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October 16, 2019 | World Dollar Liquidity Crashes as Does Marginal Utility of Debt

  Lacy Hunt at Hoisington Management has another sterling post in its third quarter review and outlook. Here are some snips from the latest Hoisington Management Quarterly Review by Lacy Hunt. World Dollar Liquidity The Fed’s balance sheet constriction reduced world dollar liquidity, which is defined as the monetary base plus foreign central bank holdings of U.S. […]

October 15, 2019 | Germany Ignores EU Warning on Huawei 5G Security Risk

German Chancellor Angela Merkel ignored an EU risk assessment and allows Huawei’s 5G technology. The Wall Street Journal reports EU Warns of 5G Risks Amid Scrutiny of Huawei. The European Union has identified a series of specific security threats posed by foreign vendors of telecommunications equipment, significantly heightening the bloc’s scrutiny of suppliers like Huawei Technologies […]

October 14, 2019 | Shanghai Housing Sales Plunge 86% in Golden Week

Golden Week, a seven-day Chinese holiday, is traditionally a peak period for home sales. This year, sales plummeted. The South China Post reports ‘Golden Week’ Property Sales Plunge in Major Chinese Cities. Property sales in China’s major cities saw one of their worst “golden week” holidays in years, as buyers held back amid a slowing economy […]

October 13, 2019 | Austria’s Central Banks Says More QE is Counterproductive

Dissent within the ECB over QE is at unprecedented levels and rising. But what does “counterproductive” really mean? Several members of the European Central Bank’s Governing Council are against the ECB buying more bonds. Add Austrian central bank Governor Robert Holzmann to the list. Holzmann says Draghi’s QE Policy Is Counterproductive “The view was that the […]

October 10, 2019 | Millions of People Without Electricity in California

  Widespread power outages leave million of Californians without electric power. ​Pacific Gas and Electric Co (PG&E) has imposed unprecedented shutoffs leaving millions without power. The shutdowns are safety precaution to prevent wildfires. California Governor Gavin Newsom said the widespread electricity shutdown is “unacceptable.” “We’re seeing a scale and scope of something that no state in […]

October 8, 2019 | Fed Seeks Firm Grip On Interest Rates, Supposedly Not QE

Powell was busy yapping away about the need to control interest rates, looking more than a bit foolish in the process. Federal Reserve Chairman Jerome Powell says the Fed Will Increase Supply of Bank Reserves, but supposedly it’s not QE. The Federal Reserve will soon increase its purchases of short-term Treasury securities to avoid a recurrence […]

October 2, 2019 | Car Dealers Make More Profit On Loans Than Selling Cars

A third of auto loans in 2019 had a term period over six years. People cannot afford the cars they are buying. Seven-Year Loan Surge America’s middle class can’t afford its cars. A surge in the Seven-Year Auto Loan rate provides all the evidence you need. Walk into an auto dealership these days and you might walk […]

September 30, 2019 | Nixon Shock, the Reserve Currency Curse, and a Pending Dollar Crisis

Many problems today including deficits spending, trade deficits, income inequality have their roots in a 1971. Nixon Shock A reader asks “What Forced Nixon to Close the Gold Window in 1971?” The answer is called “Nixon Shock“. Nixon wanted to fight the war in Vietnam, not raise taxes, and not hike interest rates to finance […]

September 29, 2019 | House Flipper Lending Hits 13-Year High: What Can Possibly Go Wrong?

Home flipping is up and so is flip financing. Flippers sing the praises of increased leverage. The flippers are back and the competition fierce as there are fewer and fewer foreclosed properties to bid on. Haven’t we been down this road before? As the competition heats up, Lending to House Flippers Hits a 13-Year High. It […]

September 28, 2019 | Stocks Sink as Trump Threatens to Delist Chinese Firms

Hoping to force China to forge a trade deal to his liking, Trump threatens to delist Chinese firms from US exchanges. Radical Escalation of Trade War In what would be a radical escalation of the trade war, Trump Considers Delisting Chinese Firms From U.S. Markets. President Donald Trump’s administration is considering the possibility of delisting Chinese […]

September 25, 2019 | In Search of the Effective Lower Bound

The Fed is no longer talking about zero-bound but effective lower bound. What’s the difference? Where is it? Change Observation ​ The self-described “BondFreak” noticed a shift in Fed vocabulary from “zero bound” to “effective lower bound”. Why? Powell Ready to Cut Rates to “Effective Lower Bound” via “Conventional” Policy A Google search for “effective […]

September 24, 2019 | Crypto Bloodbath: One Day Wonder or More Coming?

Cryptocurrencies went on a deep dive today. Some blame new futures, others cite technical factors. Bitcoin sank slowly all day then cascaded over a steep waterfall at about 1:30PM. 24-Hour Crypto Crash Altcoins Lead Cryptocurrencies Lower Bloomberg reports Altcoins Lead Cryptocurrencies Lower After Bitcoin Futures Start Slow Bitcoin tumbled as much as 17% to $8,087, the […]

September 23, 2019 | Negative Interest Rates Are Social Political Poison

The interest rate business model is dead. Negative interest rates killed it, with no replacement in sight. Anne Kunz and Holger Zschäpitz co-authored an excellent article for Welt (in German) called the Interest Rate Business Model is Dead. Here are some excerpts via Google translate with many of my own modifications. For example, the title itself […]

September 22, 2019 | Danish and Swiss Banks to Charge Customers 0.75% Interest on Large Deposits

Last week, Denmark’s central bank cut its deposit rate to -0.75%. Banks will pass this on to large customers. Please consider Denmark’s Jyske Bank Lowers its Negative Rates on Deposits. Jyske Bank said on Friday people with more than $111,100 in their bank accounts will be charged more for their deposits as it seeks to pass […]

September 20, 2019 | Edging Closer to a Brexit Deal (Might Even Be a Fair One)

Movement by the EU, by Boris Johnson, and most importantly by Ireland suggests a good chance of a reasonable deal. Compromise Movements Boris Johnson has had a series of good discussions with Ireland. Out of the blue, Jean Claude Juncker gave an optimistic interview even to the point of scrapping the backstop. Eurointelligence has an […]

September 19, 2019 | Bankrupt Illinois Cities Forced to Cut Services to Fund Pensions

Multiple cities in Illinois are forced to cut police, fire departments and other city services to fund pension plans. Third Domino Illinois does not allow cities to file for bankruptcy but that is the best word to describe the sate of many. East St. Louis is the latest. What Follows is a Guest Post from […]

September 18, 2019 | Technically Speaking, Bitcoin Ripe for Major Move: Which Way?

  Bitcoin has been consolidating for months. Generally, and technically speaking, this suggests a big move is coming. I have no position in Bitcoin and I doubt that changes although I do not rule out a token amount in certain circumstances. That said, I do find the technology fascinating and I occasionally look at charts. […]

September 17, 2019 | Death of Shopping Malls and Department Stores in Five Charts

Traditional retailers are getting killed by online shopping, especially Amazon. Five charts tell the story. Core Retail Sales Core retail sales are retail sales excluding autos, auto parts, and gasoline. I calculate 17.9% not 20% as shown in the above chart. But this is nitpicking. I loved the idea in the lead chart, pulled off […]

September 15, 2019 | Oil Shock, Crude Surges 20%, Treasuries Untouched: One Is Wrong, Which One?

In the wake of the attack on Saudi Arabia, crude futures jumped as much as 20%. Treasury yields are flat. One is wrong! Oil Futures Up 20% The Financial Times reports Oil prices jump 20% After Attacks Halve Saudi Output. This is in the wake of a Saudi Oilfield Attack over the weekend. Questions Abound By Yemen, Iraq, […]

September 14, 2019 | Drone Strikes Shut Down Half of Saudi Arabia Oil Production

The Shutdown amounts to a loss of some five million barrels a day, roughly 5% of the world’s daily production of crude. Houthi rebels in neighboring Yemen claimed responsibility for a Coordinated Drone Strike Shutting Down About Half of Saudi Arabia’s Oil Output. A coordinated drone strike hit at the heart of Saudi oil production on […]

September 13, 2019 | Hyperinflation Returns to Zimbabwe, 70% Interest Rate and 230% Inflation

Zimbabwe raised its benchmark interest rate to 70% in an attempt to curtail a second round of hyperinflation. Zimbabwe Hyperinflation is Back Hyperinflation in Zimbabwe was a period of currency instability in Zimbabwe that, using Cagan’s definition of hyperinflation [50% in a month], began in February 2007. During the height of inflation from 2008 to 2009, it […]

September 11, 2019 | Australia “Cash Back” Government Scheme Fails to Inspire Consumer Confidence

  Australia gave “cash back” in July to those making up to $126,000. The move failed to inspire consumer confidence. Tax Refund Scheme In July, the government of Australia concocted a $1080 Tax Refund Scheme. The maximum offset of $1080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000. The offset is […]

September 10, 2019 | Multiple Rumors of Johnson Seeking a Deal with Ireland, Dumping DUP

Numerous articles note a softening of Boris Johnson’s stance, especially in regards to Ireland. Let’s take a look. Failure of Statecraft In Dublin, on September 9, Boris Johnson and Leo Varadkar, the Irish Taoiseach (Prime Minister) held a joint press conference in Dublin on the backstop. ​ Boris Johnson said the UK could get through […]

September 8, 2019 | American Dream: 68% of Millennial Homeowners Regret Buying a Home

A Bank of the West study finds that 68% of millennials regret buying a home. Please consider the polling results of a Study on the American Dream. What Best Describes Your Views? Key Findings 3% of Millennial live the American Dream. 16% of Boomers live the American Dream. 25% have abandoned the American Dream. 11% overall […]

September 7, 2019 | Fat Tails, But Which Way? Up or Down?

  Alpine Macro has an interesting article on risk. They provide two extremes, melt up and melt down. Melt Up or Melt Down? Please consider some snips from Fat Tails. Everyone on Wall Street is freaking out over the 2/10-year yield curve inversion, with recession being the most feared outcome. I am fully aware of the […]

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