If the road to Hell is paved with good intentions, in economic terms the paving is done by zombies. We’ve all heard of the convention regarding Japanification. In desperation trying to avoid a worse fate, many of Japan’s tortured financial institutions were left open and operating so as to not force losses too much at a time. Rather than allow [...]
Something had to give one way or the other. With all the oil traders piled onto the long side, either demand had to seriously pick up (or plausibly appear ready to do so) or the weak hands would start to capitulate. But as WTI has pulled back from $54 to around so far $48, the futures market remains nearly as [...]
It has been out of hand for some time, but the longer it goes the further from sense it can get. Today’s news is apparently about a bipartisan effort for $1 trillion in “stimulus”, as if the last $1 trillion in “stimulus” had never happened. Apparently eight years is enough for memories to have been expunged, or as if IRS [...]
Mainstream commentary will continue to harp on the unemployment rate as if it were some kind of lucky charm for protection against an increasingly unrecognizable and frightening (to the orthodoxy) world around it. That appeal dominates even where it has so little if any bearing, as in negative swap spreads that were in truth an easy and simple warning about [...]
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 these nonthreatening rationalizations trace back [...]
Economics in the orthodox version has it entirely backwards. If that wasn’t apparent in the last cycle, it is becoming far more so once again. This descent into math is not limited to econometrics, as it says a lot about the state of popular perception more generally. Computer models and statistics are given the moniker of “science” which is wielded [...]
You almost have to marvel at the resilience shown in leveraged loan pricing over the past nearly month. Prior to the Fed’s rate decision on December 16, the leveraged loan market, as with the rest of the junk bubble, was sinking fast and furiously. Since then, however, despite great financial turmoil all over the world, and even in the places [...]
The most important outbreak or story of 2015 had to have been the junk bond reversal. It combined all the major elements of what investors and economic agents are both fearing and, at one point in the past anyway, hoping. It is the confluence of finance, “dollars”, liquidity and economics with or without recovery and the best scenario. The FOMC [...]
The Fed’s industrial production series also includes estimates on total motor vehicle assemblies. Auto sales in general have been one of the only bright spots in the economy, especially since the 2012 slowdown (even though it has been boosted artificially via credit far, far more than income gains). Given that trend, it is still difficult to assess whether activity in [...]
There isn’t much commentary needed here, as the prices and yields indicate everything relevant and important. I would only add that seeing August 24, October 15 and now the change (in acceleration) in December all add up to something different than the FOMC’s whatever influence. There is no monetary policy reason for the August 24 global liquidations to show up [...]
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