes in name only) given what’s going on in Treasury bills.Not rate hikes, or enough of them. Our dead horse needs more clubbing. Where's that dead equine? I'm going to beat on it some more.Tbills today: 4w @ 49bps, 31 less than RRP8w @ 71bps, 9...

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Who’s Playing Puppetmaster, And Who Is Master of Puppets

Cue up the old VHS tapes of Bill Clinton. The former President was renowned for displaying, anyway, great empathy. He famously said in October 1992, weeks before the election that would bring him to the White House, “I feel your pain.”What pain? As Clinton’s chief political advisor later clarified, “it’s the economy stupid.”Jay Powell is no retail politician in near the same company as Mr. Clinton. Yet, the Federal Reserve’s current Chairman is attempting to channel his inner-stupid anyway....

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Collateral Shortage…From *A* Fed Perspective

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods.There was, as I wrote at the time, no mistaking...

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China Then Europe Then…

This is the difference, though in the end it only amounts to a matter of timing. When pressed (very modestly) on the slow pace of the ECB’s “inflation” “fighting” (theater) campaign, its President, Christine Lagarde, once again demonstrated her willingness to be patient if not cautious. Why?For one thing, she noted how Europe produces a lot of stuff that, at the margins of its economy, make the whole system go. Or don’t go, as each periodic case may be: Europe in particular benefited...

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What Really ‘Raises’ The Rising ‘Dollar’

It’s one of those things which everyone just accepts because everyone says it must be true. If the US$ is rising, what else other than the Federal Reserve. In particular, the Fed has to be raising rates in relation to other central banks; interest rate differentials. A relatively more “hawkish” US policy therefore the wind in the sails of a “strong” dollar exchange regime.How else would we explain, for example, the euro’s absolute plunge since around May last year? Everything since would...

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Synchronized Manufacturing, Hopefully Not Mao

This is one of those cases when Inigo Montoya, the lovable if fictional rapscallion from the movie The Princess Bride, would pop into the scene to devastatingly deliver his now famous rebuke. Last week, China’s one-man Dear Leader said that the country was going to start up its own version of Build Back Better. Immediately cheered by the entire Western media, every single news story contained the same phrase.“All out.”Cue Mr. Montoya’s wry witticism. Did anyone actually hear what Emperor Xi...

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Weekly Market Pulse: Welcome Back To The Old Normal

Stagflation. It’s a word that strikes fear in the hearts of investors, one that evokes memories – for some of us – of bell bottoms, disco and Jimmy Carter’s American malaise. The combination of weak growth and high inflation is the worst of all worlds, one that required a transformational leader and a cigar chomping central banker to defeat the last time it came around. Or at least that’s how it’s remembered. Whether the cigar chomping central banker was...

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Some ‘Core’ ‘Inflation’ Difference(s)

The FOMC meets next week, with everyone everywhere expecting a 50 bps rate hike to be announced on Wednesday. Yesterday’s “unexpected” and “shocking” negative GDP is unlikely to deter anyone on the committee. Most have already dismissed it as nothing more than quirky, temporary factors, not unlike when they did the same to Q1 2014’s similarly negative result. At least that one had the Polar Vortex (uh oh). Jay Powell’s group can’t see beyond the US border, doesn’t care much about inventory,...

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