Prefiguring The Expected Expectations Fail

By |2018-09-10T18:24:12+00:00September 10th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The Boston Fed held its 62nd Annual Economic Conference over the weekend. Not quite as well-known as the KC Fed’s Jackson Hole symposium, this Eastern branch’s meeting still attracts many big-name speakers. The “right” speakers, that is, meaning academic and mainstream bank Economists, supranational think tank thinkers, as well as current and former central bankers. [...]

ECB At A (Familiar) Crossroads

By |2018-08-31T17:05:54+00:00August 31st, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If Brazilian central bankers are the standard for illicit shamelessness, their European counterparts are at least on the same spectrum. At the end of April, the European Central Bank’s President Mario Draghi took his shot at purposeful mischaracterization. Speaking to the press after the ECB’s Governing Council meeting had concluded, Draghi had been forced to [...]

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32+00:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the [...]

Bank Reserves Appendix; One Additional Case Study

By |2018-05-11T16:48:29+00:00May 11th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Early last month, Deutsche Bank replaced one CEO pledged to paring back the bank’s ailing franchise with another committed to doing the same thing only more quickly. As I wrote at the time, “Cryan isn’t being ousted because he was wrong, but because he was right.” In comes Christian Sewing whose plans are starting to [...]

Bank Reserves Part 2; If QE Was Really QT, Then Why Hasn’t QT Been QE?

By |2018-05-09T17:35:19+00:00May 8th, 2018|Economy, Federal Reserve/Monetary Policy, Markets|

Since we’ve already cracked open the accounting, it makes some sense to take our example into an important corollary examination (if you haven’t yet, you’ll need to read through Part 1). In our prior examples, we’ve assumed that the swap of risk-free assets on Bank A’s asset side is a neutral trade. That is, there [...]

Bank Reserves Part 1; The Great Tease

By |2018-05-09T17:35:48+00:00May 8th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I completely understand the confusion regarding bank reserves. I really do. It’s easy to believe they are money because that’s what you’ve been taught from Day 1. Not only that, the same message is carelessly reinforced in the media every single time QE or any LSAP is referenced. Bank reserves are the aftermath of money [...]

What Really Happened In Europe

By |2018-05-07T19:03:02+00:00May 7th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The primary example of globally synchronized growth has been Europe. Nowhere has more hope been attached to shifting fortunes. The Continent, buoyed by the persistence of central bankers like Mario Draghi, has not just accelerated it is actually booming. Or so they say. Last September, politicians were lining up to confidently declare as much, often [...]