Eurodollar University

Multipliers and Elasticity: The Other More Consequential Side of Repo

By |2019-10-01T18:12:32-05:00October 1st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is increasing skepticism in the mainstream media as to the functions and declarations coming from the Federal Reserve. As a direct consequence of the mid-September repo rumble, for the first maybe ever official opinions and explanations aren’t being taken immediately at face value. That may end up being the lasting legacy of what was [...]

The Corroboration and Costs of Fear Gold

By |2019-08-27T17:02:18-05:00August 27th, 2019|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Gold is the ultimate hedge, but it is far from perfect. Unlike, say, sovereign bonds there should be no expectation for a negatively correlated price. You can buy a UST or German bund even at negative yields and at least expect the price to rise when things are at their worst. Flight to safety or [...]

Eurodollar University: Diagramming Repo Reserves And Negative Yields

By |2019-08-20T18:54:38-05:00August 20th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Following up on yesterday’s look at the concept of repo reserves. These are, as hopefully that narrative retelling established, very different from the inert byproducts of QE; or, bank reserves. The explanation for record low and negative yields amounts to a pretty intuitive process, though in practice it is incredibly complex. Sovereign bonds as “pristine” [...]

Eurodollar University: With Each Passing Year, August 9 Becomes More Not Less Important

By |2019-08-09T17:31:09-05:00August 9th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The anniversary actually seems more poignant with each passing year. You would think it would be easy to get used to it, or at least become numb and normalized for the deep inflection it had represented. But the more everything stays the same the closer you are pulled to going back in time and rethinking [...]

Does A Second Floor Make An Effective Ceiling?

By |2019-07-22T17:06:42-05:00July 22nd, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For central bankers like Bill Dudley and Ben Bernanke, the Global Financial Crisis was a godsend. So much had been a disaster it was hard to pin down specific failures. Where does one begin? Practically everything went wrong, so take your pick. The Financial Crisis Inquiry Commission (FCIC) did its part pointing the finger at [...]

The Fallacious Doctrine of ‘Abundant Reserves’

By |2019-07-22T16:44:42-05:00July 22nd, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It wasn’t the first time it had happened, but to that point it did suggest something had changed. Things were going wrong and afterward the very idea of wrong took on an even more disastrous nature. On Monday, September 29, 2008, the Dow Jones Industrial Average plummeted nearly 778 points. It was the largest single [...]

Eurodollar University: Epilogue 2, TIC & The Evidence For The Collateral Bid For Bonds

By |2019-04-16T13:09:10-05:00April 16th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

They said May 29 was Italians. I say it was collateral. Offshore repo collateral, to be specific. Because we keep seeing May 29 show up everywhere, what happened that day matters. Getting the story straight allows us to properly analyze the craziness in between then and now. From that, we hope to get a better [...]

Eurodollar University; Epilogue, It’s Supposed To Be Really Easy To Print Money

By |2019-04-15T16:36:36-05:00April 15th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In September 2012, the Federal Reserve’s third QE wasn’t the only major “rescue” of note. The Europeans had benefited from Mario Draghi’s “promise” earlier that summer but that was a little too vague. So, the various governments cobbled together sufficient backing to launch the European Stability Mechanism (ESM). This replaced two other prior “rescues”, neither [...]

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