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Recession In China First, Followed by the World
Jeffrey Snider
Recession In China First, Followed by the World June 09, 2023
It wasn’t just a complete narrative fail, the fiasco uncovers much deeper and more intractable problems resurfacing at a most inopportune time. There are lessons to be heeded across the world, but they won’t be even as we get full confirmation the ho...
The Eurodollar Standard Isn't Going Anywhere Anytime Soon
Jeffrey Snider
The Eurodollar Standard Isn't Going Anywhere Anytime Soon June 02, 2023
This may be the best, most perfect example of why the eurodollar standard isn’t going anywhere anytime soon. Since hardly anyone knows the world runs on that rather than the dollar, the two are constantly conflated for what is only nomenclature. As s...
There's a Real Ceiling on Money and Finance Unrelated to Government
Jeffrey Snider
There's a Real Ceiling on Money and Finance Unrelated to Government May 26, 2023
Before March 10, 2023, these kinds of moves had been exceptionally rare. In eurodollar futures and now SOFR futures (term), daily swings of greater than 20 bps were reserved for the most momentous occasions. Contract prices skyrocketed, for example, ...
Markets Continuously Project Lower Rates...Much Lower
Jeffrey Snider
Markets Continuously Project Lower Rates...Much Lower May 19, 2023
Several serious questions remain yet to be answered in the aftermath of recent bank failures. While politicians wrestle over who might be to blame, they’ll never come up with a useful answer anyway and far more important is what this will all do to a...
The Deflation Is Here, and It Wasn't the Rate Hikes
Jeffrey Snider
The Deflation Is Here, and It Wasn't the Rate Hikes May 05, 2023
Just a few months ago, Mohamed El-Erian was decrying a “paradox of financial conditions” as he called them. Writing in the Financial Times, El-Erian was speaking for quite a lot of establishment types, Economists mostly, who were perplexed by the mis...
Safety and Liquidity Will Soon Be Prized Even More
Jeffrey Snider
Safety and Liquidity Will Soon Be Prized Even More April 28, 2023
It has not been a great week for central bankers, which is already saying something. By standards of recent developments, so long as a seven-day period goes by without major banking news, for them it would be considered a good one. Adding to the now-...
The Fed Goes Back to Fighting Non-Existent Inflation
Jeffrey Snider
The Fed Goes Back to Fighting Non-Existent Inflation April 21, 2023
In the months before the debt ceiling was reached and possibly breached in 2011, global markets just could not get enough of Treasury’s bills. Not the ones the Department might use to make payments, of course, rather the debt instruments which rest u...
March FOMC Minutes Reinforce How Bad They Are at Money
Jeffrey Snider
March FOMC Minutes Reinforce How Bad They Are at Money April 14, 2023
The other side of the supply shock was always going to be rough. Our only question was just how bad it might get. On that there were two variables, neither of those inflation. From the monetary side, we’d know from the beginning what ailed the global...
The Question No One Will Ask Jerome Powell: "What Would You Say You Do Here?"
Jeffrey Snider
The Question No One Will Ask Jerome Powell: "What Would You Say You Do Here?" March 31, 2023
It’s such an amazing scene from a true cult classic that it hasn’t just become an internet meme, the very image of the Bobs grilling sweaty, fear-ridden Tom Smykowski trying desperately to justify his employment at Initech has become its own hierogly...
Markets Have Been Warning Us About SVB for Months
Jeffrey Snider
Markets Have Been Warning Us About SVB for Months March 17, 2023
Can’t say we weren’t warned. Money and bond curves have been screaming for months trouble was lurking. A decent bout of it had erupted last fall, though hardly anyone saw it for what it was. Something about the UK, a bit of dollar activity in Switzer...
Prices Point In Unison To a Dark Global Experience
Jeffrey Snider
Prices Point In Unison To a Dark Global Experience March 10, 2023
Have you ever noticed that whenever the US dollar’s exchange value goes up, nothing good comes from it? The simplest, most obvious correlation to make yet it has taken a decade and half for some Economists to start putting two and two together. For ...
The Irrationality That Forms the Beliefs of Janet Yellen
Jeffrey Snider
The Irrationality That Forms the Beliefs of Janet Yellen March 03, 2023
I’m inclined to cut Treasury Secretary Janet Yellen a tiny little slack here, pun intended. Rather miffed by all this talk of recession, appearing on ABC’s Good Morning America the Monday following the release of the gigantic January jobs report, Yel...
The Very Serious Possibility Recession Has Already Happened
Jeffrey Snider
The Very Serious Possibility Recession Has Already Happened February 24, 2023
It was a sudden and epic flood of oil the likes of which the country hadn’t seen before. According to the government’s numbers, the Energy Information Administration, over a seven-week period domestic stocks of crude gushed by a then-record 34.4 mill...
Do QEs Fix Any Economy? The Question Is Rhetorical
Jeffrey Snider
Do QEs Fix Any Economy? The Question Is Rhetorical February 17, 2023
They come in with a tremendous bang, then go out with barely a whimper, and leave us in the very same jam that kicked off the cycle. Having since completely squandered rather than simply losing an entire decade, we must first remember Haruhiko Kuroda...
In This 'Silent Depression,' Let's Destroy the Dollar All Over Again
Jeffrey Snider
In This 'Silent Depression,' Let's Destroy the Dollar All Over Again February 10, 2023
If you’ve been on the website nerdwallet.com, there truly is a lot of good and interesting stuff there. From helping you compare credit card offers to researching banks and their lending options, it even has useful information to explore insurance co...
Central Bankers Fail Upward, But We Suffer Their Failings
Jeffrey Snider
Central Bankers Fail Upward, But We Suffer Their Failings February 03, 2023
Here it begins, an unofficial start to what will shortly be the mass official exodus from inflation-fighting first transiting through bewilderment before eventually settling in their usual climate of panic. It is as regular as any natural cycle, such...
Dollar Providers Biding Time, Betting On Collapse
Jeffrey Snider
Dollar Providers Biding Time, Betting On Collapse January 27, 2023
Among the earliest participants in the eurodollar system were Canadians. Though these dollars were floating around Europe, primarily, Canadian banks stood ready to borrow in bulk as needed. Not for their own purposes, the trade contributions therefor...
Much Like Twenty Novembers Ago, We're At the Edge of a Cliff
Jeffrey Snider
Much Like Twenty Novembers Ago, We're At the Edge of a Cliff January 20, 2023
When staring directly at the edge of a cliff, you quite naturally begin to explore all the ways in which you might avoid going over it. The closer you get, obviously the more urgent the inquiry. And that’s exactly where we find our collected selves y...
No Need To Wait For a Crisis To Confirm What We Already Know
Jeffrey Snider
No Need To Wait For a Crisis To Confirm What We Already Know January 13, 2023
It seems like an unnecessarily inefficient method, maybe even a total waste (pun intended) of time trying to discern what an animal eats solely by observing what comes out its back end. You might eventually witness something useful at some point, tho...
We've Been On a Digital Money Standard For at Least Half a Century
Jeffrey Snider
We've Been On a Digital Money Standard For at Least Half a Century January 06, 2023
Just as the Federal Reserve is not a central bank, VISA is not actually a credit card company. What is it about money and payments which leads to so many of these things being labeled as what they aren’t? The answer, quite simply, is in the human ing...
Recessions Hidden Behind Obvious Biases, Outdated Dogma
Jeffrey Snider
Recessions Hidden Behind Obvious Biases, Outdated Dogma December 16, 2022
Recessions are never unexpected, merely hidden behind obvious biases or buried under layers of outdated dogma. Most of the time, any economy is almost certainly expanding, which distorts our sense of probabilities. Since outright contractions seem ra...
New Urgency In the Marketplace Lacks Meaning to Monetary Officials
Jeffrey Snider
New Urgency In the Marketplace Lacks Meaning to Monetary Officials December 09, 2022
It’s been amazing to watch SOFR do in real-time what its detractors had warned about the entire time. The Federal Reserve through its various means pushed the private market to adopt this thing after having demonized LIBOR for going on a decade. Why?...
Recession Is the Most Obvious Answer To All the Inversion
Jeffrey Snider
Recession Is the Most Obvious Answer To All the Inversion December 02, 2022
As I type, the eurodollar futures curve is exactly 200 bps inverted, solidly Holy Crap territory. US Treasuries aren’t far behind in terms of historical upset, while an unprecedented inversion in the market for Germany’s government debt gets more unp...
So Much Trouble For So Little Yield at the Fed
Jeffrey Snider
So Much Trouble For So Little Yield at the Fed November 18, 2022
Before even getting to the details, it begs the question, why go to all this trouble? So much effort for so little yield, figuratively and literally. For policymakers at the Fed, their job really should be simple, robotic, even. Supply enough money t...
Progress For Jerome Powell, But What About Everyone Else?
Jeffrey Snider
Progress For Jerome Powell, But What About Everyone Else? November 11, 2022
The inability to learn from mistakes, including the most enormous and consequential errors, is the stuff of long-term decay. And while it is nothing new, there’s no comfort in such stark human reality. While we think of scientific progress as a stead...
Jerome Powell Should 'Get It,' But Maybe I'm Being Obtuse
Jeffrey Snider
Jerome Powell Should 'Get It,' But Maybe I'm Being Obtuse November 04, 2022
A wise man once warned that you never bite the hand which feeds you. That man was Jerome Powell. Seriously. Long before he set foot in the Federal Reserve, thirty years ago the future central banker was an actual banker (as a lawyer, still) who then ...
The Real Antagonists Are Those Doing the Same Things Over and Over
Jeffrey Snider
The Real Antagonists Are Those Doing the Same Things Over and Over October 28, 2022
It was the sort of man-to-man appeal no political official wants to make, especially for someone in a position of great authority during exceptionally trying times. Jean-Claude Trichet was the head of the European Central Bank and after having surviv...
QE Amounts to Involuntary Tightening By Central Banks
Jeffrey Snider
QE Amounts to Involuntary Tightening By Central Banks October 21, 2022
Though they never come out and say it, the growing body of evidence shows that what’s called quantitative easing (QE) is more akin to involuntary or inadvertent tightening. The implications are enormous, though still largely unexplored if not entirel...
Tons of Bank Reserves, Little Capacity To Do Anything
Jeffrey Snider
Tons of Bank Reserves, Little Capacity To Do Anything October 14, 2022
Long before too big to fail became a thing, Citigroup and the Federal Reserve often worked together. Traders at the bank would quite often talk and exchange action advice with their ostensibly regulatory overlords. Chummy, sure, but also a necessary ...
Only a Little of What's Said Is Anywhere Close To Accurate
Jeffrey Snider
Only a Little of What's Said Is Anywhere Close To Accurate October 07, 2022
Talk about whiplash. Having waited over three decades to restore inflation to its economy, the Bank of Japan is now concerned there’s too much. Maybe way too much. If so, was the twenty-sixth time really the charm? That’s how many QE versions have be...
A Combination of Xi Coincidences Spins Into a Narrative
Jeffrey Snider
A Combination of Xi Coincidences Spins Into a Narrative September 30, 2022
This isn’t the first time Xi Jinping was said to have disappeared unexpectedly. And it isn’t the first time Xi was unaccounted for in the weeks leading up to a crucial Communist Party Congress. China’s entire government and political calendar revolve...
Global Demand May Have Hit a Wall When Market Curves Did
Jeffrey Snider
Global Demand May Have Hit a Wall When Market Curves Did September 23, 2022
You would have thought him a prosecutor knee-deep rooting out corruption. The man detested the very possibility of anyone scheming under his nose. But Jean-Claude Trichet wasn’t some overtly aggressive DA targeting mafiosos, he was the ECB’s boss det...
The Planet Has a Eurodollar Problem, Not a Dollar Problem
Jeffrey Snider
The Planet Has a Eurodollar Problem, Not a Dollar Problem September 16, 2022
Hardly any of us know how an automobile actually provides locomotion. Sure, we understand fuel goes in it somewhere, combustion provides the required power, forcing the vehicle forward as efficiently as possible on its circle-shaped tires. That’s all...
The Infatuation With Fanciful Stories of Fascinating Bank Reserves
Jeffrey Snider
The Infatuation With Fanciful Stories of Fascinating Bank Reserves September 09, 2022
Humans invent monsters as a way to cope with their own imperfect knowledge. Norse sailors traveling around the various seas observed a gigantic, long-legged creature and without any way to understand what it was concocted the Kraken. What is supersti...
It's Not Just the Japanese Who Can't Afford to Wait for the Inevitable Truth
Jeffrey Snider
It's Not Just the Japanese Who Can't Afford to Wait for the Inevitable Truth September 02, 2022
For the last several years, the behavior of Japan’s yen against the US dollar is near perfectly correlated with the eight-week average of US$ repo fails. From the outside, which means the mainstream, this sounds like one of those nonsensical relation...
Kicking and Screaming Into Deflationary Seas
Jeffrey Snider
Kicking and Screaming Into Deflationary Seas August 26, 2022
In nearly every questionable case, when a politician like a central banker tells you that the economy is doing just swell, you’re safe to assume you’ve been lied to. Part of this is what modern “monetary” policy actually is, which is psychological ma...
There's Much That Ails Us Today, But It's Not Inflation
Jeffrey Snider
There's Much That Ails Us Today, But It's Not Inflation August 19, 2022
It remains one of those instances when you see something for the first time, truly take in the thing, you can never unsee it. Explanations for the seventies Great Inflation to this day are lacking and inconsistent. The venerable Allan H. Meltzer’s wo...
Whose Interests Do Central Bankers and Economists Serve?
Jeffrey Snider
Whose Interests Do Central Bankers and Economists Serve? August 12, 2022
Adam Smith was sufficiently brilliant to simply call it the invisible hand and leave it alone. How does individual business make the miraculous seem ordinary enough to be taken for granted? On a microscale, that’s for them to know and macroanalysis t...
What's Lacking Right Now Is the Fed's Will To Act
Jeffrey Snider
What's Lacking Right Now Is the Fed's Will To Act August 05, 2022
The Financial Crisis Inquiry Commission (FCIC) was empaneled to have the final say on the 2008 panic. A political affair though not necessarily partisan, its true purpose was to get the public to stop talking about the disaster by appearing thorough,...
Why Does the Fed Spend So Little Time On the Past?
Jeffrey Snider
Why Does the Fed Spend So Little Time On the Past? July 29, 2022
There is something about repo which repels mainstream curiosity. It’s more than weird, how throughout their long history repurchase agreements have gone so studiously overlooked. It has to be intentional. The real irony is that the Federal Reserve it...