201605.03
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Benign Foreign Dollar Buffer or Systemic Collateral Issues, Continued Illiquidity and ‘Dollar Strain’?

There isn’t a whole lot known about the Federal Reserve’s Foreign Reverse Repo accommodation, and I believe that is intentional. The rate which the Fed pays to “borrow cash” from foreign central banks and governments is unknown. What is known is just how much in total the Fed is “accommodating” foreign dollar business. This RRP,…

201605.02
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Coming To Terms With Money; Part 2

To economists nothing about the 2000’s makes sense (a condition that has only grown worse in the 2010’s). At the same time productivity growth suddenly disappears, in its place is this incomprehensible “global savings glut.” While it has been tempting to dismiss these shifts as anomalies, even orthodox economists cannot just ignore them given the…

201605.02
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Coming To Terms With Money; Part 1

The assumed relationship between inflation and employment, unemployment really, has been tortured in the last half century. Given the constant mistakes economists make in this regard, it is fair to conclude that they really don’t have much idea at all about the connection. There is a fatal conceit contained within the orthodox views here that…

201604.27
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Focused On The Wrong End of Oil

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The…

201604.27
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Sentiment vs. Liquidity

On January 16, 2009, the FOMC gathered telephonically for an emergency conference call to discuss a deal that had been struck between Bank of America and the FDIC, Federal Reserve, and US Treasury Department. There was enormous concern, quite well-founded, that had nothing been done the news of that day might have led to a…

201604.24
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A Reader’s Chart Of The Week

One of the things I like about posts like the Chart of the Week is that it gets people to think, share and collaborate. It can be a bit of echo chamber sometimes so we welcome other opinions and feedback about our work. This chart of the week comes from reader Bradley Parkes, former investment…

201604.22
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Upping The Credit Cycle Pressure

The corporate junk bubble had gotten so beaten up and so dire that removal of the liquidation pressure was bound to attract bargain hunters and momentum chasers. Despite all that has happened, the lust for huge potential gains remains constant. Where that might have been more expressed upon the short side last year, with the…

201604.20
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Potentially Interesting Isolation On JPY

Today was the third consecutive down day or selling in eurodollar futures. The June 2018 contract settled below 98.80 for the first time in April, almost unwinding the move higher at the start of this month. Even after the selling, the eurodollar curve remains as depressed as ever, discounting an entirely different set of future…

201604.20
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Surely Confused By The Slope

Goldman Sachs did not disappoint. The bank’s earnings for Q1 were a disaster slightly worse than what was already anticipated as beyond bad. There was nothing that the firm did that it can say it did well, as Goldman’s CEO admitted there was weakness or “headwinds across virtually every one of our businesses.” For eurodollar…

201604.20
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What Nigeria Could Tell Us About China’s ‘Dollar’ Instability

On April 12, Muhammadu Buhari, President of Nigeria, was in Beijing to negotiate Chinese aid for his ailing country. At home, the government faces an enormous budget deficit largely on the price of oil. The more immediate threat, however, is that Nigeria in large part due to oil prices is being squeezed by monetary shortage….