balance sheet capacity

Beware The Collateral Underneath The Top of GDP

By |2018-07-24T18:31:40+00:00July 24th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why so much wholesale emphasis on collateral? Easy. The monetary history of recent times hasn’t been very kind in that regard. On the one hand, the repo market has become so much more important than it was, as scared interbank participants fled unsecured eurodollar markets eleven years ago next month for the presumed shelter of [...]

TIC Confirms Pretty Much Everything

By |2018-07-18T17:39:55+00:00July 18th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Russian ruble has fared far and away much better than its EM peers. Compared to something like the Brazilian real, there is no comparison. The ruble has been relatively steady following an initial drop in April with the imposition of sanctions. April 19 came and went, and while that date is displayed prominently across [...]

Gold, Dollar, and Repo: Who Cares About Taper, or QE?

By |2018-07-17T18:49:40+00:00July 17th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s funny how these things work. He didn’t actually say the word “taper”, at least not when the frenzy first started. The very idea of the “taper tantrum” was the media’s work, the easy slogan that could be used as shorthand for the conventional explanation. The economy was improving, everyone was told and easily believed, [...]

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32+00:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the [...]

Is Anyone Really Surprised DB’s Problems Had Nothing To Do With The DoJ Fine?

By |2018-05-31T17:03:13+00:00May 31st, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You need only go back a little less than two years for an example. In later 2016, Deutsche Bank was a huge problem everyone was discussing if only because they couldn’t avoid it. Despite “reflation” then gripping much of the world, the German institution stood out for all the wrong reasons. Those were easily dismissed [...]

Bank Reserves Appendix; One Additional Case Study

By |2018-05-11T16:48:29+00:00May 11th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Early last month, Deutsche Bank replaced one CEO pledged to paring back the bank’s ailing franchise with another committed to doing the same thing only more quickly. As I wrote at the time, “Cryan isn’t being ousted because he was wrong, but because he was right.” In comes Christian Sewing whose plans are starting to [...]