Euro$ #4

A Bigger Boat

By |2019-09-10T12:42:43-04:00September 10th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

For every action there is a reaction. Not only is that Sir Isaac Newton’s third law, it’s also a statement about human nature. Unlike physics where causes and effects are near simultaneous, there is a time component to how we interact. In official capacities, even more so. Bureaucratic inertia means a lot more than just [...]

The Shock, The Squeeze, and The Downside

By |2019-08-28T11:39:46-04:00August 28th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Yesterday, Eurostat confirmed that German GDP in Q2 2019 had contracted. Also issuing benchmark revisions, the European government agency found that GDP growth had been slightly better than previously thought at the top of Reflation #3. The last two quarters of 2017 saw the biggest upward revisions. But if Europe’s “boom” really was a little [...]

Globally Synchronized, After All

By |2019-07-16T12:49:44-04:00July 16th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For there to be a second half rebound, there has to be some established baseline growth. Whatever might have happened, if it was due to “transitory” factors temporarily interrupting the economic track then once those dissipate the economy easily gets back on track because the track itself was never bothered. More and more, though, it [...]

From Their Lips To No One’s Ears

By |2019-06-25T15:27:49-04:00June 25th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I thought this one needed a separate notation, though the same subject as the previous article. We’re still talking about the foreign repo pool, or monetary policy’s original reverse repo. It’s basically a way for overseas official governments and central banks to tell the Fed’s New York branch they’re uncomfortable with the dollar condition. How [...]

Japan’s Bellwether On Nasty #4

By |2019-06-21T17:01:43-04:00June 21st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One reason why Japanese bond yields are approaching records like their German counterparts is the global economy indicated in Japan’s economic accounts. As in Germany, Japan is an outward facing system. It relies on the concept of global growth for marginal changes. Therefore, if the global economy is coming up short, we’d see it in [...]

Europe Comes Apart, And That’s Before #4

By |2019-05-29T11:21:31-04:00May 29th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed [...]

Central Bankers Follow Bonds, Then Insist They Aren’t And That Bonds Agree With Them

By |2019-05-24T13:04:09-04:00May 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When central bankers use the word “financial” in an economic context, they mean exclusively stocks. Maybe that’s somewhat appropriate given how bonds are so often treated as monetary equivalents. Then again, if that is the case in the official view, how does anyone reconcile bonds with anything? Economy or money? The hard answer is that [...]

With Rate Cuts Looming, A Necessary Bit of Perspective Before Going Into Them

By |2019-05-23T17:11:20-04:00May 23rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It is sometimes amazing what happens when you add just a little perspective. In some cases, it doesn’t require much at all to do so. One little addendum can upend the entire message, leading you off into entirely different interpretations. The implications can be enormous. To see what I mean, let’s begin with the basics. [...]