201501.29
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Diverging Denmark

The Danish central bank, Danmarks Nationalbank, reduced its deposit rate floor by 15 bps to -0.5%. In what looks like a preemptive move aimed at potential destabilization ahead, so far they have managed to keep the krone from following in the franc’s destructiveness (short run). I think it is more than credibility at this point,…

201501.28
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Credit Calm Instead of Hope

Looking through all the various indications of the “dollar” world, there is seemingly to this moment a great deal of calm. This is in sharp contrast to December where bearishness and tightening were not just evident but dangerously so (across almost every part of the global financial system). But those two observations are not necessarily…

201501.28
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Funding Markets Just Called The FOMC’s Bluff

Janet Yellen and her colleagues would like to welcome you, not unlike Tim Geithner’s 2010 expedition in this area, to the recovery. They have removed pretty much all language that would make you think there was anything like lingering destructiveness or erosion. In doing so, they make it very plain that they want you to…

201501.27
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Global Means Global; ‘Dollar’ Means Trouble

In addition, and very much related, to durable and capital goods disappointment, some major bellwether earnings have weighed on jubilation over the “robust” economy. Caterpillar in particular was troubling, but as the lineup of excuses expands, the idea of “decoupling” is now even more pronounced. So, in addition to the energy sector dragging down earnings,…

201501.26
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When 2 Years Doesn’t Mean 2 Years

Japan has faded from the front page, but the economic disaster continues to bother. The Bank of Japan has been forced back from its first target “against” the “deflationary mindset” that launched QQE back in April 2013. The goal then was not to achieve 2% “inflation”, but rather a stable and sustained 2% rate. Needless…

201501.25
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The Deflation Threat

There’s been a lot of talk recently about deflation – no I’m not talking about the New England Patriots – so maybe it’s a good time to talk about what it really is and why so many economists seem to be in a tizzy about the possibility. For most of the folks who spend their…

201501.23
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A Difference Between Krone and Franc

Recognizing the danger of being understated, Swiss markets are a disaster. The overnight rate at -4% handily beats out the periodic specialness in US$ repo which settles at the penalty rate of “only” -3%. The 10-year bond rate is -.257%; the 15-year at -.083%. The Swiss stock index fell more than 14% in the two…

201501.20
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Gold Does Seem To Suggest A Different Degree Of At Least Uncertainty

The main problem with looking at the financial world from a “dollar” funding perspective is that there really is no such monolithic existence. The funding conditions in Russia may be very different than those of Swiss banks; they also may be far too similar. Given the impossibility of direct observation, being left outside and searching…

201501.20
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It Does Appear Bank-Driven

The major categories provided within the TIC estimates are a breakdown between private “flows” and those from official sources, such as foreign government and central bank accounts (as much as is known). In terms of those larger segments, there wasn’t really much of note in the update for November. There is some indication that foreign…

201501.19
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The Dangers Of Leverage

Leverage: the use of credit to enhance one’s speculative capacity Merriam-Webster Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes The Swiss National Bank – the Swiss equivalent of our Federal Reserve – didn’t exactly move the world last week but the fallout…