201706.21
1
0

Brazil’s Reasons

Brazil is another one of those topics which doesn’t seem to merit much scrutiny apart from morbid curiosity. Like swap spreads or Japanese bank currency redistribution tendencies, it is sometimes hard to see the connection for US-based or just generically DM investors. Unless you set out to buy an emerging market ETF heavily weighted in…

201706.21
0
1

Basic China Money Math Still Doesn’t Add Up To A Solution

There are four basic categories to the PBOC’s balance sheet, two each on the asset and liability sides of the ledger. The latter is the money side, composed mainly of actual, physical currency and the ledger balances of bank reserves. Opposing them is forex assets in possession of the central bank and everything else denominated…

201706.21
0
0

Committing To A World Without 3%

When President Trump nominated Congressman Tom Price for Secretary of Health and Human Services he created a vacancy in Georgia’s 6th Congressional District. After no candidate secured a majority in the first round of voting, a runoff was to take place yesterday among the top two contenders. Republican Karen Handel squared off against Democrat Jon…

201706.20
0
1

Fading Further and Further Back Toward 2016

Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in…

201706.20
4
3

What We Are After

I am a long-term optimist by nature. Stop laughing. I am well aware I have attained a reputation as something of a permabear, but that is merely the consequence of the time period in which we inhabit. Read some of the things I wrote in 2009 (and even in early 2010) and you might think…

201706.20
1
0

Now China’s Curve

Suddenly central banks are mesmerized by yield curves. One of the jokes around this place is that economists just don’t get the bond market. If it was only a joke. Alan Greenspan’s “conundrum” more than a decade ago wasn’t the end of the matter but merely the beginning. After spending almost the entire time in…

201706.19
0
1

TIC Consistency in April

Chinese officials earlier this month broadcast they were ready to buy US Treasury bonds again. After selling an unknown quantity (there are different figures, none of which exactly agree) over the past few years, the announcement was clearly aimed at China’s exchange rate. Officials have taken to CNY stability as a central focus of official…

201706.19
1
2

Root Monetary Behavior

Capitalism has always featured feedback mechanisms. They never were perfect, as nothing is going to ever be. Instead, market discipline was always a messy affair as it more often throughout history included periods of undisciplined behavior followed closely by mass exodus, crash, and then depression. Economists after 1929 thought of themselves as a replacement mechanism…

201706.19
0
1

More Pieces of Impossible

On his company’s earnings conference call back on Valentine’s Day, T-Mobile CEO John Legere was unusually feisty. Never known for shyness, Legere had reason behind his bluster. T-Mobile had practically built itself up on price, being left the bottom tier of the wireless space practically to itself. That all changed, however, as both Verizon and…

201706.19
0
0

Global Asset Allocation Update:

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 no changes to the portfolio this month. The growth and inflation outlook continued to weaken somewhat since last month’s update. Certainly nothing very dramatic though, just a…