Fundamental, Not Technical

By |2018-08-27T12:07:50+00:00August 27th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On June 13, the day the eurodollar futures curve inverted, Federal Reserve Chairman Jerome Powell was at his regularly scheduled press conference following the regularly scheduled FOMC meeting. Nobody asked him about eurodollar futures, of course, because why bring that up? The press did inquire about IOER, though. The Fed had decided to make a [...]

The Fed Tries To Tighten By Rates, But The System Instead Tightens By Repo

By |2017-08-17T19:01:29+00:00August 17th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Fed voted for the first federal funds increase in almost a decade on December 15, 2015. It was the official end of ZIRP, and though taking so many additional years to happen, to many it marked the start of recovery. The yield on the 2-year Treasury Note was 98 bps that day. A lot [...]

Follow-Up on Bills; Supply Side

By |2017-06-26T16:51:54+00:00June 26th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Returning to the theme of the parallel evolutionary developments in the early 20th century as compared to the last decades of it, in 1908 famed Gilded Age industrialist Andrew Carnegie wrote what seems today a misplaced article for New York Outlook magazine. The steel magnate lamented the state of American banking, which he called within [...]

Chart of Last Week: In Need of Official Address

By |2017-06-26T11:56:08+00:00June 26th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

According to the US Treasury, the calculated equivalent treasury bill yield for the 4-week maturity was 76 bps at Friday’s close. At such a short time frame there isn’t actually a single instrument that creates the rate, more of an amalgamation (spline) of various 4-week securities staggered on their own. The bill maturing this week, [...]

How We Got Here: Ignoring Even The Mathematics of Ideology When It Becomes Uncomfortable

By |2017-04-11T12:27:54+00:00April 11th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On July 20, 2007, the much discussed slow-walk implementation of the Basel II framework was finally taking its form. The Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board of Governors, all government agencies dealing in bank supervisory powers, issued a joint [...]

If You Believe There Was Too Much Money During The Monetary Panic, Then Why Not Heroin

By |2017-03-06T16:31:34+00:00March 6th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

November 2008 was an extremely busy month for authorities in the US. The financial markets had just undergone panic the month before, but rather than dissipate there were lingering indications that all was not yet over. On November 23, 2008, the Treasury Department, the FDIC, and the Federal Reserve issued a joint statement on Citigroup. [...]

The Very Important Task Of Trying To Figure Out What Happened In The Middle

By |2017-02-08T18:09:31+00:00February 8th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The whole point of any “stimulus” is to buy time. The idea is to keep the economy busy or, in the case of more purely monetary policy, happy during that time so that the economy on the demand side can on its own heal. In the parlance of orthodox economics, “stimulus” reduces the output gap, [...]

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