201411.25
0
0

Contours of the Cliff

I usually ignore sentiment surveys as, to reiterate one more time, they do not mean what people think they mean (and certainly not how they are used). The ISM Manufacturing Survey, for example, has been on fire for most of 2014 in an almost exact mirror of 2011. And just like 2011, that told us…

201411.23
0
0

The Return of Conundrum

co·nun·drum – noun: A confusing or difficult problem; a question or problem having only a conjectural answer Merriam-Webster Back in the last Fed tightening cycle, Alan Greenspan described the refusal of long term rates to follow short rates higher a conundrum, something he couldn’t really explain. Unlike past periods of tightening, long term rates refused…

201411.16
7
0

Bubble Behavior?

I really hate the term bubble. With regard to markets, frankly it has no meaning. One man’s bubble is another man’s rational bull market. There is no agreed upon valuation metric which, once exceeded, pegs a market or a sector or a stock as a bubble. My view on the matter is that “bubbles’ are…

201411.12
1
0

Why Bubbles Are Being Recognized

The nature of liquidity under the eurodollar standard is to essentially link “markets” that outwardly seem to have little or no relation. You can see the synchronized ups and downs quite clearly but miss the ultimate connection, especially under the orthodox assumption of the world’s economies and their “natural” finance as mostly closed systems with…

201411.10
0
0

Dragging Tycho Brahe To The Repo Market

I probably should start by issuing the caveat that it is dangerous to compare anything of the modern age to the revolution in astronomy dating back to the time of Copernicus. This is not at all about the supposed lack of tolerance at the time, as it seems as if there was more than enough…

201411.06
1
0

GOFO Back Beyond Its ‘Old’ Tricks

As the “dollar” runs somewhat “tighter” again, it is not surprising to see the various global dollar short proxies struggle under the weight of what I think is a very serious transition. The Brazilian real and gold are related in that respect, so lower prices in each are intertwined and significant toward that interpretation. However, the…

201411.02
4
0

Bank Of Japan Fills The Gap

The Federal Reserve ended QE3 last week as was widely expected and markets seemed to take it calmly enough. Stocks and bonds fluctuated, as they tend to do, but the end result was a non-event. It seemed that investors were willing to give the economy and the markets the benefit of the doubt as we…

201410.31
1
0

‘Dollar’ Tight Again, Though Maybe Wrong Fed Read

It began more than a week before the FOMC meeting, as eurodollars again anticipated what the mood would be surrounding whatever the FOMC might say. “Dollar” conditions had run down significantly where the entire curve shifted lower (looser) for the first two weeks of October as doubts grew about the economy in the US and…

201410.26
8
0

A Market That Satisfies No One

Stocks rebounded in spectacular fashion last week, the angst of the last few weeks apparently forgotten as quickly as a central banker can float a trial balloon. First there was the Bullard bounce that moved us off the lows when things were looking their grimmest and then last week we got a rumor about the…

201410.24
2
0

What Magnificent (For Some) Complications

In July 2014, just as the dollar was beginning to tighten with what seems like an overly sensitive trigger, the US Treasury Dept’s Office of Financial Research published a paper by Zoltan Pozsar that attempted to map out the financial system as it actually exists (hat tip to W Kraus for sending it to me)….