201801.16 4

Confirming the Big Change In 2017

What determines the price of gold? It seems like it should be an easy question to answer, but gold more than perhaps any other asset often mystifies in its behavior. Part of the reason is mainstream, orthodox Economics and its practitioners who have waged an intentional war on the metal for more than a century…

201712.18
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Chinese Really Are Not Tightening, Though They Would Be Thrilled If You Thought That

Why would any central bank try to disguise the fact that it is being highly accommodative in its own money markets? That would be a strange place to start, made all the more so by the further observation the same central bank is perfectly happy if you thought it was doing the opposite. Cryptic introduction…

201712.18
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TIC Points To ‘Dollar’ Redistribution As Much As Possible Supply

We ended last week with a clear sign that global “dollars” are in (escalating) shortage. I would write “again” with that sentence but there is every indication that said shortage never really ended. It’s not like last year’s “reflation” was a switch from insufficient supply to sufficient, rather it was a relative change to a…

201712.15 4

Chart of the Week: …ummmm

Back in early October, I noted that repo fails had jumped above $250 billion (combined “to receive” and “to deliver”) for three weeks straight. That wasn’t an auspicious result, as sustained collateral problems like that don’t correlate to happy things. It all began the week of September 5, in what seemed like a minor one-day…

201712.07
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Seriously, Wherefore Art Thou Collateral?

I’m going to go out on a limb and claim there is something seriously wrong in repo. All jokes aside, I know it sounds like a broken record but the dimension that matters is not intermittent collateral problems so much as the greater intensity to them and in a condensing timeframe. Escalation is a description…

201712.05
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COT Blue: Bonds Are Not Tuned In To The Mainstream Channel

You do have to wonder to whom the increasingly shrill bond market declarations are being directed. It’s very likely that Bloomberg’s now daily haranguing “the yield curve can’t possibly be right” tirades aren’t meant for UST investors. Rather, it is perfectly evident that the treasury market is going to do what it does regardless, and…

201712.04
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Transitory?

The FOMC is holding its next regular policy meeting next week. It is widely expected that on December 13 the Federal Reserve’s policy body will vote and publicize the next “rate hike” in its exit strategy. Starting in December 2015, this next one, if it happens, will be the fifth in the series. It would…

201711.15
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Symmetry Matters, Or The (Small) Progress of Stating The Obvious

Chicago Fed President Charles Evans is this year a voting FOMC member. Normally, that might not make much difference but in times like this where dissension is building beneath the surface of even the typically stoic central bank, this time it might. Apparently we can count Evans among the list dissatisfied with the current state…

201711.13
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Broad Market Calibrations: Nowhere Near Good

In later 2014, the Bank of Russia began to repo out eurodollars to local Russian banks. These financial institutions were being increasingly deprived of “dollar” funding on global markets. It made sense that Russia’s central bank would step in on their behalf, redistributing what it could out of its own pocket (though exactly which one…

201711.08
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Full(er) Appreciation of the Geographical ‘Dollar’ Dimension

The American view of the “rising dollar” period is one of truly understated appreciation. I wouldn’t be surprised if many of us didn’t realize there was ever a downturn to begin with, let alone one that flirted with proportions reaching recession. After all, the most widely felt effects didn’t manifest and really sting until the…