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money supply

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. [...]

China’s Offshore Confusion

By |2015-12-31T17:00:59-05:00December 31st, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

China’s government or the PBOC moved to suspend three foreign banks from participating in cross-border currency transactions. From what I have seen, and nothing has been confirmed, rumors have suggested that Deutsche Bank was one of the three. The move has, as usual, created all manner of confusion in how to frame what the PBOC or Chinese regulators might be [...]

The Inescapable Trap of the ‘Dollar Short’; Brazil Edition

By |2015-12-30T15:46:35-05:00December 30th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

For bond ratings agencies, finding a bottom is pretty much their job. In other words, they are supposed to map out and understand, as best as may be possible through regressions and equations, the forces that might define a worst case. By direct implication, a worst case probability is determined by at least some ray of hope, some perhaps buried [...]

The Economy They Hope Or The Money That Is?

By |2015-12-16T16:37:47-05:00December 16th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Now that the FOMC has done it, we get to hear about how it was surely the “right” time for it. Unlike September, conditions are supposedly an order of magnitude more settled. That has given the policymaking economists the green light to make sure they start the normalization process before “overheating” becomes the central concern. With August a fading memory, [...]

China ‘Dollar’ Simplicity

By |2015-12-11T12:36:41-05:00December 11th, 2015|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

There are times when you can distill the utterly complex into something elegantly simple. This is one of those times, as there really should be no doubt as to “what” and “why” about December so far. From repo to crashing EM’s to crude oil, the common theme is both eurodollar and Asian “dollar.” In that sense, it might be fair [...]

Yet, It Is Likely To Get Worse

By |2015-12-02T18:11:25-05:00December 2nd, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The GDP statistics for Brazil as of Q3 2015 were worse than expected in every way imaginable. Real GDP fell 4.5% Y/Y, which is nearly double the worst quarter Brazil experienced during the Great Recession. Household spending fell 1.7%, the third consecutive quarter of contraction, while fixed investment declined an astounding 15%. That was the sixth straight reduction and the [...]

China’s Stocks Fall Backward Again

By |2015-11-30T17:41:58-05:00November 30th, 2015|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Chinese stocks “unexpectedly” plunged last week in a fit of stormed selling that reminded of August rather than the placidity that has been claimed of China since. By mainstream account, China has fixed its bout of “selling UST” and “outflows” while also providing two double doses of “stimulus.” The PBOC had even taken to a higher fix in the middle [...]

If You Don’t Learn…

By |2015-11-23T13:38:55-05:00November 23rd, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Monetarism, at its core, is relatively quite simple. It would have to be, standing upon ground of nothing much more than generic concepts for almost every important economic factor. But all of it can be distilled into the idea of money supply; given “enough”, the economy will thrive. That view includes some of the worst of conditions so long as [...]

The Method of Compression Trades Is Not The Meaning

By |2015-11-18T15:33:33-05:00November 18th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Dealer banks are accomplishing their withdrawal from FICC and the eurodollar necessities of dark leverage in the typical corporate fashion. For one, there is attrition as past derivatives trades simply runoff or mature. Second, banks have been engaging in what are called compression trades to an enormous degree, the money dealing equivalent of synergy. Finally, dealers have been studious and [...]

Swap Spreads Refute Not Just Recovery, But Economics as a Science

By |2015-11-18T15:25:12-05:00November 18th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Economics is a not a science. It tends to emulate the appearances by which outwardly hard sciences project in terms of rules and especially mathematical complications, but it does not conform. Karl Popper observed in 1972 that, “Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory [...]

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