Tag Archive: Federal Reserve/Monetary Policy

What’s Germany’s GDP Without Factories

2019-05-09

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2019-05-09

Europe Real GDP, 2007-2013
It was a startling statement for the time. Mario Draghi had only been on the job as President of the European Central Bank for a few months by then, taking over for the hapless Jean Claude-Trichet who was unceremoniously retired at the end of October 2011 amidst “unexpected” chaos and turmoil. It was Trichet who contributed much to the tumult, having idiotically raised rates (twice) during 2011 even as warning signs of crisis and economic weakness...

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What Tokyo Eurodollar Redistribution Really Means For ‘Green Shoots’

2019-05-02

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2019-05-02

TIC - US Banking Data
Last April, monetary officials in Japan were publicly contemplating ending asset purchases under QQE. This April, they are more quietly wondering what other financial assets they might have to buy just to keep it all going a little longer. I’d suggest something like the clouds passing over the islands or the ocean water surrounding them. Nobody would notice either way and it would be equally as effective.

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Globally Synchronized…

2019-04-29

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2019-04-29

WTO Global Trade, 2007-2019
The economic sickness is predictably spreading. While unexpected in most of the world which still, somehow, depends on central banking forecasts, it really has been almost inevitable. From the very start, just the utterance of the word “decoupling” was the kiss of death.

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Durably Sideways

2019-04-28

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2019-04-28

Durable Goods New Orders, SA 2013-2019
Next month, in the durable goods series, the Census Bureau will release the results of its annual benchmark changes. In May 2019, the agency will revise the seasonal adjustments going back to January 2002. Unadjusted data will not be, well, further adjusted.

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The Eurodollar, Unfortunately, Is What Is Rebalancing China’s Services Economy

2019-04-24

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2019-04-24

China Nominal GDP, 1995-2019
If the “equation” CNY DOWN = BAD is valid, and it is, then what drives CNY downward in the first place? In conventional Economics, authorities command the currency to affect the level of exports. In reality, that’s not at all how it works. The eurodollar system of shadow money is almost purely calculated risk versus return.

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COT Blue: Distinct Lack of Green But A Lot That’s Gold

2019-04-24

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2019-04-24

US Shortage, Gold, 2017-2019
Gold, in my worldview, can be a “heads I win, tails you lose” proposition. If it goes up, that’s fear. Nothing good. If it goes down, that’s collateral. In many ways, worse. Either way, it is only bad, right? Not always. There are times when rising gold signals inflation, more properly reflation perceptions. Determining which is which is the real challenge.

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China’s Blowout IP, Frugal Stimulus, and Sinking Capex

2019-04-19

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2019-04-19

China Industrial Production 1999-2019
It had been 55 months, nearly five years since China’s vast and troubled industrial sector had seen growth better than 8%. Not since the first sparks of the rising dollar, Euro$ #3’s worst, had Industrial Production been better than that mark. What used to be a floor had seemingly become an unbreakable ceiling over this past half a decade. According to Chinese estimates, IP in March 2019 was 8.5% more than it was in March 2018. That was far more...

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Green Shoot or Domestic Stall?

2019-04-17

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2019-04-17

U.S. Industrial Production, SA 2007-2019
According to revised figures, things were really looking up for US industry. For the month of April 2018, the Federal Reserve’s Diffusion Index (3-month) for Industrial Production hit 68.2. Like a lot of other sentiment indicators, this was the highest in so long it had to be something. For this particular index, it hadn’t seen better than 68 since way back in March 2010, back when the economy looked briefly like it might actually recover.

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Coloring One Green Shoot

2019-04-16

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2019-04-16

China Retail Sales, 2010-2018
China’s Passenger Car Association reported last week that retail sales of various vehicles totaled 1.78 million units in March 2019. The total was 12% less than the number of automobiles sold in March 2018. This matches the government’s data, both sets very clear as to when Chinese economic struggles accelerated: May 2018.

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Why 2011

2019-04-12

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2019-04-12

TIC - US Banking Data 1979-2019
The eurodollar era saw not one but two credit bubbles. The first has been studied to death, though almost always getting it wrong. The Great Financial Crisis has been laid at the doorstep of subprime, a bunch of greedy Wall Street bankers insufficiently regulated to have not known any better. That was just a symptom of the first. The housing bubble itself was more than housing.

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External Demand, Global Means Global

2019-04-07

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2019-04-07

Germany Factory Orders, SA 2014-2019
The Reserve Bank of India (RBI) cut its benchmark money rate for the second straight meeting. Reducing its repo rate by 25 bps, down to 6%, the central bank once gripped by political turmoil has certainly shifted gears. Former Governor Urjit Patel was essentially removed (he resigned) in December after feuding with the federal government over his perceived hawkish stance.

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Retail Sales In Bad Company, Decouple from Decoupling

2019-04-04

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2019-04-04

Retail Sales, NSA 2011-2018
In a way, the government shutdown couldn’t have come at a more opportune moment. As workers all throughout the sprawling bureaucracy were furloughed, markets had run into chaos. Even the seemingly invincible stock market was pummeled, a technical bear market emerged on Wall Street as people began to really consider increasingly loud economic risks.

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Phugoid Dollar Funding

2019-04-04

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2019-04-04

Money Markets Equivalents 2014-2019
On August 12, 1985, Japan Airways flight 123 left Tokyo’s Haneda Airport on its way to a scheduled arrival in Osaka. Twelve minutes into the flight, the aircraft, a Boeing 747, suffered catastrophic failure when an aft pressure bulkhead burst.

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February 2019 PBOC/RMB Update

2019-03-24

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2019-03-24

China Internal/External 2017-2019
This will serve mostly as an update to what is going on inside the Chinese monetary system. The PBOC’s balance sheet numbers for February 2019 are exactly what we’ve come to expect, ironically confirmed today on the domestic end by the FOMC’s dreaded dovishness. Therefore, rather than rewrite the same commentary for why this continues to happen I’ll just link to prior discussions.

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Slump, Downturn, Recession; All Add Up To Sideways

2019-03-22

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2019-03-22

Germany ZEW Financial Market Survey 2007-2019
According to Germany’s Zentrum für Europäische Wirtschaftsforschung, or ZEW, the slump in the country’s economy has now reached its fourteenth month. The institute’s sentiment index has improved in the last two, but only slightly. As of the latest calculation released today, it stands at -3.6.

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The Real End of the Bond Market

2019-03-22

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2019-03-22

US Treasury Yield Curve
These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke).

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The World Economy’s Industrial Downswing

2019-03-20

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2019-03-20

Europe Industrial Production, 2013-2019
As economic data for 2019 comes in, the numbers continue to suggest more slowing especially in the goods economy. Perhaps what happened during that October-December window was a soft patch. Even if that was the case, we should still expect second and third order effects to follow along from it.

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Chart(s) of the Week: Reviewing Curve Warnings

2019-03-19

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2019-03-19

Eurodollar Futures Curve 2018
Quick review: stocks hit a bit of a rough patch right during the height of inflation hysteria. At the end of January 2018, just as the US unemployment rate had finally achieved the very center of attention, global markets were rocked by instability. Unexpectedly, of course.

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No Sign of Stimulus, Or Global Growth, China’s Economy Sunk By (euro)Dollar

2019-03-16

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2019-03-16

China Industrial Production 1999-2019
Najib Tun Razak was elected as Malaysia’s Prime Minister in early 2009. Taking office that April amid global turmoil and chaos, Najib’s first official visit was to Beijing in early June. His father, also Malaysia’s Prime Minister, had been the first among Asian nations to open formal diplomatic relations with China thirty-five years before.

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Downturn Rising, No ‘Glitch’ In Retail Sales

2019-03-13

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2019-03-13

U.S. Retail Sales, Jun 2011 - Dec 2018
You just don’t see $4 billion monthly retail sales revisions, in either direction. Advance estimates are changed all the time, each monthly figure will be recalculated twice after its initial release. Typically, though, the subsequent revisions are minor rarely amounting to a billion. Four times that?

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