201708.23
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That’s Odd, I’ve Seen That Curve History Somewhere Before

Orthodox monetary theory tells us that central banks matter, a lot. Monetary policy is supposed to be the difference in everything from economy to currency. If one central is doing one thing and another central bank something different, it is presumed the only necessary information to infer what markets and therefore economies might do in…

201708.23
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If 2014 Was Ultimately a Letdown, What Might 2017 Be?

Today’s topic du jour isn’t even a word but an abbreviated name. Whereas yesterday markets were somewhat spooked by a relatively obscure British firm, Provident, today they are again by still another. This time it’s WPP Plc, an advertising aggregation firm that owns a sizable portfolio of ad agencies located all around the world. Given…

201708.22
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Context For The Inflation ‘Debate’

You can understand to some small degree economists’ collective confusion about inflation. They believe in wage dynamics, where a recession through mass layoffs creates slack and thus depresses wages. The recovery in a period of robust growth re-employs those unfortunate workers, and after enough time when that slack is reduced or even eliminated wages accelerate…

201708.22
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Eurodollar Futures, The Verdict (Eurodollar University)

The American banking system had been primarily a domestic one throughout its early development. Despite, or because of, the rapid growth in the later 19th century, banking was orientated almost entirely inward to finance the needs of that growth. But as a growing national as well as industrial power, the US adopted several measures early…

201708.21
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Being Rational

In April 2011, the European Central Bank’s staff and Governing Council were all optimistic. They had suffered through the panic and Great “Recession” and then the relapse in 2010 that birthed the term PIIGS. Despite all that and with considerable effort on their part (especially the purchasing of bonds), they thought there was reason to…

201708.21
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Weight Of Recovery

In 1871, W. Stanley Jevons in the preface to his book The Theory of Political Economy writes of a fundamental human issue with Economics. He makes a distinction between it and other sciences which do not suffer, as he said a century and a half ago, “the weight of authority.” Finding such words from so…

201708.18
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Commitment of Traders: Crude Confounding Confusion

The price of oil can’t seem to climb out of the $40’s despite a lot going for it at the moment. Oil prices matter right now as much as three years ago when they signaled serious trouble ahead. For them to get above $50 and then continue on would indicate for a lot of important…

201708.18
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Still Written in Chinese

The world of eurodollars is always going to be hidden. What goes on, really goes on, often sees no light of day. The most basic financing transactions are typically bilateral, meaning that the only people who really know the terms and the reasons are the two counterparties engaged. That is also true if one of…

201708.18
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Global Asset Allocation Update: No Upside To Credit

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are other changes to the portfolio though so please read on. As I write this the stock market is in the process of taking a dive (well if…