201409.19
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And Europe’s Credit Version

While dollar credit and funding undergo their own version of policy-induced confusion, I can’t help but see something similar on Europe’s side of it – though for much different constructions. This week marked the inauguration of the highly publicized T-LTRO’s (again, the flood approach is past) that immediately deflated upon launch. Some expectations were as…

201409.19
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Credit Rundown of Opposing Propositions That Aren’t Necissarily Opposed

There is an interesting dichotomy taking shape in credit markets, including those around the globe (that will be a separate post). Some of this, I think, relates to what FOMC member Richard Fisher related today about concerns over asset bubbles. I think the Economic Times of India summed him up the best: Already there are…

201409.18
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‘Markets’ Want More Yen Debasement?

The good news in Japan for August trade figures is that imports fell 1.5% Y/Y, but that was balanced by an almost identical 1.3% Y/Y decline in exports. Confounding all orthodox expectations, the yen’s radical devaluation did nothing to press divergence between imports and exports as it was “supposed” to. Instead, imports matched exports, at…

201409.18
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Home Construction Still Moving Down

Another month, another instance where supposed “tight” supply and high home prices fail to register any significant change in home construction. Construction figures for August bear little resemblance to the idea that anything other than monetary interference is responsible for the mini-bubble in activity. Further, August represents another month’s worth of confirmation, despite any and…

201409.17
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China Profoundly Disagrees With FOMC Assessments

With Brazil in recession and much of the “resource” part of the supply chain nearing that or worrying about it, you can surely bet that there are “unexpected” problems in the Chinese economy. As much as the word “decoupling” is being used once again (though in 2008 it was reversed, with the world supposedly able…

201409.17
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The Business of Movies Without Customers

The biggest thorn in the recovery narrative, or whatever it is that the FOMC claims is guiding its hand, is that consumers are not spending as they “should” under such circumstances. Retail sales not only have disappointed this year, bookended by “unexpected” weather on one and an as-yet excused position for the other, they are…

201409.17
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Dollar Shift Is Actually More Dramatic Than Appears

For the conspicuous lack of drama surrounding currencies in 2014 vs. 2013, there does not seem to be much by way of actual change. Perhaps the only real difference this year (through July) compared to last is how central banks are responding to what they perceive of dollar availability. It is entirely a different perspective…

201409.17
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There’s A Lot To Eonia and the ECB

The ECB turned to negative rates, at least as far their floor, back in June which was supposed to “force” banks to find a suitable alternative to liquid and safe. In orthodox terms this is called the “portfolio effect” as making low-risk contain an outward-facing cost should, as the theory goes, make financial participants shift…

201409.17
4
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QE’s Taper Reveals Liquidity Degradation

Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed’s own repo “fix” fail to affect the…