201503.04
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Watching the Franc Again

The rock of the Swiss banking position was its still-heavy relationship with the global “dollar”, a proportion of funding that diminished only somewhat post-crisis. The hard place was the euro, whereby pegging the franc to it meant the SNB was balancing euro problems with banking disproportion. It seemed like a good bet, for orthodox monetarists,…

201503.04
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Construction Is Dragging

Lost amid last week’s stock euphoria was the collapse in both the ISM’s Chicago Business Barometer (which I covered here) and construction spending. While sentiment surveys are hard to judge, it wasn’t a huge intuitive leap to suggest that both data points may be related to the energy sector. While that will remain unanswered for…

201503.04
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Oil Updates On Supply And Inventory (Demand)

There were several updates in the crude oil data flow, including the latest “unexpectedly” huge increase in inventory that pushed spot WTI back below $50 yet again. The US EIA estimated that domestic inventory rose by a gargantuan 10.3 million barrels, far exceeding predicted builds. That figure has to include oil being shipped to the…

201503.03
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It’s Not A Stock Bubble But A Bigger Corporate Bubble

With liquidity running somewhat perilously noncommittal since June, you would think the riskiest parts of the credit market would be most affected. That is incorrect and once again stands out as to the bubbly nature of the current age. Aside from liquidity draining enthusiasm into and around October 15 and December 1, high yield debt…

201503.03
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Where There’s A Rising ‘Dollar’ There Is Short Collateral But Plentiful ‘Reserves’

The Federal Reserve is running another large-scale test on its Term Deposit Facility (TDF), the account by which it intends to establish a European-style floor to its also intended interest rate corridor. Judging by the fact that nobody has paid any attention to this test or the one that preceded it, except for those that…

201503.03
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Swirling ‘Dollars’

Despite the relative peace and tranquility in dollar-denominated credit markets at present, the “dollar” itself continues to rise. Clearly the acceleration of that trend has waned in recent weeks, but nonetheless is still moving upward to the point it is at the highest level in more than a decade. Somehow most commentary takes such a…

201503.02
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Optimism/Pessimism: Stocks At Record Highs While Savings Rate Jumps

Stocks had a great day today unshaken by whether the manufacturing part of the economy was growing more quickly or at the slowest rate in 13 months. Confusion isn’t part of the asset inflation lexicon. In economic news, the U.S. manufacturing sector had its best gains since October, according to Markit’s final Manufacturing Purchasing Managers’…

201503.02
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Crude Parallels

The Great Recession was seven years ago so it might seem appropriate that our memories of the specific nature and order of events is lost to time. However, given that it will be a seminal event in history (hopefully not surpassed) there is less leeway to having such a short grasp on the important pieces….

201503.02
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China Steering Away From or Back Toward Bubbles?

The confusing nature of the PBOC’s actions in the past year or so has led now to publications of theories over a potential power struggle at the central bank. While finally acknowledging that last year was all about “targeted” approaches to monetary “guiding” economic reality, this year is about to explode in personnel changes and…

201503.01
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Currency Wars & Newton’s Third Law

Newton’s Third Law states that for every action there is an equal and opposite reaction. Economics is certainly not science so the application of Newton’s law would seem inappropriate for analyzing the global economy, but in today’s world I think it is apt; more growth here means less growth there, a zero sum game of aggregate demand…