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Tag Archives: Reflation

Until This Changes, Forget Inflation: Banks Bought Epic Amounts of Safe, Liquid Assets in H1 ’21

The first half of 2021 was inundated with government helicopters, more QE’s, and then CPI’s put up with guarantees the “inflation” was going to continue for a long time. Jamie Dimon, JP Morgan’s often hapless CEO, proudly declared US Treasuries beyond the touch of any 10-foot pole. With the economy on fire, he “reasoned”, who would ever want safe and liquid instruments?The Federal Reserve, ironically, since Mr. Dimon is always on the Fed’s side, provides us with a more than partial answer....

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Finally The Taper Tantrum, Or What’s Wrong With August?

If you’re fortunate to be able to do this long enough, you’re absolutely assured to get caught with your pants down and almost certainly more than once. In the short run, it’s all a crapshoot anyway. Markets fluctuate and never, ever go in a straight line. And just when you claim to be right on top, they yank the rug right out from under your conceit(s). I’ve spent the past few weeks, really months pointing out how Federal Reserve policymakers via their compliant media hasn’t been...

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Hey Jay, Maybe Check The Swaps Before Committing to Taper

It was said to be something hugely significant, truly momentous – but only until it started to misbehave all over again. This was the summer of 2013, SHIBOR Summer in China and the misunderstood, mislabeled “taper tantrum” in the US$. Consistent with the latter’s more optimistic take on the world, the 30-year swap spread turned positive for the first time since the worst of the 2008 crash.Ever since it first appeared late in 2008, a negative then persistently negative swap spread...

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The Eurodollar’s Nose

What an intriguingly odd month September 2017 turned out to be. To start with, Reflation #3 only seemed to be gaining strength. The full throat behind Inflation Hysteria #1 was still ahead, as was its related personage the BOND ROUT!!!! And yet, early in that late summer month a sudden eruption; actually several. On September 5, T-bills. A day later a big one, CNY. Gold. Repo fails. And on and on. While Reflation #3 would continue forward, and after October 2017 it seemed like the...

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Neither Coincidence Nor Nothing: Fedwire Six Months Later

It was one of those little things that really shouldn’t have made any difference whatsoever, an interesting if trivial little nugget left behind for only obsessive scholars to care any about. Late in the morning of February 24, 2021, Fedwire shutdown. The fact a couple hours inactive snowballed into something bigger, we wondered if this would end up being indicative of how it might turn the world’s economic direction and then turn out.Now six months later, we can quite confidently make our...

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A TIC Trio of More Serious Deflation Potential: Asset Rebound, Banks Can’t Borrow T-bills From Foreigners, And The China Cringe Which Goes Along

The Treasury Department’s TIC update for the month of June 2021 was, well, interesting. Not in a good way, either (post-2014, is it ever actually good?) There are just too many nuggets to digest in one sitting, so here I’ll merely go over three major developments: an update to the May 2021 big dollar warning; a big, nasty wince given this particular China twofer; and what the hell must be going on without US banks being able to borrow US T-bills from foreign non-banks (yes, you read that...

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Studying, Analyzing Reflation Templates and Their Legs

In one sense, we have a template to follow, two potentially, but in another there may not be one this time. I’m talking about reflation and how it plays out specifically in bond yields because these have been among the most reliable indicators. Economists and central bankers unaware of this wealth of information right in front of them, right here for everyone to see, confused simply because their outdated, anachronistic worldview doesn’t allow for rational interpretation.Though very...

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The Contraction Is Over, Which Means The Hard Part Only Begins

Conventional wisdom has said for a long time that a recession is two consecutive quarters of declining output. Where this idea came from, who knows. It’s a shorthand that was put together over time derived from the folks at the NBER. This latter group has claimed the responsibility for being the “official” arbiter of every recession, having become the go-to outfit for determining business cycles.What the NBER actually says about recession is that it is a serious downturn lasting more than a...

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From China: Dollar, Deflation, And The RRRest

It’s not necessarily a discrepancy so much as maybe looking at the same thing from a different point of view. China’s State Administration of Foreign Exchange (SAFE) reports on, among other things, the widest definition of foreign assets being under its whole national umbrella. Yet, the agency publishes balances denominated not in CNY, either US$’s or SDR’s (hey, they can dream!) instead. The country’s central bank, the People’s Bank of China (PROC), owns, holds, and manages (a...

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Inching Closer To Another Warning, This One From Japan

Central bankers nearly everywhere have succumbed to recovery fever. This has been a common occurrence among their cohort ever since the earliest days of the crisis; the first one. Many of them, or their predecessors, since this standard of fantasyland has gone on for so long, had caught the malady as early as 2007 and 2008 when the world was only falling apart.The disease is just that potent; delirium the chief symptom, especially among the virus’ central banker variant.One need only review...

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