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Tag Archives: rate hikes

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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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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Do I Owe Christine Lagarde An Apology?

I may have to rethink my opinion of Christine Lagarde. It just may be that after helming one serious debacle after another, she – unlike most in her position – may have learned a thing or two about being too quick to call it a day. Premature celebrations were the hallmark of central banks throughout the last fifteen years, including, famously, her predecessor’s predecessor raising ECB rates…in June 2008.Lagarde was, after all, the leader at the IMF behind its biggest disaster in history...

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I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape. The 2022 FOMC has made itself plain, incredibly hawkish to an extent not seen since 2006,...

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Concocting Inventory

The Census Bureau provided some updated inventory estimates about wholesalers, including its annual benchmark revisions. As to the latter, not a whole lot was changed, a small downward revision right around the peak (early 2021) of the supply shock which is consistent with the GDP estimates for when inventory levels were shrinking fast. What’s worth noting about the figures now is how much of a problem there is in terms of petroleum. By that I mean two ways. First, wholesale sales of...

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Speaking Volumes Rather Than Fast Rate Hikes

The price illusion. It is causing enormous confusion and difficulty, making the global economy out to be something it really isn’t. In fact, the whole situation is being viewed backward. What’s presumed from this is a red-hot economy causing consumer prices to skyrocket. In such a scenario, central banks might need to rush their rate hikes to cool it down (assuming, of course, that’s what modern “central banks” actually do). They’d have to step it up because red-hot growth would otherwise...

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