I was reading Bill McBride's blog, Calculated Risk, recently and came across this post on heavy truck sales as a recession indicator. As Bill notes: Usually, heavy truck sales decline sharply prior to a recession. Sales were solid in January. It certainly looks like sales do indeed peak before recession. But how long before recession? Does this really work as [...]
Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?” Sherlock Holmes: “To the curious incident of the dog in the night-time.” Gregory: “The dog did nothing in the night-time.” Sherlock Holmes: “That was the curious incident.” From Silver Blaze by Arthur Conan Doyle, 1892 It is hard to determine sometimes what [...]
Another economic discussion lost to the eventual coronavirus pandemic mania was the 2019 globally synchronized downturn. Not just downturn, outright recession in key parts from around the world, maybe including the US. We’ll simply never know for sure because just when it was happening COVID struck and then governments overrode everything including unfolding history.What anyone can say for sure is [...]
It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it [...]
For several weeks now, the Federal Reserve has launched one bazooka after another. Officials there keep reassuring the markets, and the public, they’ve got an unlimited toolkit. However, the fact that they feel it necessary to keep showing you is a warning sign, especially how quickly each one is forgotten and overshadowed by the latest Big New Thing. The reason [...]
There is increasing skepticism in the mainstream media as to the functions and declarations coming from the Federal Reserve. As a direct consequence of the mid-September repo rumble, for the first maybe ever official opinions and explanations aren’t being taken immediately at face value. That may end up being the lasting legacy of what was otherwise nothing more than a [...]
One of the most maddening aspects of the recent repo market, federal funds mashup is the lack of context behind it. The event is being characterized and described as if in isolation. Regulations are squeezing dealers at the same time there is a lack of bank reserves. Thanks to QT, there’s just not enough liquidity to go around. Therefore, the [...]
Engaged in one of those protectionist trade spats people have been talking about, the flow of goods between South Korea and Japan has been choked off. The specific national reasons for the dispute are immaterial. As trade falls off everywhere, countries are increasingly looking to protect their own. Nothing new, this is a feature of when prolonged stagnation turns to [...]
There are seasonal bottlenecks which litter the calendar. Why did Lehman fail two weeks before the end of the third quarter of 2008? Bear Stearns, if you remember, came to the end of its rope…two weeks before the end of that year’s first quarter. And here we are again today two weeks before another quarter-end. US money markets are in [...]
It was a poignant moment that has gone totally unappreciated. Lost in the noise about subprime mortgages, on August 9, 2007, what actually happened that day represented perhaps the best example of how things worked. Or suddenly didn’t. On the occasion of the 10th anniversary, I recounted the tale of BNP Paribas. You’ve heard of Lehman and Bear Stearns, countless [...]
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