201602.03
1
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Potential Connections

You simply cannot act as a money dealer when the money you are dealing is highly suspect. I am not writing about money in the true sense, such as any tangible form that falls under property laws of custody and bailment, but rather the wholesale “money” that is derived under the much looser and unconstrained…

201602.01
9
1

It Starts: Junk Bonds ‘Contained’

To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks…

201601.27
5
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Blatant Warning, Not Casual Dismissal

For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of…

201601.22
5
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Stimulus: ECB’s QE Goes Missing

If markets have rebounded today after the sustained selloff on fresh “stimulus” hopes, then one would have to wonder immediately what the background fundamentals might be. Setting aside all notions of past “stimulus”, the call for more would seem to suggest, quite strongly, something far, far less than desirable. Yet, in the same breath economists…

201601.22
2
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Credit Cycle Circular

Economics in the orthodox version has it entirely backwards. If that wasn’t apparent in the last cycle, it is becoming far more so once again. This descent into math is not limited to econometrics, as it says a lot about the state of popular perception more generally. Computer models and statistics are given the moniker…

201601.19
1
1

And These Are The People Who Loved That Price

When the Fed is revered as it is in certain circles, its superstitions afford unwavering faith and even straight up desire. It is much, much easier and comforting to believe in a benevolent guiding spirit, an all-powerful force of good that removes all the nightmares. The cultivation of that ideal started in the 1980’s but…

201601.12
1
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Rough Contours of Bond Cycle Implications

The fallout in liquidity and funding markets (subscription required) has been mostly suggested at the junk bond bubble. Prices have fallen, and many precipitously, while yields have risen. But those are not the only negative factors being exhibited. If the issuance figures are anywhere close to correct, then increasingly junk obligors are being totally shut…

201601.11
6
1

PBOC Wastes No Time Proving Desperation

The PBOC wasted no time this week showing that it was serious about its desperation last week. The central bank fixed the CNY reference contrarily upward to 6.583 this morning from Friday’s 6.600. As we have been documenting during this unabated “dollar” problem, whenever the PBOC attempts a contrary maneuver with the fix it typically…

201601.07 0

Stocks Join Global Risk Adjustments

The focus on China as if their problems were only Chinese is highly misplaced, though you can understand the appeal of the excuse. This sentiment was expressed over and over today (just as it was in August): Do we all live in China now? Investors could be excused for thinking that, given that arcane indicators…