dark leverage

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 [...]

Bank Reserves Part 2; If QE Was Really QT, Then Why Hasn’t QT Been QE?

By |2018-05-09T17:35:19+00:00May 8th, 2018|Economy, Federal Reserve/Monetary Policy, Markets|

Since we’ve already cracked open the accounting, it makes some sense to take our example into an important corollary examination (if you haven’t yet, you’ll need to read through Part 1). In our prior examples, we’ve assumed that the swap of risk-free assets on Bank A’s asset side is a neutral trade. That is, there [...]

Bank Reserves Part 1; The Great Tease

By |2018-05-09T17:35:48+00:00May 8th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I completely understand the confusion regarding bank reserves. I really do. It’s easy to believe they are money because that’s what you’ve been taught from Day 1. Not only that, the same message is carelessly reinforced in the media every single time QE or any LSAP is referenced. Bank reserves are the aftermath of money [...]

The (Official) World Still Has A Ways To Go

By |2018-04-24T17:29:52+00:00April 24th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before Mario Draghi took over the ECB, he was head of the Bank of Italy. In between, Draghi was also Chairman of something called the Financial Stability Forum (FSF). This latter organization was created in 1999 “to promote international financial stability through enhanced information exchange and international cooperation in financial supervision and surveillance.” Draghi was [...]

COT Blue: A Decade of Weird

By |2018-03-16T16:17:47+00:00March 16th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On July 15, 2008, Federal Reserve Chairman Ben Bernanke sat in front of Congress for the second of his required Humphrey-Hawkins reports for that year. The original act meant for these to be more than bland economic obfuscation, where the original Full Employment and Balanced Growth Act of 1978 demanded monetary targets. The Fed stopped [...]