201608.26
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What Yellen May Have Said

In case you need any assistance in trying to figure out when Janet Yellen spoke, or at least when the text of her speech was released from embargo, here is a hint: It seems her stream of consciousness was somewhat consistent with the old Greenspan idea of “fedspeak.” People and investors appear to have taken…

201608.25
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The Reckoning

As I have written many, many times, the “unexpected” events of January and February were a dramatic wake-up call for central banks. Last August’s global liquidation they could at least try to ignore because it could possibly fit within the paradigm of “transitory”, a one-off aberration that was some mysterious Chinese viral contagion and thus…

201608.24
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The Product of NIRP: Exposing Psuedo-Science

It wasn’t the introduction of statistics that led to the dire state of “science”, rather it was the jettison of common sense in favor of, and the total deference to, statistics. This was not a single event or a clean break, of course, as it happened slowly over decades. But in the 21st century what…

201608.23
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Liquidity Risk Is Very Real And Really Not That Hard To Spot And Define

Going back to Japan for a third time today (it is more than deserved), at least in the setup, the Financial Times on August 1 astutely picked up what the rest of the mainstream media missed about the last BoJ policy moves. They correctly judged the “dollar” intentions, but also that it wasn’t nearly enough, as…

201608.23
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The Oil of ‘Dollars’, Japanese ‘Dollars’

Starting June 8, oil prices began falling again, reversing their more optimistic trend that had lingered since February 11 long after the usual correlation to CNY was broken. In fact, by the time WTI had peaked, CNY was already being meddled with again in clear PBOC interference. Despite being backward to what was 2015’s relationship…

201608.23
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Clues to the Origins And Stubbornness of the ‘Rising Dollar’

On March 9, 2016, front month trading for Japanese government bond (JGB) futures was halted at 12:32 pm Tokyo time. Selling had become intense, tripping the Osaka Exchange’s dynamic circuit breaker. The total length of the halt was just 30 seconds, but fingers were already being pointed in the direction of the BoJ. More than…

201608.23
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Bi-Weekly Economic Review: The Big Picture

Economic Reports Scorecard If you want to understand the US economy based on one economic report, you could do a lot worse than the report on productivity released last week. This was the third quarter in a row that showed a decline in US productivity. That is, output was up (GDP was positive) but not…

201608.22
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Confused By The Slope: All The Answers Were There in 2012 China

The simple fact of the matter is that 2012 wasn’t supposed to happen. By every orthodox prediction and theory about the set of tools deployed after the Great Recession (after it, the first clue) there was no reason to suspect anything but the usual cyclical occurrences. Sure, the recovery would be weak because the recession…

201608.22
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Magic Number Theory Must Be Magic For All Sides

John Williams: Finally, monetary policy frameworks should be critically reevaluated to identify potential improvements in the context of a low r-star. Although targeting a low inflation rate generally has been successful at taming inflation in the past, it is not as well-suited for a low r-star era. There is simply not enough room for central…

201608.22
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The Inequality of Logic Behind The Increasingly Emphasized Magic Numbers

It is a basic element of logic that if A = B and B = C, then A must also equal C. In terms of action, if I do a thing and that thing always leads to a predictable outcome, not seeing that outcome causes one to question whether or not one actually did that…