Sintra +1

Does a year matter? It seems like a sufficient length of time whereby solid conclusions might be reached. While that may be true in a lot of disciplines, it is not so in Economics. Recall that in late June 2017, ECB President Mario Draghi kicked up a minor fury over presumed “hawkish” comments. It triggered…


Dovish = Uncertain, Therefore Dollar

Back a few months ago when Europe was booming, or at least everyone was sure that this one particular economy was, market futures prices indicated an expectation for the first European rate hike to take place by Q2 2019. That was consistent with the US Federal Reserve’s experience as well as how the mainstream narrative…

201805.25 7

ECB’s Turn For A Disappointing Account

Earlier this week the FOMC published the minutes of its April policy meeting, disappointing “dovish” in them which more properly suggests skepticism about the state of economic affairs. Yesterday, it was the ECB’s turn. Releasing the “Account” of also its April gathering, Europe’s central bank began it by noting Germany’s federal securities. Specifically, it mentions…


The Currency of PMI’s

Today is PMI day. Markit Economics released the flash results from several of its key surveys. Included is manufacturing in Japan (lower), as well as composites (manufacturing plus services) for the United States and Europe. Within the EU, Markit offers details for France and Germany. Given the nature of sentiment surveys, we tend to ignore…

201805.07 7

If There Was No QE, How Could There Be QT?

How big should the Fed’s balance sheet be? It’s a topic that has taken over a lot of academic discussions. Recall that before 2008 the level of bank reserves was practically nil. They didn’t play much of a role in any money market, required reserves or not (this should be a big clue). After four…


Bi-Weekly Economic Review: Investing Is Not A Game of Perfect

The market volatility this year has been blamed on a lot of factors. The initial selloff was blamed on a hotter than expected wage number in the January employment report that supposedly sparked concerns about inflation – although a similar number this month wasn’t mentioned as a cause of last Friday’s selling. The unwinding of…


COT Black, Green, and Blue; Extremes But Not Extremes

No matter where one looks, there is extreme positioning in all the key markets. Each one is pulled further and further toward “reflation”, too, or in the case of the euro this “falling dollar” consistent with that idea. The world is betting big on it finally coming true, the “globally synchronized growth” to this point…


US Imports: A Little Inflation For Yellen, A Little More Bastiat

US imports rocketed higher once again in December, according to just-released estimates from the Census Bureau. Since August 2017, the US economy has been adding foreign goods at an impressive pace. Year-over-year (SA), imports are up just 10.4% (only 9% unadjusted) but 9.3% was in just those last four months. For most of 2017, imports…


Bi-Weekly Economic Review: Markets At Extremes

Economic Reports Production Production ended the year on a strong note but early readings from January are not as positive. The December industrial production report headline was strong at a 0.9% gain but a lot of that strength was in the mining (oil drilling) and utility sectors. Mining has actually led the way the last…


This Explains A LOT (And It’s Still Not Enough)

NOTE: This is really the second half of an earlier missive on the changing nature of the eurodollar system post 2014-16. While it’s not absolutely necessary to read the first here, it’s probably a good idea. The reason nothing ever goes in a straight line is that first everything is always changing. How and why…