stimulus

The Macro Downgrade Cycle

By |2018-10-09T17:19:18+00:00October 9th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There was an old joke among bond investors that use to say no AAA-rated bond had ever defaulted…because it was downgraded several times first. By the time the issuer was in restructuring, it was junk accredited long before then. It ceased being funny around February 2007. There is something similar and similarly tragic that takes [...]

Anchoring Globally Synchronized Growth, Or We Gave Up Long Ago?

By |2018-05-15T16:58:22+00:00May 15th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

January was the last month in which China’s National Bureau of Statistics (NBS) specifically mentioned Fixed Asset Investment (FAI) of state holding enterprises (or SOE’s). For the month of December 2017, the NBS reported accumulated growth (meaning for all of 2017) in this channel of 10.1%. Through FAI of SOE’s, Chinese authorities in early 2016 [...]

QE Through The Housing Channel

By |2018-04-23T12:15:24+00:00April 23rd, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Even after several years of them, monetary policymakers continued to tread carefully with large scale asset purchases (LSAP). Otherwise known as quantitative easing (QE), in the US they were first announced all the way back in the darkest days of global financial panic in 2008. Yet, in 2012 and 2013 concerns remained that they could [...]

The Einstein Stimulus Equation

By |2018-02-20T18:16:16+00:00February 20th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The housing bubble began to reverse in the middle of 2006. Strangely, Economists presented with the possibility were almost uniformly confident that it wouldn’t matter. Forgetting the market and liquidity issues, even by the middle of 2007 it was clear the end of the housing bubble had already restrained economic growth. Confidence abounded anyway, largely [...]

A (More) Rational Basis For Expectations

By |2017-12-20T12:12:11+00:00December 20th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

With UST yields backing up a little bit after the yield curve collapsed so far so fast, the combination of tax cut and reform “stimulus” juxtaposed with the constant, non-transitory mainstream message of recovery and growth has left us with yet another BOND ROUT!!! It has been somewhat if not completely reminiscent of earlier in [...]

An Unexpected (And Rotten) Branch of the Maestro’s Legacy

By |2018-04-23T16:41:52+00:00October 24th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The most significant part of China’s 19th Party Congress ended in the usual anticlimactic fashion. These events are for show, not debate. Like any good trial lawyer will tell you, you never ask a question in court that you don’t already know the answer to. For China’s Communists, that meant nominating Xi Jinping’s name to [...]

Officially A No-growth World

By |2017-10-19T17:51:45+00:00October 19th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I really don’t think people quite understand just how much trouble China is in right now. That’s no mystery because in the Western media the Chinese economy is almost always described as somewhere between awesome and magnificent (only slight hyperbole). Their government, on the other hand, is not fooled. General Secretary Xi Jinping opened the [...]

A Different Kind, But Corruption Nonetheless

By |2017-09-27T12:27:04+00:00September 27th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The problem with the Federal Reserve is that it is corrupt. I don’t mean that its staff is busy filling their days thinking up ways to cheat the American taxpayer, rather it is a philosophical sort of debasement. Many people think the Fed is evil and nefarious, others that its policymakers are plain stupid. Neither [...]