Posts Tagged ‘PBOC’
February 24, 2019
More than two decades ago, then-Fed Chairman Alan Greenspan said, “I know you think you understand what you thought I said but I’m not sure you realize that what you hear is not what I meant.”
It seems that the cacophony of Fed speakers on Friday accomplished what the so-called Oracle did by his own design .The headlines pulled out the narrative of the FED leaving a larger balance sheet and more reserves thus allowing for more liquidity in the U.S. financial system. Equity markets, bond markets and hard assets all experienced a sigh of relief and rallied in anticipation of removal of what Druckenmiller referred to as the double-barrel approach of FED tightening policy. Fed Vice Chairman Richard Clarida spoke about the FED‘s use of balance sheet and forward guidance dynamics as two exceptional tools the Fed used to combat the Global Financial Crisis. If policy was already at the “effective lower bound” the Fed may invoke a Bank of Japan-type policy of yield curve control (YCC) by capping the rates on longer maturities.
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Tags:Bank of Japan, China, Chinese Yuan, Federal Reserve, Japanese yen, PBOC, Richard Clarida, Simon Potter, superforecasting, trade
Posted in BoJ, Currency, Fed, PBoC | 11 Comments »
August 7, 2018
The markets remain locked into the latest tweet from either politicians or CEOs. Whether it’s about tariffs or taking a company private, the Twittersphere has the ability to move markets for a nanosecond. Regardless of the algos and the continued march of passive investing NOTES FROM UNDERGROUND believes that Hyman Minsky has entered the room. A Minsky moment occurs when complacency leads to increased risk-taking while using increasing leverage. It is not market valuations that disrupts markets but rather the amount of debt that needs to be serviced. Can future cash flows ensure that the vast amount of debt can be managed? Leverage is a great aphrodisiac but if priapism results the exit strategy can elicit great pain. The markets are built on record debt.
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Tags:China, Debt, emerging markets, Fed, PBOC, Yuan
Posted in Debt Market | 20 Comments »
October 19, 2017
First a few jokes: My sources tell me that the new Fed Chairman will be Marc Faber; second, as Lloyd Blankfein is chirping about Brexit and Goldman moving to Frankfurt, Germany, he opined several years ago that Goldman was doing God’s work. Well, being the cyclical time in the Jewish Torah of the reading of NOAH, I remind Blankfein that Noah was also part of God’s work. (Pour a scotch and laugh).
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Tags:Abe, ECB, Fed, Gold, Governor Zhou, Janet Yellen, Japan, Japanese yen, Nikkei, PBOC, silver, Steve Mnuchin, tax reform
Posted in Central Banks, China, Currency, Gold, Silver, United States | 10 Comments »
January 12, 2016
Last night’s blog contained some of the key sparks to watch this year, but I left some for today so as not to overwhelm. While we slept, the Chinese borrowed a page from the French National Bank. In an effort to curb the arbitrage of trading the YUAN in Hong Kong versus the mainland levels under the direct auspices of the PBOC, the Chinese Government raised overnight borrowing rates for those short the yuan in Hong Kong. The rate is only on overnight borrowings so it is intended to make being short against the PBOC cost prohibitive.
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Tags:Britain, British pound, China, David Cameron, EU, EUR/GBP, PBOC, referendum, Yuan
Posted in BOE, Currency, PBoC, UK | 31 Comments »
November 2, 2015
One of the great movies of the 1960s asks who is more insane: Those in the asylum or those who create wars? The present state of central banking can lead one to ask the same question about the overseers of FIAT CURRENCY and those who make investment decisions based on the policies of those academics so in love with their economic models. As the Bernanke victory tour rolls on, the fallback position of the recent anointed savior of the global financial system poses the counter-factual of, “What if we hadn’t acted by embarking on a massive liquidity injection? Aren’t you all satisfied that the unemployment rate is hovering around the defined level of full-employment?”
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Tags:Aussie Dollar, Ben Bernanke, BOJ, ECB, Euro, Fed, PBOC, QE, RBA, SPS, U.S. Dollar
Posted in Central Banks, Currency | 13 Comments »
October 28, 2015
In the realm of physics, absolute zero is the temperature at which every element freezes and molecules are no longer in motion. The FED and other global central banks seem to be mimicking their scientific betters by keeping rates at a low enough level to prevent the movement of capital from their balance sheets and into the real economy. Yes, the ECB, Riksbank, Swiss National Bank are at negative interest rates but it is the velocity that measures absolute zero rather than the relative level of interest rates. This brief analysis is based on the CONTINUED FRUSTRATION of trying to understand the basis of FED communication and signalling to the markets.
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Tags:5/30 Yield Curve, BOJ, ECB, Fed, FOMC, Gold, Janet Yellen, PBOC, rate hike, silver, U.S. Dollar
Posted in Central Banks, Currency, Fed, Gold, Silver | 11 Comments »
October 26, 2015
It was ECB President Mario Draghi who declared war on the German economic model of GROWTH THROUGH AUSTERITY, but it was the Chinese central bank that fired the first real shot in response to the “intervention” by Super Mario. As usual, Draghi proposed an increase in the ECB QE program (possibly in December) and also mentioned taking deposit interest rate even more negative. The EURO, of course, depreciated by as much as 3 percent while Draghi stoked the fires of a possible liquidity increase.
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Tags:Angela Merkel, Aussie Dollar, ECB, Euro, Fed, FOMC, Janet Yellen, Mario Draghi, New Zealand dollar, PBOC, QE, RBNZ, U.S. Dollar, Yuan
Posted in Uncategorized | 14 Comments »
August 27, 2015
At 8:00 a.m. EST, CNBC‘s announcer says, “From The Most Powerful City In the World, This Is Squawk Box.” What bothers me is the squawking about your importance. What irritates me even more is that Beijing has been the most powerful city when it comes to moving markets. Every other idea spewed this week has been about the impact of the Chinese authorities and the policy impact from the Politburo that “destroyed” trillions of equity market value. It even appears that the Chinese are dominating the discussion in Jackson Hole, Wyoming where the Kansas City Fed is hosting their annual symposium. Even New York Fed President Bill Dudley, aka Less Compelling, cites the Chinese as the reason to be less compelled to raise rates at the September meeting.
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Tags:Abe, Bill Dudley, BOJ, China, Fed, FOMC, Janet Yellen, Japan, Kuroda, PBOC, QE, rate increase, Yen
Posted in BoJ, China, Currency, Fed, Japan, PBoC | 9 Comments »
July 9, 2015
It would be great to concentrate on market fundamentals rather than the latest TWEET but as traders know, can’t play the cards that are not dealt. If the market wants to jump to the latest 140 character piece of informed opinion, then it is either use your own reaction function or fold up the lap-top and wait for greater clearance from trends and underlying fundamentals. The markets are presently in a binary mode. Chinese stock market gyrations impact global equity markets and all type of commodities and foreign currencies as traders “guess” what assets the Chinese might be selling to raise cash to meet stock market losses. The nature of a “collateralized, securitized” credit system is that it is subject to violent reactions because of its pro-cyclical element: Copper secures a loan and when copper prices rise the lender offers more money because the value of the security increases allowing an increase in liquidity.
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Tags:China, ECB, Euro, Germany, Gold, Greece, PBOC, Yuan
Posted in Central Banks, China, Currency, Gold, Greece | 14 Comments »
May 11, 2015
Today, CNBC‘s Steve Liesman interviewed San Fran Fed President John Williams. In a swipe at Fed gallows humor, President Williams presented Liesman with a T-Shirt that said the Fed was DATA DEPENDENT. The humor part was Williams’s effort to cut-off Steve Liesman’s well choreographed question which amounts to: “Come on, John, share your inside view about the possibility of a RATE RISE at the next FOMC meeting (just between us, John).” So as to make sure that Liesman understands the consistent answer: It is data dependent. If the FED wants to create some jobs it can send everyone with a bank account a free “Data Dependent” shirt, compliments of their regional Federal Reserve. All sarcasm aside, President Williams’s view puts added importance now to the inflation data on Friday and of course the retail sales input on Wednesday. The consensus on the CORE RETAIL SALES is 0.3% increase so a strong number would be above 0.6%. If the theory of data dependence holds then it should be the SHORT END of the curve that gets sold and here is my reasoning: The 2/10 and 5/30 parts of the yield curve have steepened dramatically during the last two months as the market accepts the fact that the recent bout of weak economic data has pushed the FED further away from raising rates.
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Tags:copper, data dependent, dual mandate, EU, Fed, Greece, IMF, jobs, John Williams, PBOC, Yuan, zero interest rate
Posted in Currency, data, Debt Market, Fed, Greece, PBoC, United States | 5 Comments »
