CBs Archive

Emerging Nations Save $2.9 Trillion Reserves in Rout

Smart not to intervene and use reserves. And even the 19% isn’t as much as Japan’s recent approx. 25% drop, so they all remain stronger vs the yen. So the US now loses ‘competitiveness’ vs a whole mob of exporters cutting ‘real’ wages vs US, Canada, UK, and the Eurozone etc. As ...Read More

Turkey’s Babacan Warns Of Financial Turmoil

Turkey’s Babacan Warns Of Financial Turmoil By Yasemin Congar August 27 (Al Monitor) — Emerging markets will soon find themselves operating in a new world order. Few people are as painfully aware of this as Turkey’s Deputy Premier Ali Babacan. A soft-spoken politician whose key positions in three successive Justice and Development ...Read More

Brazil hikes rates to fight inflation

Fundamentally this increases govt deficit spending/interest income for the private sector, a negative for the currency and inflation, especially as it adds to costs. However it also adds to spending/output/employment which causes policy makers to think they got it right by hiking as the stronger economy ‘needs’ the higher rates, etc. Brazil ...Read More

China to keep credit growth steady: Central bank

This is ridiculous, of course: China to keep credit growth steady: Central bank July 14 (Reuters) — China’s central bank pledged on Sunday to use a mix of policy tools to adjust banking liquidity to ensure steady credit growth, in an apparent bid to soothe market concerns about tighter monetary conditions. The ...Read More

Chinese liquidity drill

With floating fx, it’s necessarily about price (interest rate) and not quantity. That includes China’s ‘dirty float’, a currency not convertible on demand at the CB, but with periodic CB market intervention. Loans necessarily create deposits at lending institutions, and they also create any required reserves as a reserve requirement is functionally, ...Read More

Bill Gross – Fed tapering plan may be hasty:

I agree with a lot of this ‘Mortgage originations have plummeted by 39% since early May.’ The Fed’s financial obligations ratios have turned up as well. But it’s not about QE in any case It takes private credit expansion or net exports to overcome fiscal drag. Bill Gross: Fed tapering plan may ...Read More

last update from Rome, home tomorrow

Markets remain in ‘QE off’ mode, with stocks down and longer term rates up. ‘QE on’ was a misguided speculative bubble in any case, as QE is, at best, a placebo, and in fact somewhat of a tax as it removes a bit of interest income. But obviously global markets view it ...Read More

Friday update- deficits matter, a lot!

So back to basics For 16t in output to get sold there must have been 16t in spending, which also translates into 16t in some agent’s income. And (apart from unsold inventory growth), for all practical purposes nominal GDP growth is another way to say sales growth. To state the obvious, sales ...Read More


Karim writes: Question: On timing of tapering Answer: If the labor market continues to improve at the current pace, could taper in the next few meetings. Asked if he expected this to occur before Labor Day; depends on the data. Did not answer question about how much warning he would give the ...Read More

Thinking Caps On – Grab a Coffee – Sales/Trading Commentary

From: JJ LANDO At: May 14 2013 07:41:14 Consider the following thought experiment. These are the scenarios: A. The Treasury decides that it will fund itself 30% more in Overnight Bills and reduce issuance across the curve. B. The Fed announces it will increase QE by 30% (it will remit the net ...Read More