201801.15
2
1

Bi-Weekly Economic Review: A Weak Dollar Stirs A Toxic Stew

Economic Reports Employment We received several employment related reports in the first two weeks of the year. The rate of growth in employment has been slowing for some time – slowly – and these reports continue that trend. The JOLTS report showed a drop in job openings, hires and quits. The Fed has been talking…

201801.10
1
4

No, No, This Time They Mean It

I thought he might wait awhile longer given how things have played out. I guess not. Bill Gross, the former “bond king” at PIMCO, was back to advertising his position that the great bond bull market of the past quarter century is finished. In a tweet from his new employer Janus (h/t ZeroHedge) it seems…

201801.04
2
2

Global Asset Allocation Update

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. The extreme overbought condition of the US stock market persists so I will continue to hold a modest amount of cash. There are some minor changes within the…

201801.02
1
3

COT Blue: Nobody Buys a Dead Horse

FRBNY’s December 2017 Primary Dealer survey results aren’t yet published, so we will have to wait a few days for the collection of those banks’ economists to tell us what they think their own traders likely won’t do. It’s a mess in that situation, but one as old as the crisis. Nevertheless, Economists for some…

201712.20
2
1

A (More) Rational Basis For Expectations

With UST yields backing up a little bit after the yield curve collapsed so far so fast, the combination of tax cut and reform “stimulus” juxtaposed with the constant, non-transitory mainstream message of recovery and growth has left us with yet another BOND ROUT!!! It has been somewhat if not completely reminiscent of earlier in…

201712.19
2
1

Bi-Weekly Economic Review: Animal Spirits Haunt The Market

The economic data over the last two weeks continued the better than expected trend. Some of the data was quite good and makes one wonder if maybe, just maybe, we are finally ready to break out of the economic doldrums. Is it possible that all that new normal, secular stagnation stuff was just a lack…

201712.07
9
4

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
1
5

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…

201712.05
2
4

Bi-Weekly Economic Review: Who You Gonna Believe?

We’ve had a pretty good run of data recently and with the tax bill passing the Senate one would expect to see markets react positively, to reflect renewed optimism about economic growth. We have improving economic data on pretty much a global basis. It isn’t a boom by any stretch of the imagination but there…

201712.04
3
4

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…