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Tag Archives: rate cuts

Wait A Minute, What’s This Inversion?

Back in the middle of 2018, this kind of thing was at least straight forward and intuitive. If there was any confusion, it wasn’t related to the mechanics, rather most people just couldn’t handle the possibility this was real. Jay Powell said inflation, rate hikes, and accelerating growth. Absolutely hawkish across-the-board. And yet, all the way back in the middle of June 2018 the eurodollar curve started to say, hold on a minute. That’s the part which caused so...

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The Greenspan Moon Cult

Taking another look at what I wrote about repo and the latest developments yesterday, it may be worthwhile to spend some additional time on the “why” as it pertains to so much determined official blindness, an unshakeable devotion to otherwise easily explained lunar events. The short version: monetary authorities as well as the “experts” describe almost perfectly risk averse behavior among the central money dealing system in outbreaks like September’s repo – but...

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A Day For Rate Cuts

Well, that wasn’t he had in mind. The whole point of a rate cut, any rate cut let alone an emergency fifty, is to signal especially the stock market that the Fed is in the business of…something. The public has been led, by and large, to assume that something good happens when the Fed Chair shows up on TV. If you ask anyone to be specific, however, they can’t really answer you beyond the primitive superstition of low rates being especially beneficial to borrowers....

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Economy: Curved Again

Earlier today, Mexico’s Instituto Nacional de Estadística y Geografía (INEGI) confirmed the country’s economy is in recession. Updating its estimate for Q4 GDP, year-over-year output declined by 0.5% rather than -0.3% as first thought. On a quarterly basis, GDP was down for the second consecutive quarter which mainstream convention treats as a technical recession. On a yearly basis, it was actually the third straight. Nothing seems to have changed as 2019 drew to...

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Don’t Forget (Business) Credit

Rolling over in credit stats, particularly business debt, is never a good thing for an economy. As noted yesterday, in Europe it’s not definite yet but sure is pronounced. The pattern is pretty clear even if we don’t ultimately know how it will play out from here. The process of reversing is at least already happening and so we are left to hope that there is some powerful enough positive force (a real force rather than imaginary, therefore disqualifying the ECB)...

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History Shows You Should Infer Nothing From Powell’s Pause

Jay Powell says that three’s not a crowd, at least not for his rate cuts, but four would be. As usual, central bankers like him always hedge and say that “should conditions warrant” the FOMC will be more than happy to indulge (the NYSE). But what he means in his heart of hearts is that there probably won’t be any need. Three should do the trick nicely. And a lot of people, from what I can tell, believe him if not simply because he’s already stopped. The last two...

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Very Rough Shape, And That’s With The Payroll Data We Have Now

The Bureau of Labor Statistics (BLS) has begun the process of updating its annual benchmarks. Actually, the process began last year and what’s happening now is that the government is releasing its findings to the public. Up first is the Household Survey, the less-watched, more volatile measure which comes at employment from the other direction. As the name implies, the BLS asks households who in them is working whereas the more closely scrutinized Establishment...

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The FOMC Channels China’s Xi As To Japan Going Global

The massive dollar eruption in the middle of 2014 altered everything. We’ve talked quite a lot about what Euro$ #3 did to China; it sent that economy into a dive from which it wouldn’t escape. And in doing so convinced the Chinese leadership to give growth one more try before changing the game entirely once stimulus inevitably failed. In many other places around the world it has been the same. Not just developing economies, either. You wouldn’t have known from how...

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More (Badly Needed) Curve Comparisons

Even though it was a stunning turn of events, the move was widely celebrated. The Federal Reserve’s Open Market Committee, the FOMC, hadn’t been scheduled to meet until the end of that month. And yet, Alan Greenspan didn’t want to wait. The “maestro”, still at the height of his reputation, was being pressured to live up to it. The Fed had begun to cut rates. In Austin, Texas, where President-elect Bush and many prominent business leaders were gathered, the news...

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The Inventory Context For Rate Cuts and Their Real Nature/Purpose

What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process. An economy for whatever reasons slows down. That leads to inventory piling up across the various levels of the supply chain....

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