Episodes
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Consumers can't afford groceries, so how is a lower reverse repo rate going to help them? Now that it is settled the Fed will cut rates next week, everyone wants to know by how much. The real story is what's behind the cuts in the first place and what that means for financial markets as well as the economy. It isn't the murder hornet rate.
Eurodollar University's conversation w/Steve Van Metre
https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Authorities in China continue to do everything they can to derail the country's globally synchronized bond rally. It continues to hit record low yields anyway in spite of increasingly desperate government efforts. But why? More ugly data on banks, incomes, and Chinese jobs shows bonds are right, and not just about what's already happened to this point.
Eurodollar University's Money & Macro Analysis
China Xinhua Xi Jinping presided over a symposium on comprehensively promoting ecological protection...
https://www.gov.cn/yaowen/liebiao/202409/content_6974190.htmBloomberg Xi Urges Efforts to Hit 5% Growth Target Amid Rising Doubts
https://www.bloomberg.com/news/articles/2024-09-12/xi-urges-efforts-to-hit-annual-growth-target-amid-rising-doubtBloomberg PBOC’s China Bonds See Trading Surge in Sign of Intervention
https://www.bloomberg.com/news/articles/2024-09-10/pboc-owned-china-bonds-see-trading-surge-in-sign-of-interventionBloomberg China’s Deflationary Spiral Is Now Entering Dangerous New Stage
https://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stagehttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Missing episodes?
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The ECB cut rates for the second time, as expected, though amidst a strong bond/bund market rally that has now completely un-inverted that yield curve. This comes at a time when major businesses like Volkswagen are thinking about closing down factories due to how much idle capacity they have. What links all of these together, what explains all the facts, is that there was never a global recovery, only a transitory price illusion.
Eurodollar University's Money & Macro Analysis
Bloomberg Half-Empty Car Plants in Europe Spell Trouble for Workers
https://www.bloomberg.com/news/articles/2024-09-11/vw-s-german-factory-closures-highlight-wider-problems-for-europe-s-carmakers?srnd=phx-economics-v2Volkswagen 2023 Annual Report Income Statement
https://annualreport2023.volkswagen-group.com/consolidated-financial-statements/income-statement.htmlVolkswagen 2019 Annual Report
https://annualreport2019.volkswagenag.com/ECB Press Conference Statement
https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/2024/html/ecb.is240912~4f7b17040c.en.htmlBloomberg ECB’s Economic Hopes at Risk as Consumers Put Spending on Ice
https://www.bloomberg.com/news/articles/2024-09-09/ecb-s-economic-hopes-at-risk-as-consumers-put-spending-on-iceStatista Half of OECD Countries Earn Less Now Than Pre-Pandemic
https://www.statista.com/chart/32831/real-wage-growth-in-the-oecd/OECD Employment Outlook 2024
https://www.oecd.org/en/publications/oecd-employment-outlook-2024_ac8b3538-en.htmlhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
It was all banks all day yesterday. Basel rules foul-up. Warren Buffett continuing to dump BofA. Citi dumping on credit. Deutsche unloading CRE, or trying to. JP Morgan downgrading...itself. Most of all Ally Financial admitting unemployment is fast becoming a big problem and right on its balance sheet.
Eurodollar University's Money & Macro Analysis
Bloomberg JPMorgan Leads Banks in Dimming Outlooks, Spoiling Win on Rules
https://www.bloomberg.com/news/articles/2024-09-10/jpmorgan-leads-banks-in-dimming-outlooks-spoiling-win-on-rulesBloomberg Ally Drops After CFO Flags Consumer Stress, Underperformance
https://www.bloomberg.com/news/articles/2024-09-10/ally-drops-after-cfo-flags-consumer-stress-underperformanceBloomberg Consumers Shift Spending to Pay for Basic Staples, Citi CFO Says
https://www.bloomberg.com/news/articles/2024-09-09/consumers-shift-spending-to-pay-for-basic-staples-citi-cfo-saysFRBNY Household Debt and Credit Report
https://www.newyorkfed.org/microeconomics/hhdc.htmlCNBC Berkshire unloads another chunk of Bank of America as CEO Moynihan lauds Buffett as great shareholder
https://www.cnbc.com/2024/09/11/berkshire-unloads-another-chunk-of-bank-of-america-as-ceo-moynihan-lauds-buffett-as-great-shareholder.htmlBloomberg Deutsche Bank Is Unloading $1 Billion in US Real Estate Loans
https://www.bloomberg.com/news/articles/2024-08-01/deutsche-bank-is-unloading-1-billion-in-us-real-estate-loanshttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
There's no September here as interest rates continue to plunge. The two-year UST is at a record low relative to the Fed. In the past when the two-year has dropped like this it has meant nothing good. Combined with the still ongoing crash in energy prices, we have a solid sense of what's coming next. And it isn't just a lot of rate cuts.
Eurodollar University's Money & Macro Analysis
CHECK OUT EURODOLLAR UNIVERSITY'S DDA SUBSCRIPTION
GO MUCH DEEPER AND STEP INTO THE BLACKHOLE OF MONEY AND MACRO.
NOW MORE THAN EVER.Bloomberg S&P 500 Rally Hits a Wall as Big Banks Sound Alarm: Markets Wrap
https://www.bloomberg.com/news/articles/2024-09-09/stock-market-today-dow-s-p-live-updatesFOMC Transcript Conference Call January 3, 2001
https://www.federalreserve.gov/monetarypolicy/files/FOMC20010103ConfCall.pdfhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Interest rates continue to collapse in China even outpacing US Treasuries. Commodities are being crushed as prospects for the world's two largest economies are getting worse by the week; by the day. Over the weekend, the Chinese reported negatives in consumer and more so producer prices, adding more evidence to what is shaping up in bond markets and beyond as a looming deflation shock.
Eurodollar University's Money & Macro Analysis
Bloomberg China’s Deflationary Spiral Is Now Entering Dangerous New Stage
https://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stageWall Street Journal Australian Economy Posts Weakest Growth Since Early 1990s
https://www.wsj.com/economy/australian-economy-posts-weakest-growth-since-early-1990s-a7f5d6b0?tpl=cbChina's NBS Consumer Prices August 2024
https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956311.htmlChina's NBS Producer/Factory Gate Prices August 2024
https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956310.htmlhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
We know there are Fed rate cuts coming in September and that there is very good chance it will be 50 bps. Could policymakers also surprise by ending QT (not that it matters)? Might that be a first step toward the next QE? It's not as far-fetched as you may think; after all, some at the Fed were talking rate hikes just two months ago.
Eurodollar University's conversation w/Steve Van Metre
Bloomberg Fed’s Waller Says Jobs Data ‘Requires Action,’ Open to Big Cut
https://www.bloomberg.com/news/articles/2024-09-06/fed-s-waller-says-jobs-data-requires-action-open-to-big-cut?https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
More meltdowns across key markets, starting with the Treasury curve rapidly unwinding. Commodities are getting crushed, gasoline absolutely smoked. Swaps. Yen. The August payroll report only further confirmed the reasons why all this is happening.
Eurodollar University's Money & Macro Analysis
Bloomberg OPEC+ Pauses Oil Supply Hike in Effort to Reverse Price Slump
https://www.bloomberg.com/news/articles/2024-09-05/opec-has-deal-to-pause-planned-oil-hike-for-2-months-delegatehttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Politicians always feel the need to do something even if they don't know why or what's actually wrong. That's all "price controls" really are since they sure don't control anything like prices. Unknown to most people, the US has already experimented with them running price and wage restrictions for several years. The results are conclusive.
Eurodollar University's Money & Macro Analysis
Robert Bleiberg Farewell to Wage and Price Controls
https://imprimis.hillsdale.edu/farewell-to-wage-and-price-controls-july-1974/Richard Nixon August 15, 1971 TV address
https://www.youtube.com/watch?v=7_Xw5tWsOQo
https://www.cvce.eu/content/publication/1999/1/1/168eed17-f28b-487b-9cd2-6d668e42e63a/publishable_en.pdfArthur Burns Testimony before Congress Joint Economic Committee June 1971
https://fraser.stlouisfed.org/files/docs/historical/burns/Burns_19710630.pdf?utm_source=direct_downloadArthur Burns Testimony before Congress Joint Economic Committee July 1971
https://fraser.stlouisfed.org/files/docs/historical/burns/Burns_19710723.pdf?utm_source=direct_downloadNYT NIXON FREEZES PRICES FOR UP TO 60 DAYS, THEN WILL ESTABLISH PHASE 4 CONTROLS; FARM PRICES, WAGES, RENTS UNAFFECTED
https://www.nytimes.com/1973/06/14/archives/nixon-freezes-prices-for-up-to-60-da-ys-then-will-establish-phase-4.htmlhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Carry trade is back! In reality, it never left. Not because of BoJ rates hikes or threats, rather all the growing evidence the US isn't at risk of recession, so many indications showing it's here. Oil and gasoline are crashing. Curves unwinding. Forward rates project...a total mess. In time for all of the fun, JOLTS shows job openings plunge and layoffs jump.
Eurodollar University's Money & Macro Analysis
CNBC Job openings fell more than expected in July in another sign of labor market softening
https://www.cnbc.com/2024/09/04/jolts-july-2024.htmlCNBC Nikkei sees worst day since early August sell-off; Taiex leads losses in Asia as tech stocks fall
https://www.cnbc.com/2024/09/04/asia-pacific-markets-set-to-fall-after-recession-fears-heighten-nvidia-tumbles.htmlhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
While the world was focused on financial volatility and liquidations at the start of August, something odd happened at the Federal Reserve's Discount Window (DW). Given everything else that has gone on since then, starting with the yield curve then considering now-cracking commodities, plus foreigners' dollar buffers and even US dealer banks' collateral holdings, there aren't that many ways to interpret what banks are doing - or not - at the DW.
Eurodollar University's Money & Macro Analysis
FRB Michael Barr The Importance of Effective Liquidity Risk Management
https://www.federalreserve.gov/newsevents/speech/barr20231201a.htmReuters Discount window reform bill introduced as Fed works on its own overhaul
https://www.reuters.com/markets/discount-window-reform-bill-introduced-fed-works-its-own-overhaul-2024-07-29/FRBNY Staff Report 1103 Can Discount Window Stigma Be Cured? An Experimental Investigation
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1103.pdf?sc_lang=enhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Wholesale gasoline prices plunged in August to their lowest since the start of the year. This sounds like a positive, both for consumers as well as Fed policymakers and the disinflationary impact on consumer prices. But refinery margins have crashed to their lowest in three and a half years which instead points to more and bigger trouble.
Eurodollar University's Money & Macro Analysis
CNBC Oil prices ease on US gasoline demand worries, economic data
https://www.cnbc.com/2024/05/29/oil-rises-as-major-producers-expected-to-keep-output-cuts-in-place.htmlThe Globe & Mail Crude Prices Fall on Energy Demand Concerns and Increased Russian Crude Exports
https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
The most significant macro data from the past week certainly wasn't GDP (it wasn't even the most important datapoint within its own series), instead it was personal savings. It is yet another confirmation of what we've been hearing from across the economy and markets. Consumers are tapped out, and they're out of money because of jobs and incomes.
Eurodollar University's conversation w/Steve Van Metre
BLS Metropolitan Area Employment and Unemployment (Monthly)
https://www.bls.gov/web/metro.supp.toc.htmBLS Over-the-year percent change in total private average weekly earnings for metropolitan areas, not seasonally adjusted
https://www.bls.gov/charts/metro-area-employment-and-unemployment/metro-area-oty-percent-change-in-average-weekly-earnings.htmChallenger, Gray, & Christmas Challenger Report: Job Cuts Remain Low While Hiring Falls to Lowest YTD Since 2012
https://www.challengergray.com/blog/challenger-report-job-cuts-remain-low-while-hiring-falls-to-lowest-ytd-since-2012/
https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
People keep saying the economy is in the toilet and the US government keeps raising its estimate for GDP. The general public isn't wrong, GDP is. How do we know? Because that's what GDP says - its other side. Not as well known, it should be because this is the one which is far more accurate during cyclical downturns. History, academic studies, consistency with other signals, not to mention how much it backs up popular perception. Everything including the better side of GDP is lined up against GDP.
Eurodollar University's Money & Macro Analysis
Jeremy Nalewaik Board of Governors of the Federal Reserve System
The Income- and Expenditure-Side Estimates of U.S. Output Growth
https://www.brookings.edu/wp-content/uploads/2010/03/2010a_bpea_nalewaik.pdfCNBC Dollar General shares crater 25% as retailer cuts outlook, blaming ‘financially constrained’ customers
https://www.cnbc.com/2024/08/29/dollar-general-shares-crater-20percent-as-retailer-cuts-outlook-blaming-financially-constrained-customers.htmlCNBC Lululemon cuts guidance, misses sales estimates after botched product launch
https://www.cnbc.com/2024/08/29/lululemon-lulu-earnings-q2-2024.htmlMorningstar Lululemon Earnings: Near-Term Outlook Dims, but Profitability and Underlying Brand Strength Hold
https://www.morningstar.com/stocks/lululemon-earnings-near-term-outlook-dims-profitability-underlying-brand-strength-holdUBS “Vibecession”? - The paradox between hard data and sentiment
https://www.ubs.com/us/en/wealth-management/insights/market-news/article.1608955.htmlhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
New information from various sources all around the US service sector shows a downturn taking hold in that segment with employment signals turning more and more negative. It confirms the ongoing and more decisive bull steepening continuing to take shape in the Treasury market. Even mainstream sources are having to cover the fact there is something big happening when you can see it in services.
Eurodollar University's Money & Macro Analysis
CNN A key part of America’s economy has shifted into reverse
https://www.cnn.com/2024/07/07/economy/stocks-week-ahead-services-sector-slow-restaurants-stores/index.htmlFRB Philadelphia August 2024 Nonmanufacturing Business Outlook Survey
https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/nbos-2024-08Fifth District Survey of Service Sector Activity
https://www.richmondfed.org/region_communities/regional_data_analysis/surveys/service_sectorTexas Service Sector Outlook Survey
https://www.dallasfed.org/research/surveys/tssos/2024/2408https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
German observers are saying the economy has reached crisis proportions and the reason is what the US economy's weakness is doing to the rest of the world. Rather than recover as many in Europe had hoped, the situation has turned grim due to America's growing negatives. As one result, bulls are firmly in charge of all the curves.
Eurodollar University's Money & Macro Analysis
IFO Business Climate Index deteriorates (August 2024)
https://www.ifo.de/en/facts/2024-08-26/ifo-business-climate-index-deteriorates-august-2024Dow Jones German business increasingly in trouble, Ifo survey finds
https://www.morningstar.com/news/marketwatch/2024082620/german-business-increasingly-in-trouble-ifo-survey-findsWSJ German Economic Expectations Nosedive as Global Slowdown Fears Bite
https://www.wsj.com/economy/central-banking/german-economic-expectations-nosedive-as-global-slowdown-fears-bite-944996b5S&P Global/HCOB Germany PMIs August 2024
https://www.pmi.spglobal.com/Public/Home/PressRelease/3c59ed1870c24259ac3e62cfb7792724deStatis Germany June Trade
https://www.destatis.de/EN/Press/2024/08/PE24_300_51.htmlBundesbank Forecast for Germany: German economy slowly regaining its footing
https://www.bundesbank.de/en/press/press-releases/bundesbank-forecast-for-germany-german-economy-slowly-regaining-its-footing-933658
https://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Chinese e-commerce retailer Temu becomes the latest global consumer business to warn about the economy - exactly what bonds have been doing all year much to the growing frustration of authorities. They'd rather derail lower market rates at the same time as cutting their own? It actually does make a lot of sense as all these things are related.
Eurodollar University's Money & Macro Analysis
Bloomberg PDD’s Warning Highlights Growing Strain on China Consumer Firms
https://www.bloomberg.com/news/articles/2024-08-27/pdd-s-warning-highlights-growing-strain-on-china-consumer-firmsCNBC Shares of Temu parent company PDD plunge almost 29%
https://www.cnbc.com/2024/08/27/shares-of-temu-parent-company-pdd-plunges-29percent-largest-one-day-loss.htmlBloomberg China Economists See Weak Demand Despite Expected Rate Cuts
https://www.bloomberg.com/news/articles/2024-08-26/china-seen-mired-in-weakening-demand-despite-expected-rate-cuts?srnd=phx-economics-v2Bloomberg PBOC Holds Policy Rate Steady After Warning on Bond Rally
https://www.bloomberg.com/news/articles/2024-08-26/pboc-holds-policy-loan-rate-steady-after-warning-on-bond-rally?srnd=phx-economics-v2Bloomberg China Won’t Ban Bond Trading But Sees Risk in Buying Frenzy
https://www.bloomberg.com/news/articles/2024-08-24/china-won-t-ban-bond-trading-but-sees-risk-in-buying-frenzyhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Just as low interest rates are being validated in every way, some Economists like Nouriel Roubini are alleging that yields are instead being held down by noted monetary genius Janet Yellen who has the Treasury Department engaged in a form of stealth QE. The problem is actually Economists who think interest rates are nothing more than tools to be manipulated by all-powerful govts when in reality they are more accurate though not perfect reflections of how govts fail.
Eurodollar University's Money & Macro Analysis
Roubini/Miran Hudson Bay Capital ATI: Activist Treasury Issuance and the
Tug-of-War Over Monetary Policy
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/635102_Activist_Treasury_Issuance_-_Hudson_Bay_Capital_Research.pdfFT People are flipping out about T-bill issuance
https://www.ft.com/content/f0f62f0b-fee2-463a-a075-3b8dab333f40TBAC Fiscal Year 2023 Q3 Report
https://home.treasury.gov/system/files/221/TreasuryPresentationToTBACQ32023.pdfTBAC April 30, 2024
https://home.treasury.gov/system/files/221/TBACCharge1Q22024.pdfCNN 'Dr. Doom' explains why the Fed will lose its inflation battle
https://www.cnn.com/videos/business/2022/10/19/nouriel-roubini-markets-now.cnn-businessBloomberg Roubini Sees Significant Chance of ‘No Landing’ for US Economy
https://www.bloomberg.com/news/articles/2024-03-04/roubini-sees-significant-chance-of-no-landing-for-us-economyhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
Jay Powell's Jackson Hole appearance and speech wasn't really about rate cuts. It was a sales job trying to sell you and as much of the world as possible on the Fed itself. Just making the pitch, however, means implicitly admitting the US economy just leapt out of the frying pan and into the fire. Powell says it's OK because he knows how to turn the heat down when there is zero reason to believe anyone at the FOMC knows where it is us or what the temperature is going to be.
Eurodollar University's conversation w/Steve Van Metre
Jay Powell Jackson Hole
https://www.federalreserve.gov/newsevents/speech/files/powell20240823a.pdfhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU -
It wasn't just a pivot, Powell admits the US economy is in trouble as unemployment has already started rising. While that's it's own can of worms, there are also more monetary and financial considerations related to what happened early in August. CLOs, collateral, stock market liquidations, all tied to what the Fed just agreed to.
Eurodollar University's Money & Macro Analysis
EDU YT Japan is buying MASSIVE Amounts of Junk Credit
https://www.youtube.com/watch?v=_a_2J6mU48oCNBC Jay Powell Jackson Hole
https://www.youtube.com/watch?v=zpiMF6bZ0sgText of Powell Speech
https://www.federalreserve.gov/newsevents/speech/powell20240823a.htmhttps://www.eurodollar.university
Twitter: https://twitter.com/JeffSnider_EDU - Show more
