Tag Archive: currencies

Industrial Synchronized Demand

2022-05-11

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2022-05-11

Are the industrial commodities starting to get a whiff of demand side rejection? Short run trends suggest that this could be the case. From copper to iron and the highest (formerly) of the high flyers, aluminum, this particular group has been exhibiting a rather synchronized setback going back to the end of March, start of April.

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Who’s Playing Puppetmaster, And Who Is Master of Puppets

2022-05-09

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2022-05-09

Cue up the old VHS tapes of Bill Clinton. The former President was renowned for displaying, anyway, great empathy. He famously said in October 1992, weeks before the election that would bring him to the White House, “I feel your pain.”What pain? As Clinton’s chief political advisor later clarified, “it’s the economy stupid.”

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China Then Europe Then…

2022-05-08

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2022-05-08

This is the difference, though in the end it only amounts to a matter of timing. When pressed (very modestly) on the slow pace of the ECB’s “inflation” “fighting” (theater) campaign, its President, Christine Lagarde, once again demonstrated her willingness to be patient if not cautious.

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Collateral Shortage…From *A* Fed Perspective

2022-05-07

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2022-05-07

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods....

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Some ‘Core’ ‘Inflation’ Difference(s)

2022-05-06

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2022-05-06

The FOMC meets next week, with everyone everywhere expecting a 50 bps rate hike to be announced on Wednesday. Yesterday’s “unexpected” and “shocking” negative GDP is unlikely to deter anyone on the committee.

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Synchronized Manufacturing, Hopefully Not Mao

2022-05-04

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2022-05-04

This is one of those cases when Inigo Montoya, the lovable if fictional rapscallion from the movie The Princess Bride, would pop into the scene to devastatingly deliver his now famous rebuke. Last week, China’s one-man Dear Leader said that the country was going to start up its own version of Build Back Better.

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What Really ‘Raises’ The Rising ‘Dollar’

2022-05-03

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2022-05-03

It’s one of those things which everyone just accepts because everyone says it must be true. If the US$ is rising, what else other than the Federal Reserve. In particular, the Fed has to be raising rates in relation to other central banks; interest rate differentials.

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Weekly Market Pulse: Welcome Back To The Old Normal

2022-05-03

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2022-05-03

Stagflation. It’s a word that strikes fear in the hearts of investors, one that evokes memories – for some of us – of bell bottoms, disco, and Jimmy Carter’s American malaise. The combination of weak growth and high inflation is the worst of all worlds, one that required a transformational leader and a cigar-chomping central banker to defeat the last time it came around.

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Is It Recession?

2022-04-30

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2022-04-30

According to today’s advance estimate for first quarter 2022 US real GDP, the third highest (inflation-adjusted) inventory build on record subtracted nearly a point off the quarter-over-quarter annual rate. Yes, you read that right; deducted from growth, as in lowered it. This might seem counterintuitive since by GDP accounting inventory adds to output.

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Historic Inventory Continued In March, But Is It All Price Illusion, Too?

2022-04-28

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2022-04-28

The Census Bureau today released its advanced estimates for March trade. These include, among other accounts like imports and exports, preliminary results reported by retailers and wholesalers. That means, for our purposes, inventories. Oh my, was there ever more inventory. It was, apparently, widely expected that following an avalanche of goods building up over the previous five months the situation might calm down a touch.

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Euro$ #5 in Goods

2022-04-27

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2022-04-27

Last Friday, S&P Global (the merged successor to IHS Markit) reported that its PMI for German manufacturing fell to 54.1. It hadn’t been that low for more than a year and a half. Worse than that, the index for New Orders dropped below 50 for the first time since the middle of 2020. The excuses are plentiful, as there’s COVID, supply problems, Russia, a drop in demand. Wait, what was that last one?

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CNY’s Drop Wasn’t ‘Devaluation’ in ’15 nor ’18, and It Isn’t ‘Devaluation’ Now

2022-04-25

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2022-04-25

For one thing, that whole Bretton Woods 3 thing is really off to an interesting start. And by interesting, I mean predictably backward. According to its loud and leading proponent, China’s yuan was supposed to be ascending while the dollar sank, its first step toward what many still claim will end up in some biblical-like abyss.

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The (less) Dollars Behind Xi’s Shanghai of Shanghai

2022-04-25

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2022-04-25

What everyone is saying, because it’s convenient, is that China’s zero-COVID policies are going to harm the economy. No. Economic harm of the past is the reason for the zero-COVID policies. As I showed yesterday, the cracking down didn’t just show up around 2020, begun right out in the open years beforehand, born from the scattering ashes of globally synchronized growth.

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Not Good Goods

2022-04-24

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2022-04-24

The goods economy in the United States is – maybe was – the lone economic bright spot. That in and of itself should’ve provoked more caution, instead there was the red-hot recovery to sell under the cover of supply shock pricing changes. The sheer spending on goods, and how they arrived, each unabashedly artificial from the get-go.

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Shanghai’s Current Plight Began in 2017

2022-04-23

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2022-04-23

The first chapters to China’s new story now playing out in Shanghai were written down in October 2017. Planning for them had begun years earlier, their author Xi Jinping requiring more research before committing them to paper. Communist authorities there had grown increasingly concerned about the lack of growth potential for its political system by then utterly dependent for a quarter-century on the economy growing.

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China, Japan, And The Relative Pre-March Euro$ Calm In February

2022-04-22

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2022-04-22

The month of February 2022, the calm before the latest storm. Russians went into Ukraine toward the month’s end, collateral shortage became scarcity, maybe a run right at February’s final day, and then serious escalations all throughout March – right down to pure US Treasury yield curve inversion.Given that setup, it was unsurprising to find Treasury’s February TIC data mostly unremarkable.

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I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

2022-04-21

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2022-04-21

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape.

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Yield Curve Inversion Was/Is Absolutely All About Collateral

2022-04-18

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2022-04-18

If there was a compelling collateral case for bending the Treasury yield curve toward inversion beginning last October, what follows is the update for the twist itself. As collateral scarcity became shortage then a pretty substantial run, that was the very moment yield curve flattening became inverted.Just like October, you can actually see it all unfold.

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China More and More Beyond ‘Inflation’

2022-04-17

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2022-04-17

If only the rest of the world could have such problems. Chinese consumer prices were flat from February 2022 to March, even though gasoline and energy costs predictably skyrocketed. According to China’s NBS, gas was up 7.2% month-over-month while diesel costs on average gained 7.8%.

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China’s Imports Outright Declined In March, And COVID Was The Reason Why But Not Really

2022-04-16

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2022-04-16

The guy said this was going to be the future. Not just of China, for or really from the rest of the world. Way back in October 2017, at the 19th Communist Party Congress newly-made Emperor Xi Jinping blurted out his grand redesign for Socialism with Chinese Characteristics.

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