Monetary Policy

Tyler Durden's picture

It's Not The Economy Stupid: It's The Fed





Today many are talking about the economy, but that’s all they’re doing: talking. Doesn’t matter if its today’s politician, CEO’s from the largest corporations, some national or regional business association figure-head, right down to academia with its self-perpetuating gaggle of Ivory Tower economic aficionados. All they are doing is paying lip-service to the problems. And the reason? They can’t do anything about it because as of today, the U.S. economy is being controlled high-handedly by The Federal Reserve. The U.S. economy has never before been under the command and control of a single entity – until now. Today the Fed. entices nearly all businesses to focus on short-term games of financial engineering rather than on core business principles to grow. This is what a stance at the zero bound gives rise to.

 
Marc To Market's picture

Observations about the Dollar and the Week Ahead





A look at next week's data in the somewhat larger context, and a look at interest rate differentials

 
Tyler Durden's picture

How Keynes Almost Prevented The Keynesian Revolution





Alas, by ignoring Keynes in 1925, Churchill triggered a calamity so severe that it not only inspired one man to kill himself beneath the British statesman’s very window but, more insidiously, also provided the impetus for the economics profession’s rejection of the “classical” axioms.

 
Tyler Durden's picture

Is The Currency War Over? China Revalues Yuan 0.05% Stronger





Heading into the China session, offshore Yuan signaled a 1% devaluation was on the cards. Of course, all media eyes were focused on the disaster in Tianjin but after 3 days of what was supposed to a 'one-off' adjustment, The PBOC has in fact surprised with a modestly stronger fix at 6.3975 from yesterday's 6.4010 Fix. That leaves the CNY Fix devaluation to a 4.60% loss in 4 day. Of course, its a bit hypocritical of Americans or Europeans to regard the Chinese as mean and nasty and currency warriors because they're letting their currency adjust against a constantly-devaluing dollar and euro. The US has been devaluing the dollar for years, but that's a-ok for Western commentators, apparently. It appears - judging by the opening devaluation and closing intervention - that China is as set on crushing the herd of one-way carry traders as any export-enhancing currency debasement.

 
Tyler Durden's picture

Both ECB And BOJ Warn More QE May Be Response To Chinese Currency War





Minutes from the ECB's July meeting underscore the central bank's misgivings about the pace of growth and inflation but more importantly, the governing council hinted that it would be ready to move if "financial developments in China" should conspire to further derail progress.

 
Tyler Durden's picture

Risk On Despite Third Chinese Devaluation In A Row As PBOC Jawbones, Intervenes In FX Market





With everyone now focused on what China's daily Yuan fixing will be ever night, there was some confusion why last night the PBOC decided to devalue the CNY by another 1.1% to 6.4010, despite its promise that the devaluation would be a "one-off" event, taking the 3 day devaluation to just about 4.5%. However, subsequently in a press conference, central bank vice-governor Yi Gang said that the PBoC will continue to step in when the market is ‘distorted’, that there is no economic basis for the Yuan to fall continuously and that it will look to keep the exchange rate ‘basically stable’. The Vice-Governor also said that the PBoC will closely monitor cross-border capital flows and that reports suggesting the Central Banks wants to see the currency depreciate 10% are ‘groundless’. Which is ironic considering after just 3 days, the PBOC is already half the way there!

 
Tyler Durden's picture

Global Markets Turmoil After China Extends Currency War To 2nd Day - Devalues Yuan To 4 Year Lows





Despite claiming yesterday's devaluation was a "one-off", The PBOC has devalued the Yuan Fix dramatically for the 2nd day in a row - now 22 handles weaker than Monday's Fix. Offshore Yuan is trading at 4 year lows against the USD. The carnage from this dramatic shift is just beginning as global equity markets (US futures to China cash) are tumbling, US Treasury bond yields are crashing, gold is up, China credit risk is at 2 year highs, and China implied vol has exploded to 4 year highs. Ironically, China's government mouthpeiece Xinhua explains "China is not waging a currency war; merely fixing a discrepancy."

 
Tyler Durden's picture

Demand For Credit Plunges 55% In China As Slump Deepens





Although the headline number suggests that credit demand in China was robust in July, the "expansion" was entirely attributable to Beijing's mammoth equity plunge protection effort. As for the real economy, well, the picture isn't pretty.

 
Tyler Durden's picture

Why "The Fed Is In A Bind" - Scotiabank Explains





The Fed has basically borrowed from the future to improve today. The intention of Fed policy over the past 30 years has been to self-correct business cycles into a ‘steadier state’ by easing interest rates into weakness and hiking them into strength. Unfortunately, there is political-asymmetry between easing and hiking which has resulted in the stair-stepping of official interest rates down to the zero lower bound. Monetary policy has reached the practical limits of what it can do.  Thus, the multi-decade credit era is coming to an end... Bad companies should be allowed to fail.  Creative destruction is beneficial in the long run.

 
Tyler Durden's picture

This Is What Global Currency War Looks Like: A Complete History Of Recent FX Interventions





To help remind readers of what happens when the entire world engages in wholesale currency war, here is a complete list of all the recent FX interventions, courtesy of Stone McCarthy.

 
Tyler Durden's picture

China Enters Currency War - Devalues Yuan By Most On Record





As we first warned in March, and as became abundantly clear over the weekend Beijing had no choice but to join the global currency wars, as the yuan's dollar peg will ultimately prove to be too painful going forward. And sure enough this evening the PBOC weakens the Yuan fix by the most on record

 
Tyler Durden's picture

A Message From Generation Z: Thanks For Nothing





The up and coming generations have plenty to blame on the "baby boomer" generation and the scores of bad fiscal and monetary policy decisions that has robbed them of their future. The job of each generation is to leave the world in a better place than they found it. It is clear, we failed.

 
Tyler Durden's picture

Why China Can't Unleash Major Stimulus (In 3 Simple Charts)





It appears - according to the narrative assigned by the mainstream media - that any weakness in asset prices should be bought because China will inevitably have to unleash pure QE (as opposed to the modestly watered down version currently underway) or some combination of RRR cuts. This is 'western' thinking as the go to policy of the rest of the world's central banks has been - put on pants, print money, paper over cracks, proclaim victory. However, in China there is one big problem with this... stoking inflation... and most crucially the social unrest concerns when suddenly a nation of newly minted equity losers can no longer afford their pork (which is facing record shortages)...

 
Tyler Durden's picture

Gold & Silver Are Surging On Heavy Volume





Hedgies are the most short ever... and Commercials are the least hedged in 14 years... and it appears rumors of PBOC buying along with dismal data from around the world has sparked a renewed awareness of another looming QE sending gold well north of $1100 and silver back above $15.

 

 
Syndicate content
Do NOT follow this link or you will be banned from the site!