Reflation

Whose Tightening Is It Anyway?

By |2018-08-21T16:15:14+00:00August 21st, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I suppose it’s only fair. After all, they started it. Earlier in the year, Federal Reserve officials including Chairman Jay Powell suggested it was all Trump’s fault. The abrupt difficulties presented by the dollar were, they said, the result of tax cuts swelling the deficit and thereby threatening capital markets with a “deluge” of Treasury [...]

Reflation Rollover Japan

By |2018-08-16T15:22:29+00:00August 16th, 2018|Currencies, Economy, Markets|

I was going to write that there was bad news out of Japan last night, but is there really any other kind? I know that from time to time Japan’s various rebounds over the years are characterized as the greatest economic achievements in human history, but by and large very few outside the media actually [...]

Rebalancing Decoupled Booms

By |2018-08-01T12:07:19+00:00August 1st, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The entire purpose of China’s presumed rebalancing act is supposedly that the country’s economy will no longer be strongly linked to industry. Manufacturing, for export in particular, is what made modern China into an economic powerhouse, transforming a once agrarian subsistence society (thanks to socialism). One need only look at overhead or satellite images of [...]

Beware The Collateral Underneath The Top of GDP

By |2018-07-24T18:31:40+00:00July 24th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why so much wholesale emphasis on collateral? Easy. The monetary history of recent times hasn’t been very kind in that regard. On the one hand, the repo market has become so much more important than it was, as scared interbank participants fled unsecured eurodollar markets eleven years ago next month for the presumed shelter of [...]

The Difficult Wargame of Sorting Financial Intelligence Signals

By |2018-07-20T17:45:01+00:00July 20th, 2018|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

After the Soviet invasion of Afghanistan in 1979, the Russians became hyperaware of US and NATO countermovements. There was an increase in bellicose rhetoric on both sides, and the Andropov years had left the Soviet leadership weakened by economic stagnation increasingly worried that the US just might launch a first-strike attack. The Communists developed a [...]

Gold, Dollar, and Repo: Who Cares About Taper, or QE?

By |2018-07-17T18:49:40+00:00July 17th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s funny how these things work. He didn’t actually say the word “taper”, at least not when the frenzy first started. The very idea of the “taper tantrum” was the media’s work, the easy slogan that could be used as shorthand for the conventional explanation. The economy was improving, everyone was told and easily believed, [...]

A Derivatives View On Q1 That Might Help Explain Q2 (and after)

By |2018-07-13T18:52:28+00:00July 13th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Morgan Stanley is bit more complicated as a derivatives dealer than the Big 4. Those other banks hold most of their books at their bank subsidiaries. In this case, the term bank actually means something, the legal distinction of a depository institution. Each of the four banks, JPM, C, GS, and BofA, have a holding [...]

Not Exactly Paradox, Reflation In Oil Deflation In Copper

By |2018-07-11T16:49:36+00:00July 11th, 2018|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The PBOC really needn’t have conducted the last few of its RRR raises. By the time they were in the books, Chinese inflation was already well underway toward being tamed. Though their CPI wouldn’t register for a few more months still, peaking in July 2011, commodities had already turned decidedly downward. Copper went first, hitting [...]

There Is Only One Global Trade War

By |2018-06-27T12:22:14+00:00June 27th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

IHS Markit reported last week that its composite Purchasing Managers Index (PMI) rebounded slightly in its first reading for June 2018. In January, the index had managed nearly 59, the highest in a very long time. It was taken as a definitive sign that Europe’s economy was not only booming, that boom was sustainable. Global [...]

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