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wholesale banking

Big Difference Mechanical Tightening

By |2017-04-24T18:11:07-04:00April 24th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March. The central bank also increased the rate on its Medium Term Lending [...]

‘Trust Us’

By |2016-09-13T18:21:57-04:00September 13th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is validity in (not “to”) the myth of central banking, one that has important and very serious implications right down the smallest and most immediate terms. The first task of every central bank was currency elasticity, which simply meant the bank would endeavor to supply (at penalty rates, according to Bagehot, such that banks do not fund themselves on [...]

The Remarkable Inferences About the PBOC’s Unremarkable February Balance Sheet

By |2016-03-16T12:33:00-04:00March 16th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

The PBOC’s balance sheet was relatively quiet in February, with no large moves on either side of its ledger. In fact, these minor shifts appeared to be more so adjustments than the more extreme efforts the central bank had become used to undertaking. The heavy lifting was accomplished in January at least as far was what is visible, leaving February’s [...]

The Perils of Citi: The Last of the Eurodollars Part 2

By |2016-03-09T13:54:45-05:00March 9th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Part 1 is here. Even if the eurodollar paradigm had started shifting long before the full panic, this is not to say that various individual firms have not tried to rekindle the former construction; in fact, I have paid particular attention to those who at various points attempted the recreation. Citigroup is one of those though it isn’t clear what [...]

The Perils of Citi: The Last of the Eurodollars Part 1

By |2016-03-09T13:55:45-05:00March 9th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Proprietary trading has taken on connotations that are extreme for some good reason owing to the events of 2008. It was there, called “principal transactions” on some balance sheets, that claimed the majority of accounting losses that perpetuated internecine banking struggles from liquidity to revenue and earnings. As with most things, there was much more to it than that rough [...]

Why Reserves Aren’t Money

By |2016-02-26T17:36:48-05:00February 26th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When the Federal Reserve through its Open Market Desk engages in a transaction under QE or the current balance sheet stabilization (reinvesting maturing securities) with a primary dealer, the direct effect is to increase the dealer’s account with the Fed while decreasing that dealer’s stock of securities. On the other side, absent any offsetting absorptions (either intentional or autonomous), FRBNY’s [...]

The Eurodollar Decay

By |2016-02-23T12:47:17-05:00February 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Standard Chartered reported a massive yearly loss for 2015, the bank’s first in almost thirty years. The results were so bad that the company has publicly stated it might even “claw back” bonuses from about 140 executives. If the firm is truly interested in assigning blame, however, it might first look to Ben Bernanke and Janet Yellen (as primary representatives [...]

Another Estimate of ‘Dollar’ Destruction

By |2016-02-17T12:38:32-05:00February 17th, 2016|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

December was one of the worst months on record for foreign dealing with the “dollar.” The latest TIC update further confirms why January was under such persistent and heavy liquidation pressure in almost every corner. There was a record monthly amount of “selling UST’s” in foreign channels, a dearth of private “dollar” activity and, perhaps most important of all, bank [...]

A Relevant Liquidity Lesson For Complex Structures

By |2016-02-02T18:24:16-05:00February 2nd, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

In the third quarter 10-Q from Capital One, the bank notes a rather large change in funding. At the start of the year, Capital One had drawn $17.72 billion in advances from the Federal Home Loans Banks (which of the twelve isn’t stated and it is likely there were funding agreements with several). The FHLB system allows banks to pledge [...]

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. [...]

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