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Never A Good Sign When Central Banks Feel the Need

By |2016-02-16T19:00:34-05:00February 16th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You can’t blame the PBOC for trying, as if they were even going to do it, Monday was the day. With the US closed and after the turmoil all over the “dollar” up to last Thursday, the Chinese central bank was left with practically no choice. With Hong Kong shaping up to the mess in the eurodollar, there wasn’t any [...]

China Trade Unsurprisingly Collapses Again

By |2016-02-16T11:31:14-05:00February 16th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Last month when China’s exports “only” declined by 1.7% (revised) the entire orthodox world took it as a definitive signal for the long-awaited monetary stimulus effects. Whether it was the yuan’s “devaluation” or the six rate cuts and the often double shots of reserve requirement reductions that accompanied them, December trade figures were so very encouraging. Economists, in particular, were [...]

Empty Consumers

By |2016-02-05T16:56:10-05:00February 5th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

If the Chinese were intent on financial reform, and that meant trying perhaps the impossible task of a managed bubble deformation, the genesis of the idea was forged in the United States. China’s vast industrial machine was made to service US consumers and financed with the full throat of eurodollar expansion, leaving so many goods for sale in US stores [...]

China’s Three Dizzying Factors

By |2016-01-27T17:41:17-05:00January 27th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It makes for quite the juxtaposition, though perhaps not so jarring given that global banks are still enormous and disparate operations. On the one hand, Citigroup’s CEO was eminently confident from within the confines of Davos and the status quo: The market is "adjusting" to a series of headwinds that can be overcome, Citigroup CEO Michael Corbat said Thursday, a [...]

Blatant Warning, Not Casual Dismissal

By |2016-01-27T11:46:48-05:00January 27th, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of these nonthreatening rationalizations trace back [...]

PBOC’s Efforts At What Cost?

By |2016-01-26T20:05:35-05:00January 26th, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Chinese central bank has managed to instill some order in both onshore and offshore RMB markets, but at what cost? The amount of intervention that was induced severely strains only the future at those maturities. Central banks are nothing if not short-termists in the purest sense, so repeating what doesn’t work never factors; all that matters is right now. [...]

Inelasticity Not Outflows

By |2016-01-25T16:00:52-05:00January 25th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

More and more the media are finally starting to get the message about Chinese liquidity and its tendency for or against “devaluation.” For their part, the PBOC has been quite clear about its intentions all along; it was only the impenetrable fog of orthodox economics that prevented more widespread acknowledgement and understanding. There are no “reserves” at least not in [...]

Tsunamis, Runs and Rubles

By |2016-01-21T16:48:01-05:00January 21st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It is said that a tsunami announces itself when the ocean suddenly and for no apparent reason recedes back farther than anyone could imagine. Left stranded are everything from beachgoers to fishing vessels of all sizes and even marine wildlife suddenly exposed to the open air. The spectacle creates a dangerous curiosity which the naturally curious humankind has difficulty avoiding. [...]

The True And Hidden Menace of Liquidations

By |2016-01-20T16:50:50-05:00January 20th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Today’s radical reversal in stocks notwithstanding, the continuing hits of liquidations are not achieving their settled ends. In purely financial terms, the entire process of liquidation is to renew a settled state. Local imbalances force restriction of financial resources (what used to be money but now is something recognizable as such but truly not money) which triggers a cascade of [...]

A Strong Indication of What Changed In January For the PBOC

By |2016-01-20T10:06:00-05:00January 19th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The official word from China, in the sense that whispers and unofficial back channels counts for any kind of imprimatur, was that last week’s huge surge in offshore yuan money rates was at the request of the PBOC using state banks to squeeze those damned speculators. It was perhaps an usual step to take in that the PBOC’s major efforts [...]

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