On April 6, the Trump administration announced a new round of sanctions imposed upon certain Russian officials, persons, and businesses. Treasury Secretary Steve Mnuchin announced their purported purpose in a letter: “The Russian government operates for the disproportionate benefit of oligarchs and government elites.” Russia’s currency, the ruble (RUB), fell sharply after the announcement as well as over the days [...]
February was a very interesting month, wasn’t it? There was the pause or even end of the inflation hysteria driven home by “unexpected” liquidations in markets all over the world. On top of those, LIBOR-OIS blew out and all the absurd explanations put forth for it, and even outright lies. Needless to say (write), I’ve been waiting for the TIC [...]
Throughout much of last year, we were told repeatedly that the PBOC was tightening monetary policy. China’s central bank had raised its reverse repo rate twice early on, and then once more last December (and would do so again just last month). These moves coincided with Federal Reserve “rate hikes”, seemingly in line with the whole idea. Not only that, [...]
On Friday I wrote: Again, the size of your reserves reflects, and is proportional to, your potential need for funding. You can’t accumulate that many unless you have a similarly arrayed “dollar short.” The bigger the stockpile the more potential for it to get out of hand if things go the wrong way (usually on the self-reinforcing cycle of rising [...]
Very early on in the turn, I mean very early, you could already tell there were substantial problems underneath. By the time CNY started lower, against all expectations, there had already been serious signs of trouble in China for months by then. In that initial seemingly minor drop in early 2014, the PBOC’s actions belied a stable system. If you knew [...]
Last month Chinese trade statistics left us with several key questions. Export growth was a clear outlier, with outbound trade rising nearly 45% year-over-year in February 2018. There were the usual Golden Week distortions to consider, made more disruptive by the timing of it this year as different from last year. And then we have to consider possible effects of [...]
On Page 1, Chapter 1 of the Central Banker Crisis Handbook it states very clearly, “do not make it worse.” It’s something like the Hippocratic oath where monetary authorities must first assess what their actions might do to an already fragile system. It’s why they take great pains to try and maintain composure, appearing calm and orderly while conflagration rages [...]
Friday, January 26, stocks hit their last record highs. Buoyed by supposedly strong earnings along with near euphoria about tax reform anecdotes, all three major US indices were sitting at their respective tops after another big week. Everything was apparently going in the right direction: All the three key U.S. indexes closed at record levels on Friday following better-than-expected earnings [...]
Top Chinese leadership is taking further shape. With Xi Jinping’s continuing consolidation of power going on right this minute, most of the changes aren’t really changes, at least not internally. To the West, and to the mainstream, what the Chinese are doing seems odd, if not more than a little off. Unlike in the West, however, there is determined purpose [...]
The Chinese government reported estimates for Industrial Production, Retail Sales, and Fixed Asset Investment (FAI) for both January and February 2018. The National Bureau of Statistics prepares and calculates China’s major economic statistics in this manner at the beginning of each year due to the difficulties created by calendar effects (New Year Golden Week). Despite this attempt to offset them, [...]
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