No Longer Overseas

I use the June 2018 eurodollar futures contract as a significant benchmark in my analysis of money markets because I feel it represents a solid cross section of sometimes conflicting influences. It’s close enough to the front end as to be significant both in terms of monetary policy as a factor but far enough to…


Blatant Warning, Not Casual Dismissal

For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of…


Rough Contours of Bond Cycle Implications

The fallout in liquidity and funding markets (subscription required) has been mostly suggested at the junk bond bubble. Prices have fallen, and many precipitously, while yields have risen. But those are not the only negative factors being exhibited. If the issuance figures are anywhere close to correct, then increasingly junk obligors are being totally shut…

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Stocks Join Global Risk Adjustments

The focus on China as if their problems were only Chinese is highly misplaced, though you can understand the appeal of the excuse. This sentiment was expressed over and over today (just as it was in August): Do we all live in China now? Investors could be excused for thinking that, given that arcane indicators…


Where Is The Outlier Position Now?

In its December 2015 policy statement, the one that raised the federal funds target corridor, the FOMC changed the language surrounding its inflation stance. They still projected the 2%, of course, but were now indicating that they were more certain than ever about it. In many ways they had to shift the wording because of…


Resetting Production And Risk Perceptions

While we await a flood of data for December spending and retail activity to confirm what we already suspect by proxy, the updated figures for November going backwards in the production process stand as yet another warning. Retail sales figures were typically abysmal, as were private indications of spending. The Thompson Reuters Same Store Sales…


Vulnerable Stocks Question What Might Be Left of the Economy To Overheat

For an economy that is supposed to be on the verge of overheating, or at least moving decisively in that direction, there are an inordinate number of indications of a cyclical stall and termination rather than some beginning (or ripening). I’m not referring exclusively to economic indications, either, such as the Federal Reserve’s own industrial…


Uncomfortably Revisiting Yellen’s Bubble Doctrine

There is growing turmoil in buybacks that threatens the very fabric of the stock bubble. That was always the primary transmission of the foundation of its current manifestation, corporate debt, into asset prices; especially the huge run following QE3 and QE4. As represented by the S&P 500 Buyback Index, this liquidity propensity has found a…


Within Or Without The Stock Bubble Matters A Great Deal

As doubts surrounding QE have grown, there has been a somewhat detectable if still small trend in central banker repentance. Alan Greenspan to an extent has embraced a more decentralized and market framework in his public comments even though he has yet, to my knowledge, actually repudiate his own work more directly. As noted a…


Rationalizing Betrayal

To illustrate just how badly Monday’s selloff (and yesterday’s late day reversal) seems to have shaken core confidence in the overriding narrative (ALL IS WELL!) you need only view the drastic reversal on what stock prices supposedly mean. With QE’s producing little or no tangible economic benefit, certainly nothing specific with which its proponents can…