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credit-based reserve currency

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

By |2016-08-23T18:46:00-04:00August 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 I wrote earlier. However, nobody [...]

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

By |2016-08-23T13:27:39-04:00August 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 four months later, on July [...]

Secular Stagnation Would Be The Best Case, But It’s Not Even Realistic

By |2016-04-12T13:42:02-04:00April 12th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The IMF released the first 2016 edition of its World Economic Outlook (WEO). Titled Too Slow For Too Long, it seems as if the institution has finally caught on to the fact that the global recovery never really was a recovery. Throughout the report you get the sense that they are starting to figure out what is going wrong but [...]

As If We Needed It, Asian ‘Dollar’ Might Be More Complicated, Too

By |2016-04-06T16:41:14-04:00April 6th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

A few weeks back, on March 18, the Japanese government bond market was hit with a “buying panic” of some noteworthy proportion. Yields all across the curve dropped, which takes some doing since yields were already at that point mostly negative. Common sense forces any sane person to wonder if sanity itself remains relevant to global finance: That raises the [...]

The Lack of Recovery Need Not Be Overly Complicated

By |2016-04-05T16:54:23-04:00April 5th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Following the explicit path of orthodox monetary and economic theory delves into something very much like Lewis Carroll’s monstrous rabbit hole he devised for Alice all the way back in 1865. Like the story’s Wonderland, the other side of the hole leads to some version of nonsense that seems to project, in the book’s case, the reader’s own senses. In [...]

Slowdown Continues; Lost Time Accumulates

By |2016-04-05T12:50:02-04:00April 5th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

US trade statistics for February improved in both exports and imports, but there are questions as to the reason for the reverse and whether it is actually meaningful. After abysmal performance in every segment and category in January, there was some give back in February including positive numbers in some places. That suggests that January’s trade activity might have been [...]

In Some Ways, It Has Always Been Forward

By |2016-03-22T18:04:29-04:00March 22nd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is certainly not enough attention paid to the evolution of eurodollars and even less devoted to how it all started. In my analysis, those two facets are inseparable as the origins of the eurodollar space tell us a lot about how and why it became what it is. The Japanese, for instance, were being squeezed by really unrelated funding [...]

Rising Yen as Rising Dollar Only with a Weaker Dollar Shown Via That Stronger Yen

By |2016-03-21T18:00:00-04:00March 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Oil prices remain ebullient, relatively, compared to the dismal start to the year. Everything else, it seems, is driven by that background which means “dollar.” In that respect, we look to China or at least the Asian version of the “dollar” for guidance on triangulating funding conditions and future potential positioning. The CNY exchange is still within the post-Golden Week [...]

The Breadth of Shortage

By |2016-03-18T17:12:53-04:00March 18th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The yield on the Japanese government’s 10-year paper traded negative yesterday for the 17th straight session. When Haruhiko Kuroda first announced his negative rate experimentation, the 10-year JGB was low but still safely positive, yielding 22.9 bps on January 28. It would be negative for the first time on February 9 right as the rest of the world started to [...]

The Search For Cause

By |2016-03-14T18:47:45-04:00March 14th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If China is most representative of the current state of the “dollar” economy, Brazil is surely most representative of its worst case. The country’s economy has been like China in slowing down steadily over the past few years, but unlike China it has descended already into a nightmarish level of distress. In other words, Brazil already has a Great Recession [...]

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