Category Archive: 5) Global Macro

Dollar Soft Despite Heightened Geopolitical Risks

The dollar staged a stunning comeback yesterday as risk-off took hold on rising geopolitical risk; those risks remain high. US-China tensions have risen ahead of trade talks that begin Thursday. The US abruptly announced that it would withdraw its troops from northeast Syria. US reports September PPI; German IP came in better than expected.

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The Consequences Of ‘Transitory’

Europe’s QE, as noted this weekend, is off to a very rough start. In the bond market and in inflation expectations, the much-ballyhooed relaunch of “accommodation” is conspicuously absent. There was a minor back up in yields between when the ECB signaled its intentions back in August and the few weeks immediately following the actual announcement.

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What’s Holding Up the Market?

The Fed's nearly free money for financiers policies in support of the Super-Rich do not exist in a vacuum--the disastrous consequences are already baked in. What's holding up the U.S. stock market? The facile answer is the Federal Reserve but this doesn't actually describe the mechanisms in play or the consequences of a market that levitates ever higher on the promise of more Fed money-for-nothing injected into the diseased veins of the financial...

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Drivers for the Week Ahead

The dollar rally has been derailed by weak US data and rising recession fears. The September jobs data was not a game-changer and so we are left waiting for more clues. Believe it or not, the US economy remains solid; however, the US repo market has not fully normalized yet. The Chinese trade delegation arrives in Washington Thursday for two days of trade talks.

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Big Trouble In QE Paradise

Maybe it was a sign of things to come, a warning how it wasn’t going to go as planned. Then again, when it comes to something like quantitative easing there really is no plan. Other than to make it sound like there is one, that’s really the whole idea. Not what it really is and what it actually does, to make it appear like there’s substance to it.

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Why The Japanese Are Suddenly Messing With YCC

While the world’s attention was fixated on US$ repo for once, the Bank of Japan held a policy meeting and turned in an even more “dovish” performance. Likely the global central bank plan had been to combine the Fed’s second rate cut with what amounted to a simultaneous Japanese pledge for more “stimulus” in October. Both of those followed closely an ECB which got itself back in the QE business once more.

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ISM Spoils The Bond Rout!!! Again

For the second time this week, the ISM managed to burst the bond bear bubble about there being a bond bubble. Who in their right mind would buy especially UST’s at such low yields when the fiscal situation is already a nightmare and becoming more so? Some will even reference falling bid-to-cover ratios which supposedly suggests an increasing dearth of buyers.

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The Big Picture Doesn’t Include ‘Trade Wars’

The WTO today downgraded its estimates for global trade growth. In April, the international organization had figured the total volume of world merchandise trade would expand by about 2.6% in all of 2019 once the year closed out on the anticipated second half rebound. Everyone took their lumps in H1 and the WTO like central bankers everywhere were thinking “transitory” factors.

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ISM Spoils The Bond Rout!!!

With China closed for its National Day Golden Week holiday, the stage was set for Japan to steal the market spotlight. If only briefly. The Bank of Japan announced last night that it had had enough of the JGB curve. The 2s10s very nearly inverted last month and BoJ officials released preliminary plans to steepen it back out.

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Musings on the Repo Market, Fed Policy, and the US Economy

The US repo market appears to finally be normalizing. The low pace of normalization is concerning and so a more permanent solution may be needed to head off similar problems at year-end. We do not think this issue has any implications for the economic outlook, which we continue to view as solid.

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Could Pricey Urban Meccas become Crime-Ridden Ghost Towns?

As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay. If there is any trend that's viewed as permanent, it's the enduring attraction of coastal urban meccas: despite the insane rents and housing costs, that's where the jobs, the opportunities and the desirable urban culture are.

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Drivers for the Week Ahead

We continue to think that the US economy is in better shape than most appreciate, and that underpins our strong dollar call. Tensions are likely to remain high after reports emerged last week that the US will look into limiting capital flows into China. US September jobs data Friday will be the data highlight of the week; there is a heavy slate of Fed speakers this week.

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Dollar Firm as US Economy Continues to Outperform

Political uncertainty is likely to persist in the US; the big unknown is whether this will impact the US economy. US core PCE reading will be of particular interest and is expected to rise 1.8% y/y; Quarles (voter) and Harker (non-voter) speak. Dovish BOE comments are weighing on sterling; France reported weak CPI and consumer spending data.

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Pets Are Now as Unaffordable As College, Housing and Healthcare

Like so many other things that were once affordable, owning pets is increasingly pricey. One of the few joys still available to the average household is a pet. At least this is what I thought until I read 5 money-saving tips people hate, which included the lifetime costs of caring for a pet. It turns out Poochie and Kittie are as unaffordable as college, housing and healthcare (and pretty much everything else).

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Dollar Firm Despite Rising US Political Uncertainty

The dollar continues to benefit despite US political uncertainty President Trump claimed to be getting “closer and closer” to a trade deal with China; we are very skeptical. There is a lot of US data to be reported and a heavy slate of Fed speakers today.

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Here’s How We Are Silenced by Big Tech

This is how they silence us: your content has been secretly flagged as being "unsafe," i.e. "guilty of anti-Soviet thoughts;" poof, you're gone. Big Tech claims it isn't silencing skeptics, dissenters and critics of the status quo, but it is silencing us. Here's how it's done. Let's start with Twitter.

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Waiting on the Calvary

Engaged in one of those protectionist trade spats people have been talking about, the flow of goods between South Korea and Japan has been choked off. The specific national reasons for the dispute are immaterial. As trade falls off everywhere, countries are increasingly looking to protect their own. Nothing new, this is a feature of when prolonged stagnation turns to outright contraction.

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Dollar Firm as Risk-Off Impulses Return

Markets have moved into risk-off mode from a confluence of events emanating from the US. Speaker of the House Pelosi formally launched a formal impeachment inquiry; DOJ inserted itself into Trump’s fight with New York state. Trump’s speech to the UN General Assembly yesterday was noteworthy for its belligerence.

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Financial Storm Clouds Gather

The price of this "solution"--the undermining of the financial system--will eventually be paid in full. The financial storm clouds are gathering, and no, I'm not talking about impeachment or the Fed and repo troubles--I'm talking about much more serious structural issues, issues that cannot possibly be fixed within the existing financial system.

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No Longer Hanging In, Europe May Have (Been) Broken Down

Mario Draghi can thank Jay Powell at his retirement party. The latter being so inept as to allow federal funds, of all things, to take hold of global financial attention, everyone quickly shifted and forgot what a mess the ECB’s QE restart had been. But it’s not really one or the other, is it? Once it actually finishes, the takeaway from all of September should be the world’s two most important central banks each botching their...

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