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Tag Archives: credit bubble bulletin
Weekly Commentary: Bubble Meets Pandemic Consequences
Weekly Commentary: Bubble Meets Pandemic Consequences For posterity, some numbers: Over the past three weeks (14 sessions), the S&P500 gained 11.5%. The KBW Bank Index surged 36.1%, with the NYSE Financials up 23.9%. The Dow Transports rose 27.2% in 14 sessions, with the Bloomberg Americas Airlines Index up 75.8%. Over this period, the broader market […]
Weekly Commentary: Global Bubbles are Deflating
Weekly Commentary: Global Bubbles are Deflating “Bubble” is commonly understood to describe a divergence between overvalued market prices and underlying asset values. And while price anomalies are a typical consequence, they are generally not among the critical aspects of Bubbles. I’ll start with my basic definition: A Bubble is a self-reinforcing but inevitably unsustainable inflation. […]
Weekly Commentary: Schumpeter’s Business Cycle Analysis
Weekly Commentary: Schumpeter’s Business Cycle Analysis The work of the great economist Joseph Schumpeter (1883-1950) has always resonated. When I ponder analytical frameworks pertinent to these extraordinary times, none are more germane than Schumpeter’s Business Cycle Analysis. Best known for “creative destruction,” Schumpeter’s seminal work materialized after experiencing the spectacular “Roaring Twenties” boom collapse into […]
Weekly Commentary: Fault Lines
Weekly Commentary: Fault Lines Now on a weekly basis, we’re witnessing things that couldn’t happen – actually happen. April 20 – Bloomberg (Catherine Ngai, Olivia Raimonde, and Alex Longley): “Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key […]
Weekly Commentary: When Money Died
Weekly Commentary: When Money Died Sitting at the dinner table, our eleven-year old son inquired: “If a big meteor was about to hit the earth, how much money would the Fed print?” I complimented his sense of humor. Yet it was a sad testament to the historic monetary fiasco that will haunt his generation. Federal […]
Weekly Commentary: The Solvency Problem
Weekly Commentary: The Solvency Problem Being an analyst of Credit and Bubbles over the past few decades has come with its share of challenges. Greater challenges await. I expect to dedicate the rest of my life to defending Capitalism. One of the great tragedies from the failure of this multi-decade monetary experiment will be the […]
Weekly Commentary: Whatever It Takes to Never Give Up
Weekly Commentary: Whatever It Takes to Never Give Up Any central bank head that passes through an eight-year term without once raising rates has some explaining to do. To leave monetary policy extremely loose for such an extended period comes with major consequences (can we at least agree on that?). So, what went wrong? How […]
Market Commentary: China Watch
Market Commentary: China Watch I’ve held the view that Chinese finance has been at the epicenter of international market unease. The U.S./China trade war was not the predominant global risk. However, it has had the potential to become a catalyst for Chinese financial instability. And there remains a high probability for an eruption of Chinese […]
Weekly Commentary: No Coincidences
Weekly Commentary: No Coincidences September 20 – Wall Street Journal (Daniel Kruger): “The Federal Reserve Bank of New York will offer to add at least $75 billion daily to the financial system through Oct. 10, prolonging its efforts to relieve funding pressure in money markets. In addition to at least $75 billion in overnight loans, […]
Weekly Commentary: Comeuppance
Weekly Commentary: Comeuppance The Chinese Credit machine sputtered in July. Growth in Total Aggregate Financing dropped to $144 billion, almost 40% below consensus estimates. This was less than half of June’s $320 billion increase and the slowest expansion since February. The sharp slowdown was beyond typical seasonality, with the month’s growth in Aggregate Financing 18% […]
Weekly Commentary: “Hot Money” Watch
Weekly Commentary: “Hot Money” Watch In the People’s Bank of China’s (PBOC) Monday daily currency value “fixing,” the yuan/renminbi was set 0.33% weaker (vs. dollar) at 6.9225. Market reaction was immediate and intense. The Chinese currency quickly traded to 7.03 and then ended Monday’s disorderly session at an 11-year low 7.0602 (largest daily decline since […]
Weekly Commentary: Fanning the Flames
Weekly Commentary: Fanning the Flames The Federal Reserve abandoned “data dependent” – at least for next week’s FOMC meeting. December futures imply a 1.78% Fed funds rate, up six bps for the week but still 62 bps below today’s 2.40% effective rate. Unless the Federal Reserve has completely caved to the markets, the Committee statement […]
Weekly Commentary: Abject Monetary Disorder
Weekly Commentary: Abject Monetary Disorder A market week that began with a U.S./China trade “truce” ended with much stronger-than-expected (224k) June non-farm payrolls data. There were new intraweek record highs in equities and no let up in the global yield collapse. Lacking was increased clarity as to prospects for trade negotiations, economic growth and central […]
Weekly Commentary: Rejoicing Central Banker Capitulation
Weekly Commentary: Rejoicing Central Banker Capitulation June 21 – Neel Kashkari, Minneapolis Fed president: “In the Federal Open Market Committee meeting that concluded on Wednesday of this week, I advocated for a 50-basis-point rate cut to 1.75% to 2.00% and a commitment not to raise rates again until core inflation reaches our 2% target on […]
Weekly Commentary: The Ignore Them, Then Panic Dynamic
Weekly Commentary: The Ignore Them, Then Panic Dynamic After years of increasingly close cooperation and collaboration, the relationship has turned strained. Both sides are digging in their heels. Credibility is on the line. If one side doesn’t back down, things could really turn problematic. The Fed is asserting that it’s not about to lower the […]
