Repos, Collateral and the Unhappy Swaps Elephant
Following up on the repo warning from two weeks ago, we have gotten confirmation in the form of repo fails. In the US treasury repo market, the primary liquidity conduit in the US dollar wholesale money, we have been seeing indications of dramatic shortages in available collateral for some time. It was first noted back .. read more
Glimmers Of Hope For The Economy?
We have been pointing out for over a year now that the trend in the economic data has been negative and we’ve taken some grief for that as the stock market has marched higher. Jeff Snider, in particular, has been raked over the coals by some commenters (public and private) for his reporting on the .. read more
Nobody Is Paying Attention To Junk?
Just over a month ago we noted the clear exuberance in the junk bond space in the context of the growing usage of the word “bubble”. At the time, various junk or high yield indices had seen yields fall laughably below or near 5%. It was not all that long ago that short-term US bills .. read more
Overall Trade Activity Does Not Bolster Taper Optimism
Coincident to the relatively boring retail sales report, the Census Bureau estimated declining trade fortunes across the whole goods supply chain. In the seasonally adjusted data, total trade sales fell 0.1% in April after declining 1.2% in March. Compared to April 2012, total sales were up only 1.5% (meaning they declined on a real basis). .. read more
Quitting Sense, Call The Euro Crisis Over
With everything going on in Japan and the US credit markets, Europe has slipped somewhat from the headlines. Part of that is now universal recognition of the durable depression facing the entire continent, no more denials about containment or rapid rebounds. But politicians and policymakers have still maintained that the currency portion of the crisis .. read more
Retail Sales Show Nothing New
An absolutely boring report from the Census Bureau, with every indication showing exactly what we have seen since early 2012. Again, the appearance of muddle or stasis is proving irresistible, but still not any demonstrable improvement or monetary breakthrough in the consumer segment. The slowing trend continues at levels consistent with economic contraction, not growth. .. read more
If You Can’t Win, Change the Standards
In trying to sound modest and even magnanimous, Ben Bernanke in November 2010 penned an oped in the Washington Post justifying the recently implemented QE 2. Toward the end of his piece he acknowledged that the Federal Reserve and monetary policy could not work miracles. But given that obsequious qualification, the Fed Chairman was very .. read more
Stasis Is Not An Economic State
Economies either grow or they shrink, though shrinking is a misplaced word here. A real economic system is always moving forward, even during recession and dislocation. The word dislocation is used in modern economics where it probably does not belong, as well. The entire idea of a dislocation is antithetical to a real economy, being .. read more
