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Another bazooka, this time from Germany, of all places. The mere thought of it has been enough to send the German bond market into a tailspin and sending yields to nearly their highest in fourteen years while also pulling other parts of the marketplace into it, too. Does the selloff signal inflation, success, or something else entirely? What are the implications for everyone else?

Eurodollar University's Money & Macro Analysis

Politico Germany moves to overhaul debt rules to unleash major defense spending
https://www.politico.eu/article/germany-unveils-e500-billion-defense-plan-as-security-threats-mount/

Roberto Perotti What Do We Know about the Effects of Fiscal Policy?
https://www.siepweb.it/siep/wp/wp-content/uploads/2021/03/1397925830013.pdf

Wilson, Daniel J.. 2012. "Fiscal Spending Jobs Multipliers: Evidence from the 2009 American Recovery and Reinvestment Act." American Economic Journal: Economic Policy, 4 (3): 251–82.
https://www.aeaweb.org/articles/pdf/doi/10.1257/pol.4.3.251

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Target issued another warning on the economy and then joined Best Buy as merely the first to say they're raising prices. While that may sound inflationary, it's the opposite and will end up pushing interest rates even lower. Those are already happening in the market, in part as markets more confidently price how the Fed is going to have to follow along, too. Just like last summer. 

Eurodollar University's Money & Macro Analysis

Bloomberg Target, Best Buy Warn US Consumers of Tariff Price Hikes
https://www.bloomberg.com/news/articles/2025-03-04/target-sees-flat-sales-this-year-warns-of-risk-from-tariffs

Bloomberg Traders Pile Into Fed Rate-Cut Bets as Tariffs Roil Markets
https://www.bloomberg.com/news/articles/2025-03-04/us-yield-curve-steepens-on-growth-angst-with-tariffs-now-reality

Atlanta Fed GDPNow
https://www.atlantafed.org/cqer/research/gdpnow

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Stocks are getting hit, with bond yields tumbling. The "growth scare" gets louder as the luxury car brand just confirmed it's heading for the worst, no longer willing to hold out for economic strength everyone talks about yet never happens. The forgot how to grow economy is firmly at risk of remembering traditional recession mechanics. 

Eurodollar University's Money & Macro Analysis

WSJ Mercedes-Benz Plans to Cut Jobs as Earnings Expected to Slump
https://www.wsj.com/business/earnings/mercedes-benz-plans-cost-cuts-as-earnings-expected-to-fall-this-year-6268813a

Bloomberg S&P 500 Sees Worst Selloff in 2025 as Bonds Climb: Markets Wrap
https://www.bloomberg.com/news/articles/2025-03-02/stock-market-today-dow-s-p-live-updates

ISM Feb 2025
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/february/

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Not a good week for financial markets. Oil down. Rates sunk. Stocks hit. Crypto crashing. Why? The "growth scare" is back. Or, at least, it's back in the mainstream. In reality, it never left and certain financial markets are being forced to reckon with this. 

Eurodollar University's conversation w/Steve Van Metre

Atlanta Fed GDPNow
https://www.atlantafed.org/cqer/research/gdpnow

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The new guy at the RBI said he wasn't going to interfere with the rupee as much as his predecessor. Apparently, the dollar has left him with little choice. It’s the fundamentals that matter. And even India is showing more signs of forgetting how to grow. That’s why the dollar has been on a rampage again and why RBI can't let it go. 

Eurodollar University's Money & Macro Analysis

Bloomberg India Central Bank’s Short Dollar Book Hit Record $77.5 Billion
https://www.bloomberg.com/news/articles/2025-02-28/india-central-bank-s-short-dollar-book-hit-record-77-5-billion

India: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for India
https://www.imf.org/en/Publications/CR/Issues/2025/02/27/India-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-562726

IMF 2018
https://www.imf.org/en/News/Articles/2018/08/07/NA080818-India-Strong-Economy-Continues-to-Lead-Global-Growth

MacroVoices Mar-a-lago Accord
https://macrovoices.podbean.com/e/macrovoices-469-jeff-snider-the-mar-a-lago-accord-seen-through-a-eurodollar-lens/
At YT:
https://youtu.be/qeu6vrqZ980

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European banks are surging into safety, buying the third most on record in January. At the same time, they scaled back activities in the real economy expecting further deterioration. Their behavior also backs up market pricing especially interest rates, while also exposing the fallacy behind them. 

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ECB BLS Q4 2024
https://www.ecb.europa.eu/stats/ecb_surveys/bank_lending_survey/html/ecb.blssurvey2024q4~e1ddae0f19.en.html

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Why now? After teasing a bank recapitalization plan as part of last year's "bazooka", the CCP did nothing about it over the five months since raising the matter. Total silence. Now, all of a sudden, news banks are going to get their equity after all. What changed? There are a few suspects, starting with growing turmoil in money markets alongside more problems with real estate. 

Eurodollar University's Money & Macro Analysis

Bloomberg China to Inject at Least $55 Billion of Fresh Capital Into Several Big Banks
https://www.bloomberg.com/news/articles/2025-02-26/china-plans-to-start-bank-capital-hike-with-at-least-55-billion

Bloomberg China’s Property Crisis Enters a Dangerous New Phase
https://www.bloomberg.com/news/features/2025-02-11/china-s-real-estate-crisis-property-sector-debt-is-getting-worse

Wapo CHINA ANNOUNCES LARGE BOND ISSUE TO BAIL OUT BANKS
https://www.washingtonpost.com/archive/politics/1998/03/01/china-announces-large-bond-issue-to-bail-out-banks/adcac8da-fe39-4b4c-90c0-13739847f35c/

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Rates are down sharply, so much the broad yield curve re-inverted from one critical spot. Given the macro context with crashing consumer confidence and a steep loss of economic momentum, particularly in the services sector, that re-inversion along with a multi-month low in 2-year yields is telling us everything we need to know. 

Eurodollar University's Money & Macro Analysis

Bloomberg Treasury Yields Slide as Confidence Gauge Stokes Economy Fears
https://www.bloomberg.com/news/articles/2025-02-25/treasuries-rally-as-traders-boost-bets-on-fed-interest-rate-cuts

Conference Board Consumer Confidence
https://www.conference-board.org/topics/consumer-confidence

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Is there trouble brewing in the AI bubble? A report came out earlier today that Microsoft was scaling back its investments, one the company denied. Its substance, however, aligns with everything else that's going on, from Warren Buffett curiously choosing not to explain Berkshire's stock selling to the deteriorating conditions in South Korea. 

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Bloomberg Microsoft Dropped Some AI Data Center Leases, TD Cowen Says
https://www.bloomberg.com/news/articles/2025-02-24/microsoft-cancels-leases-for-ai-data-centers-analyst-says

Bloomberg South Korea’s Chip Exports Lead Trade Gains Fueling Economy
https://www.bloomberg.com/news/articles/2024-06-01/south-korea-s-chip-exports-lead-trade-gains-supporting-economy

Dow Jones South Korea Government Expects Economy to Slow in 2025
https://www.morningstar.com/news/dow-jones/202501011398/south-korea-government-expects-economy-to-slow-in-2025

Bloomberg Bank of Korea Rate Cut Not a Done Deal This Month, Rhee Warns
https://www.bloomberg.com/news/articles/2025-02-06/bank-of-korea-s-rhee-leaves-door-open-to-another-rate-hold

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Walmart the latest to issue a warning. SPG's PMIs crack, particularly services. Consumer confidence tanks. And they call it "uncertainty."

Eurodollar University's conversation w/Steve Van Metre

SPG PMI press release
https://www.pmi.spglobal.com/Public/Home/PressRelease/c3a10cc3461d4d8aa1758082292e7358

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A tinderbox waiting to explode? When spreads are this low, and complacency this high, that means everyone is on one side the market. Not because they want to be, they have to be. And they all believe that they'll be able to get to the exits even though everyone is searching for the same signals. 

Eurodollar University's Money & Macro Analysis

Bloomberg Money Managers See Dangers in Credit’s Eerie Calm
https://www.bloomberg.com/news/articles/2025-02-17/credit-s-eerie-calm-has-some-money-managers-seeing-danger-signs

Bloomberg Junk Bond Guru Sees Rising Distress Ahead as Banks Tighten Lending
https://www.bloomberg.com/news/articles/2025-02-15/junk-bond-guru-fridson-sees-rising-distress-ahead-credit-weekly

BIS The market turbulence and carry trade unwind of August 2024
https://www.bis.org/publ/bisbull90.htm

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WTF!? This really better be a stunt or a bad joke because if it's not then we're faced with more bad economics. This proposal is exactly the SH&% that is supposed to be ending. The government wouldn't be giving anyone "their" money back, just borrowing more to make it look like that would what happens. 

Eurodollar University's Money & Macro Analysis

Milton Friedman - Tyranny of the Status Quo - Part 1 - Beneficiaries w/ David Brooks
https://www.youtube.com/watch?v=wRXEk7su62w

The Hill Adviser behind ‘DOGE dividend’ check program: It’s reasonable
https://thehill.com/business/5154650-james-fishback-donald-trump-elon-musk-doge-dividends/

Fox $5,000 DOGE check? Trump backs idea to send some savings to Americans
https://www.fox9.com/news/5000-doge-dividend-check-trump-backs-savings-americans

CBO 
https://www.cbo.gov/system/files/2025-01/60870-By-the-Numbers.pdf
https://www.cbo.gov/publication/60870#:~:text=The%20Budget%20Outlook-,Deficits,to%20%242.7%20trillion%20by%202035.

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The last central bank finally gives in to reality, joining the rate cutting cycle in one final blow to higher for longer. This brings RBA closer to its neighbor RBNZ even though, on the surface, the two seem far apart in every respect. For all this alleged differences, however, the dollar has drastically other ideas which is why dollar for dollar for dollar, they're all the same globally synchronized. 

Eurodollar University's Money & Macro Analysis

CNBC Australia’s central bank cuts rates for the first time in more than four years, flags economic uncertainties
https://www.cnbc.com/2025/02/18/australia-central-bank-cuts-interest-rate-for-the-first-time-in-over-four-years.html

Bloomberg ECB’s Panetta Says Economic Weakness Is Worse Than Expected
https://www.bloomberg.com/news/articles/2025-02-19/ecb-s-panetta-says-economic-weakness-is-worse-than-expected

Bloomberg New Zealand to Slow Pace of Easing After Third Big Rate Cut
https://www.bloomberg.com/news/articles/2025-02-19/new-zealand-delivers-third-big-rate-cut-to-revive-ailing-economy

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The poor economy brought down Germany's government. With the election looming on Sunday, attention turns to who will take over. The inconvenient truth, for the economy, is that it doesn't matter. The whole world needs to stop looking for answers from politicians who have NONE. 

Eurodollar University's Money & Macro Analysis

Reuters German voters demand change as Europe's biggest economy stalls
https://www.reuters.com/world/europe/german-voters-demand-change-europes-biggest-economy-stalls-2025-02-17/

Bloomberg German Investor Outlook Jumps Most in Two Years Before Vote
https://www.bloomberg.com/news/articles/2025-02-18/german-investor-outlook-improves-most-in-two-years-before-vote

Bloomberg What’s in Store for Germany as Far-Right AfD Eyes Big Election Gains?
https://www.bloomberg.com/news/articles/2025-02-18/germany-election-what-to-know-as-far-right-afd-boosted-by-musk-in-spotlight

NYT Keynesianism Explained https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/

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Warren Buffett continues to sell stocks. But it's not just disposing of stocks, which ones. At the same time, even Wall Street is beginning to take note of the dangers over dramatic complacency in risk markets like junk credit along with stocks. With both marketplaces waiting for a recession each recognizes, they're being eroded by the one we already have. That could very well explain why the selling continued at Berkshire. 

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Fortune Buffett sold more BofA stock while keeping Apple stake intact
https://fortune.com/2025/02/14/warren-buffett-berkshire-hathaway-bank-of-america-stock-apple-stake-q4/

Berkshire Hathaway 13-F
https://www.sec.gov/Archives/edgar/data/1067983/000095012325002701/xslForm13F_X02/39042.xml

Bloomberg Junk Bond Guru Sees Rising Distress Ahead as Banks Tighten Lending
https://www.bloomberg.com/news/articles/2025-02-15/junk-bond-guru-fridson-sees-rising-distress-ahead-credit-weekly

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From the outside, everything that could have gone wrong for bonds did. CPI. PPI. Auctions. Hawks. You name it. Despite all that, what bond yields did instead points to deeper fundamentals that are never talked about by mainstream sources - including the new Treasury Secretary. 

Eurodollar University's conversation w/Steve Van Metre

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Amazon warned the start of 2025 was rough, and boy was it. Government data on consumer spending as well goods production came in exactly that way. And while extreme winter weather played a role in each one, it was clearly the opposite of what everyone says. 

Eurodollar University's Money & Macro Analysis

NYT Amazon Says Profits Rose 88% but Cautions Growth May Slow
https://www.nytimes.com/2025/02/06/technology/amazon-earnings-profits.html

CNN US retail spending plunged last month, falling for the first time since August
https://www.cnn.com/2025/02/14/economy/us-retail-spending-january/index.html

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India has suffered a major currency drop, serious interbank liquidity problems, one of the largest central bank FX interventions in its history, a stock rout, and, for good measure, the third of three straight negative CPIs. And that's just the last four days. 

Eurodollar University's Money & Macro Analysis

Bloomberg India Central Bank Punishes Rupee Speculators in Surprise Move
https://www.bloomberg.com/news/articles/2025-02-11/india-central-bank-intervenes-to-curb-speculative-rupee-bets

Reters Indian central bank hikes overnight fund infusion post heavy FX intervention
https://www.reuters.com/business/finance/indian-central-bank-infuse-record-overnight-funds-post-heavy-fx-intervention-2025-02-12/

Bloomberg Modi Returns to US With Lost Clout as Stock, Economic Boom Fades
https://www.bloomberg.com/news/articles/2025-02-12/modi-returns-to-us-with-lost-clout-as-stock-economic-boom-fades

Bloomberg Indian Stocks Trim Losses as Dip Buying Provides Respite
https://www.bloomberg.com/news/articles/2025-02-12/indian-stocks-slump-to-lowest-since-june-as-global-funds-flee

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Shocker of a CPI report; or was it? The bigger shock came afterward when Chevron stunned with its massive shake-up. At the same time - and for the same reasons - the oil market is undergoing a dramatic change of its own. And these are far from inflationary. 

Eurodollar University's Money & Macro Analysis

BLS January CPI
https://www.bls.gov/news.release/cpi.htm

CNBC Chevron will slash up to 20% of its workforce as part of cost-cutting plan
https://www.cnbc.com/2025/02/12/chevron-will-slash-up-to-20percent-of-its-workforce-as-part-of-cost-cutting-plan.html

Barrons Chevron to Lay Off Up to 20% of Workers. Why the Oil Industry Is Slimming Down.
https://www.barrons.com/articles/chevron-layoffs-oil-dividends-05fb9b8a

WSJ Chevron Slashes Spending, Announces Job Cuts
https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-12-05-2024/card/chevron-slashes-spending-announces-job-cuts-giqWm4lRhl4XDmoPDxvd

CNBC Prices rose more than expected in January as inflation won’t go away
https://www.cnbc.com/2024/02/13/cpi-inflation-january-2024-consumer-prices-rose-0point3percent-in-january-more-than-expected-as-the-annual-rate-moved-to-3point1percent.html

CNN The Fed might not be done raising interest rates just yet
https://www.cnn.com/2024/04/11/economy/fed-interest-rate-hike-probability/index.html

Rueters Inflation-wary US rate options market cautiously prices for 2024 Fed hike
https://www.reuters.com/markets/us/inflation-wary-us-rate-options-market-cautiously-prices-2024-fed-hike-2024-04-29/

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We're finding more and more evidence in 2025 that escaping the economy of the past few years won't be so easy and neat as many were hoping. The golden arches reported their worst sales estimates for American stores since the lockdowns. Those results fit with other retailers struggling mightily among other commercial segments, as data now suggests consumer fears over the labor market are compounding the downturn. 

Eurodollar University's Money & Macro Analysis

CNBC McDonald’s revenue disappoints, as U.S. sales see worst drop since pandemic
https://www.cnbc.com/2025/02/10/mcdonalds-mcd-q4-2024-earnings.html

CNBC https://www.cnbc.com/2024/12/03/why-dollar-general-and-dollar-tree-are-struggling.html
https://www.cnbc.com/2024/12/03/why-dollar-general-and-dollar-tree-are-struggling.html

Bloomberg Shein's Growth is Hurting Discount Retailers as Store Closures Surge
https://www.bloomberg.com/news/newsletters/2025-02-11/shein-and-temu-s-growth-is-hurting-discount-retailers-ahead-of-tariffs

Target 
https://corporate.target.com/press/release/2024/11/target-corporation-reports-third-quarter-earnings

https://corporate.target.com/press/release/2025/01/target-corporation-provides-holiday-sales-update,-announces-leadership-team-changes

FRBNY SCE
https://www.newyorkfed.org/microeconomics/sce#/

Bloomberg US Consumer Sentiment Drops to Seven-Month Low on Price Worries
https://www.bloomberg.com/news/articles/2025-02-07/us-consumer-sentiment-drops-to-seven-month-low-on-price-worries

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Auto exports out of Mexico plunged in January. While bad news for the struggling Mexican economy, this is more evidence for the growing global backlash of which the car business is right in the middle of. Cars aren't a victim but now a cause for concern the world over - including the primary reason for the struggle to begin with. America. 

Eurodollar University's Money & Macro Analysis

Bloomberg German Industrial Production Falls Most in Five Months on Cars
https://www.bloomberg.com/news/articles/2025-02-07/german-industrial-production-falls-most-in-five-months-on-cars

Bloomberg German Government Slashes 2025 Forecast Before Snap Election
https://www.bloomberg.com/news/articles/2025-01-29/german-government-slashes-growth-forecast-before-snap-election

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Mexico is now the latest to accelerate, upping its ante as the situation reaches a critical turning point. It's been coming for a long time, yet central bankers worldwide now have a convenient excuse to cover the deterioration. The same one American consumers are now fretting with confidence rolling over and going sharply lower. 

Eurodollar University's conversation w/Steve Van Metre

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Complete mess. Payrolls revised massively lower. The govt discovers three million people and assumes two million were employed this whole time. More important than those, hours are shrinking to the point the average workweek is the lowest its been since MARCH 2020. Strong and resilient, as always. 

Eurodollar University's Money & Macro Analysis

BLS Employment Situation
https://www.bls.gov/news.release/empsit.nr0.htm

BLS Adjustments to Household Survey Population Estimates in January 2025
https://www.bls.gov/web/empsit/cps-pop-control-adjustments.pdf

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A major shift is underway now at the Bank of England. After being among the most cautious central banks it is being forced more to the dovish side. Even one of the most arch-hawks in all global central banking ditched her previous opposition to any rate cuts in order to urge a fifty-bps cut today! More reactions to the consequences from a world that forgot how to grow. 

Eurodollar University's Money & Macro Analysis

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Bond yields have fallen sharply over the past two weeks, having now roundtripped the past two FOMC meetings, going all the way back to where they'd been before the "hawkish rate cut" in December. Latest data on the services economy go a long way to explaining why, with signs of one-offs and non-economic artificial factors more and more coming out of it.

Eurodollar University's Money & Macro Analysis

Bloomberg US Bond ‘Death Spiral’ Risk Brushed Aside by Foreign Funds
https://www.bloomberg.com/news/articles/2025-01-16/treasuries-death-spiral-risk-is-brushed-aside-by-foreign-funds

Bloomberg Working Americans Turn to Food Banks as Fed Inflation Battle Drags On
https://www.bloomberg.com/news/features/2025-01-27/us-inflation-leads-families-to-struggle-for-food-fed-debates-rate-path

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No one is hiring yet no one is firing. The latter doesn't mean employers aren't getting rid of workers, because they are. Lots of them. A hiring freeze is only the first part of cost-cutting in a weak economy. From consumer surveys to govt jobs estimates, the labor market is on everyone's mind right now, employers and employees. 

Eurodollar University's Money & Macro Analysis

Nissan offers buyouts as US production scales back
https://www.automotivedive.com/news/nissan-buyouts-workforce-production-reduction-2025-tennessee-mississippi/738816/

NBC News Bridgestone closes a tire plant in Tennessee with 700 layoffs and other reductions
https://www.nbcnews.com/news/us-news/bridgestone-announces-tire-plant-closure-tennessee-700-layoffs-reducti-rcna189277

Bloomberg STMicro Eyes Workforce Cuts of Up to 3,000 in Chip Slump
https://www.bloomberg.com/news/articles/2025-01-31/stmicro-eyes-workforce-cuts-of-up-to-6-as-chip-slump-drags-on

US Consumer Confidence Retreated in January
https://www.conference-board.org/topics/consumer-confidence/press/CCI-Jan-2025

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Opening round of the 2025 trade wars. Mexico and Canada in the crosshairs. Neither of them stood a chance. The pounding started even before the negotiations began. 

Eurodollar University's Money & Macro Analysis

NYT Here’s What to Know About Trump’s Tariffs
https://www.nytimes.com/2025/02/01/business/trump-tariffs-canada-mexico-china.html

Truth Social, Trump Mexico Message
https://truthsocial.com/@realDonaldTrump/posts/113940711907400754

Bloomberg Car Prices Face $3,000 Increase as Automakers Worry Over Tariffs
https://www.bloomberg.com/news/articles/2025-02-02/car-prices-face-3-000-increase-as-trump-tariffs-hit-auto-sector

Financial Post Trump takes aim at Canada's banking sector as tariffs loom
https://financialpost.com/fp-finance/banking/trump-takes-aim-canada-banking-sector-tariffs-loom

Live updates: Trump discusses tariffs with Canada and Mexico
https://www.nbcnews.com/politics/politics-news/live-blog/trump-canada-mexico-tariffs-live-updates-rcna190371

As Trade War Intensifies, Watch for Soaring Inflation, July 2018
https://assuredam.com/2018/07/as-trade-war-intensifies-watch-out-for-inflation/

FOMC Transcript June 2019
https://www.federalreserve.gov/monetarypolicy/files/FOMC20190619meeting.pdf

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Gold has been soaring all of 2025 so far, reaching a new all-time high this past week as yet another major cyclical warning was triggered. Trade wars may account for some of the urgency, the real story is how in a world that's entirely artificial more in it desperately demand something real. It's getting easier to sort what's real from so much fakery. 

Eurodollar University's conversation w/Steve Van Metre

Bloomberg STMicro Eyes Workforce Cuts of Up to 3,000 in Chip Slump
https://www.bloomberg.com/news/articles/2025-01-31/stmicro-eyes-workforce-cuts-of-up-to-6-as-chip-slump-drags-on

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Silicon Valley Bank's failure in March 2023 kicked off a chain of events that has cascaded across money, banks, and the real economy. The world economy didn't forget how to grow, the banking crisis of early '23 proved to be the final inflection point. Central banks may have won the battle over banks, then lost the war where it truly mattered. 

Eurodollar University's Money & Macro Analysis

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Banks are in full-on defensive mode, GDP is in a huge and growing hole, and central bankers are realizing they're stuck no matter what. The end of last year for Europe stands as a stark warning that this global transition remains far from over with - even after two years of it already. 

Eurodollar University's Money & Macro Analysis

ECB statement
https://www.ecb.europa.eu/press/pr/activities/mopo/html/index.en.html

Bloomberg ECB Cuts Rates for Fifth Time as Euro-Zone Economy Flatlines
https://www.bloomberg.com/news/articles/2025-01-30/ecb-cuts-rates-for-fifth-time-as-euro-zone-economy-flatlines

Bloomberg Traders’ ECB Rate Cut Bets Fuel Biggest Yield Drop in Two Months
https://www.bloomberg.com/news/articles/2025-01-30/german-two-year-yields-slump-as-traders-boost-ecb-rate-cut-bets

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Reviewing the Fed, the Canadians, Sweden, and previewing the ECB. Market reactions and what really happened at the FOMC.

Eurodollar University's Money & Macro Analysis

Bloomberg Bets on Big Treasuries Rally Are Booming Before Fed Decision
https://www.bloomberg.com/news/articles/2025-01-28/bets-on-bigger-treasuries-rally-are-booming-before-fed-decision

Bloomberg Traders Bet ECB Will Need to Deepen and Accelerate Rate Cuts
https://www.bloomberg.com/news/articles/2025-01-29/traders-bet-ecb-will-need-to-deepen-and-accelerate-rate-cuts

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Shipping rates have plunged in January. The sinking demand for raw materials is another warning about the state of the economy in 2025. It was one echoed yet again by American consumers who, after a short reprieve on rate cuts and election, are right back to worrying about jobs and incomes all over again.

Eurodollar University's Money & Macro Analysis

Investopedia
https://www.investopedia.com/terms/b/baltic_dry_index.asp

Bloomberg US Consumer Confidence Drops to Four-Month Low on Job Market
https://www.bloomberg.com/news/articles/2025-01-28/us-consumer-confidence-drops-to-four-month-low-on-job-market

Conference Board 
https://www.conference-board.org/topics/consumer-confidence

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Chinese banks are the real story, even as China's government (intentionally?) stole the spotlight with its AI-knock-off, a distraction from the latest real economy warning and most importantly the banking sector's latest. The credit crisis in the latter may finally be coming to a head as it keeps the former from stabilizing. 

Eurodollar University's Money & Macro Analysis

AA Xi Jinping
https://www.aa.com.tr/en/asia-pacific/on-chinese-new-year-s-eve-xi-vows-to-confront-challenges-without-hesitation-/3463706

Bloomberg China’s Economy Stumbles in Sign Rebound Hinges on More Stimulus
https://www.bloomberg.com/news/articles/2025-01-27/china-s-factory-activity-cools-ahead-of-major-new-year-holiday

Bloomberg China Starts Lowering Price Goals to Match Deflationary Reality
https://www.bloomberg.com/news/articles/2025-01-24/china-starts-lowering-price-goals-to-match-deflationary-reality

Bloomberg Markets Sound Alarm Over Deflationary Spiral in China
https://www.bloomberg.com/news/articles/2025-01-07/china-investors-sound-alarm-over-japan-style-deflation-as-yields-hit-record-low

Bloomberg Hong Kong’s Property Distress Is Catching Up With City’s Banks
https://www.bloomberg.com/news/articles/2025-01-26/hong-kong-s-property-distress-is-catching-up-with-city-s-banks

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South Korea is the latest to fall into "forgot how to grow" and Texas Instruments showed the world why. Both were slammed this week for getting to the same place from different perspectives. Critical cyclical indications that shocked the consensus. 

Eurodollar University's conversation w/Steve Van Metre

Bloomberg Texas Instruments Suffers Worst Rout Since 2020 on Weak Forecast
https://www.bloomberg.com/news/articles/2025-01-23/texas-instruments-outlook-signals-chip-slump-is-persisting

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While the dollar was screaming higher the past few months, that eurodollar disorder had foreign govts absolutely raiding their reserves, money dealers hoarding record amounts of collateral and record Treasuries being piled up by depositories. And those were just the beginning. 

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President Trump created quite a stir in his speech to Davos, demanding, among other things, lower oil prices from OPEC plus lower interest rates out of Jay Powell. In fact, those two are linked with the one expected to pave the way for the other. What's the real game here? More important, what are the chances this can work?

Eurodollar University's Money & Macro Analysis

Bloomberg Trump Urges Lower Oil Prices, Interest Rate Cuts at Davos
https://www.bloomberg.com/news/articles/2025-01-23/trump-urges-opec-to-lower-oil-prices-warns-of-tariffs-at-davos

CNBC President Donald Trump says he’ll ‘demand that interest rates drop immediately’
https://www.cnbc.com/2025/01/23/president-donald-trump-says-hell-demand-that-interest-rates-drop-immediately.html

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Tariffs on Mexico and Canada begin on February 1, or do they? Whether President Trump is merely posturing or not, the threat is real and the situation globally they would be starting from makes for a difficult mix. That's why the dollar is rising, rates are falling, and real economy variables are already experiencing significant pressure.

Eurodollar University's Money & Macro Analysis

Bloomberg Trump Plans to Impose 25% Tariffs on Mexico, Canada by Feb. 1
https://www.bloomberg.com/news/articles/2025-01-21/trump-plans-to-enact-25-tariffs-on-mexico-canada-by-feb-1

WSJ The Big Risk of a Trade War: Inflation
https://www.wsj.com/articles/the-big-risk-of-a-trade-war-inflation-1522926022

Bloomberg Why the Freight Market Is Stuck
https://www.bloomberg.com/opinion/articles/2025-01-17/j-b-hunt-warning-shows-freight-is-stuck-in-place

Rueters Canadian dollar posts biggest decline among G10 currencies
https://www.reuters.com/markets/currencies/canadian-dollar-posts-biggest-decline-among-g10-currencies-2025-01-16/

Bloomberg Trump’s Pledge to Slap 25% Tariffs on Mexico Sinks Peso
https://www.bloomberg.com/news/articles/2025-01-21/trump-s-pledge-to-slap-25-tariffs-on-mexico-sinks-peso

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UK payrolls took a massive hit in both November AND December. While the media looks for reasons to blame, the answer instead comes from all the rest of the world. Unemployment is on the rise all over the place, with the situations in some of them going way beyond softening or weakness. More than a few places you might not think of having a major employment downturn are, a warning to the world this is getting really serious. 

Eurodollar University's Money & Macro Analysis

Bloomberg Surprise UK Retail Sales Drop Fuels Economic Growth Worries
https://www.bloomberg.com/news/articles/2025-01-17/uk-retail-sales-fall-in-latest-setback-for-struggling-economy

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Many regulators worry there is the potential for systemic crisis begun by so-called shadow banks. The banks you already know are the last one. In the decade and a half since 2008 the eurodollar world has evolved yet again. The aftermath of that last one opened the door to go back into the shadows. 

Eurodollar University's Money & Macro Analysis

Bloomberg US Lays Path for More Financial Giants to Get Fed Oversight
https://www.bloomberg.com/news/articles/2023-11-03/yellen-lays-path-for-more-financial-giants-to-get-fed-oversight

Bloomberg Shadow Bank Loans From US Lenders Surpass $1 Trillion in Fed Data
https://www.bloomberg.com/news/articles/2024-02-10/shadow-bank-loans-from-us-lenders-surpass-1-trillion-in-fed-data

IMF Shadow Banks: Out of the Eyes of Regulators
https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Shadow-Banks

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The verdict for the Christmas season is in and...not good. Consumers wanted to spend. They tried to spend. They couldn't spend, not what they wanted or retailers needed. Americans simply don't have enough funds and so the downturn marches on. 

Eurodollar University's conversation with Steve Van Metre

Signet Jewelers Announces Holiday Sales Results
https://www.signetjewelers.com/investors/financial-news-releases/financial-news-release/2025/Signet-Jewelers-Announces-Holiday-Sales-Results/default.aspx

Americans Are Spending Less On Streaming Services – Here’s Why
https://9meters.com/entertainment/streaming/americans-are-on-average-spending-less-on-streaming-services-in-2024-compared-to-the-previous-year

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Germany's economy is doing something we've never seen before. Not only did it contract for the second straight year, that's not even the most amazing part. The general pattern it is taking is one that is being repeated all around the world. It's as if the entire global economy stopped growing. 

Eurodollar University's Money & Macro Analysis

Bloomberg German Economy Shrinks for Second Year in New Blow to Scholz
https://www.bloomberg.com/news/articles/2025-01-15/german-economy-shrinks-for-second-straight-year-before-election

IFO Press Release Germany: Europe's largest economy is facing a third consecutive year of recession
https://www.ifo.de/en/press-release/2024-12-19/headcount-reduction-germany-more-likely-december-2024

Sky News 
https://news.sky.com/story/germany-europes-largest-economy-is-facing-a-third-consecutive-year-of-recession-13289549

Bloomberg ECB Will Keep Easing With Economy Losing Momentum, Guindos Says
https://www.bloomberg.com/news/articles/2025-01-15/ecb-will-keep-easing-with-economy-losing-momentum-guindos-says

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China's money markets have started to come unglued, with serious illiquidity driving up money rates. Despite provoking one of the largest liquidity operations in twenty years from the PBOC yesterday, the disorder came back even worse today. All of this against the backdrop of a currency fight and the prospect China's bank credit problem becomes a full-blown liquidity crisis. 

Eurodollar University's Money & Macro Analysis

Bloomberg China's Central Bank Pumps Near-Historic Level of Cash Into Financial System
https://www.bloomberg.com/news/articles/2025-01-15/pboc-dials-up-short-term-liquidity-injections-amid-cash-squeeze

Bloomberg China Cash Squeeze Rolls on Even After Central Bank’s Infusions
https://www.bloomberg.com/news/articles/2025-01-16/china-cash-squeeze-rolls-on-even-after-pboc-liquidity-boosts

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Treasuries exploded on the release of the "inflation" figures for December. Those were rather unremarkable, taken in isolation wouldn't have been able to explain why such a heavy market reaction. There is much more to the CPI and what's going on in the bond market. 

Eurodollar University's Money & Macro Analysis

Bloomberg Why Some Bond Traders Bet Relentless Selloff Will Soon Lose Steam
https://www.bloomberg.com/news/articles/2025-01-14/bond-traders-wager-slump-set-to-ease-with-key-cpi-data-ahead

Bloomberg Fed’s Barkin Says CPI Data Show Inflation Headed Toward 2% Goal
https://www.bloomberg.com/news/articles/2025-01-15/fed-s-barkin-says-cpi-data-show-inflation-headed-toward-2-goal

Bloomberg Fed Finds New Reason for Confidence in Obscure Inflation Gauge
https://www.bloomberg.com/news/articles/2025-01-09/fed-finds-new-reason-for-confidence-in-obscure-inflation-gauge

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Russian sanctions triggered more than a surge in oil prices. Financial markets near-panicked bought in near-term futures contracts. While the jump in energy is already being called an huge inflation risk, it isn't even close. On the contrary, oil spikes always end a certain way. 

Eurodollar University's Money & Macro Analysis

CNN Biden admin imposes harsh sanctions on Russian oil industry to cut off funding for Ukraine war effort
https://www.cnn.com/2025/01/10/politics/biden-admin-russia-energy-sanctions-ukraine/index.html

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Not a good day in India to start the week. The rupee’s currency crisis is accelerating. The central bank is burning through reserves at an unsustainable pace. India stocks were crushed, with the main SENSEX index down over a thousand points. Delhi also significantly dialed back its growth estimates while reports came out it is going to massively restate its November imports. Why is all this happening? It's not because of Jay Powell or Donald Trump. 

Eurodollar University's Money & Macro Analysis

Hindustan Times Stock market today: Sensex and Nifty tanks, rupee hits all-time low
https://www.hindustantimes.com/business/stock-market-crash-sensex-tanks-nearly-700-points-on-open-nifty-down-over-200-101736737599073.html

Bloomberg Deepening India Slowdown Sinks Hope for New Era of 8% Growth
https://www.bloomberg.com/news/articles/2025-01-08/india-s-deepening-slowdown-dashes-hopes-for-new-era-of-8-growth

Bloomberg India’s Central Bank Said to Ease Rupee Drought With FX Swaps
https://www.bloomberg.com/news/articles/2025-01-13/india-s-central-bank-said-to-ease-rupee-drought-with-fx-swaps

Business Standard 'If they tax us, we tax them': Trump threatens reciprocal tariffs on India
https://www.business-standard.com/external-affairs-defence-security/news/trump-threatens-reciprocal-tariffs-india-trade-conflict-124121800321_1.html

Bloomberg It May Rain Downgrades This Earnings Season in India
https://www.bloomberg.com/news/articles/2025-01-13/india-market-buzz-big-money-in-small-companies-looks-tough-now

Bloomberg India Fixing Record Trade Gap After Overstating Gold Imports
https://www.bloomberg.com/news/articles/2025-01-08/india-fixing-record-trade-deficit-after-overstating-gold-imports

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Another blowout payroll report, way above every expectation. That makes two in a row for the Est. Survey post-election. Plus, a big rebound for the HH Survey. Trump-bump, a sign of a resurgent economy finally shaking off the doldrums of the past year-plus? 

Eurodollar University's conversation w/Steve Van Metre

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China's yuan is hanging by a thread, the closest it has ever been to going over the government limit. Finally, even the mainstream media has caught on this has nothing to do with Jay Powell and the Fed. The bazooka has been utterly exposed. 

Eurodollar University's Money & Macro Analysis

Bloomberg PBOC Halts Bond Buying to Defend Yuan as Economic Gloom Worsens
https://www.bloomberg.com/news/articles/2025-01-10/pboc-says-it-will-temporarily-halt-buying-of-government-bonds

Bloomberg China’s Market Support Falls Short as Economic Gloom Deepens
https://www.bloomberg.com/news/articles/2025-01-10/china-s-market-support-falls-short-as-economic-gloom-deepens

Bloomberg China Ramps Up Yuan Support With Record Hong Kong Bill Issuance
https://www.bloomberg.com/news/articles/2025-01-09/pboc-taps-record-bill-issuance-in-hong-kong-to-support-yuan

Bloomberg Yuan Short Sellers Squeezed by Soaring Hong Kong Funding Costs
https://www.bloomberg.com/news/articles/2025-01-07/offshore-yuan-borrowing-costs-surge-as-currency-support-in-focus

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Credit card balances crashed in November, according to the latest data from the Federal Reserve. That's a major warning but not about spending. With such a negative signal instead relating to jobs and the labor market, why the hell are LT rates...rising? The answer to the question can be found in Canada and Germany. 

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And now for some layoffs to go with the ongoing alarming drop in hiring. More strong evidence the labor market in the US is on the edge of the Beveridge cliff. It may not actually be a cliff in the literal sense, yet all the data points to the economy being at that point...if not already past it.  

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European banks are not acting like either inflation is breaking back out or that the economy is going to be fine and hit its widely-expected soft landing. Instead, what they are doing is the other side of the weak euro. Both are further corroborated by the latest from France and especially Switzerland, with another warning coming from the Swiss on more than "inflation."

Eurodollar University's Money & Macro Analysis

Bloomberg Traders See Euro Hitting Dollar Parity as Soon as This Month
https://www.bloomberg.com/news/articles/2025-01-07/traders-look-past-euro-s-bounce-for-parity-as-soon-as-this-month

Bloomberg French Government Tempers Budget Goal to Shelter Economy
https://www.bloomberg.com/news/articles/2025-01-06/france-aims-for-2025-deficit-between-5-and-5-5-of-gdp

Reuters Swiss inflation falls again, pointing to more central bank rate cuts
https://www.reuters.com/markets/europe/swiss-inflation-falls-again-pointing-more-central-bank-rate-cuts-2025-01-07/

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Canada's Prime Minister resigned, as expected, just as Canada announces more troubling economic data. The whole saga of PM Trudeau's downfall is actually perfectly illustrated by the loonie; and it applies to a lot more than Canada. It's a warning to both existing governments as well as the successors who take over for them after voters have had enough. 

Eurodollar University's Money & Macro Analysis

Fox Canada’s Trudeau announces resignation following party pressure amid criticisms of Trump, budget handling
https://www.foxnews.com/world/canadas-trudeau-announces-resignation-following-party-pressure-amid-criticisms-trump-budget-handling

Bloomberg Canada’s Economy Shrank in November for First Time This Year
https://www.bloomberg.com/news/articles/2024-12-23/canada-s-economy-shrank-in-november-for-first-time-this-year

Bloomberg One in Four UK Firms Cut Jobs After Reeves Budget, PMI Shows
https://www.bloomberg.com/news/articles/2025-01-06/one-in-four-uk-firms-cut-jobs-after-reeves-tax-rise-pmi-shows

Bloomberg Number of UK Retailers in Distress Surge 25% in Fourth Quarter
https://www.bloomberg.com/news/articles/2024-12-27/number-of-uk-retailers-in-distress-surge-25-in-fourth-quarter

UK Independent Tax and pay hikes to see UK firms pay £2,300 more per low-wage worker in 2025
https://www.the-independent.com/news/uk/home-news/tax-ni-pay-wages-businesses-b2672875.html

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Eurodollar University's Money & Macro Analysis

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Eurodollar University's Money & Macro Analysis

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Something big happened in late November, impacting markets all around the world. Responsible for the crash in currencies, the collapse in some interest rates, maybe even some modest upset over in the stock market. We have a number of clues to go off, a few suspects to analyze. 

Eurodollar University's Money & Macro Analysis

CNBC Trump vows an additional 10% tariff on China, 25% tariffs on Canada and Mexico
https://www.cnbc.com/2024/11/26/trump-vows-an-additional-10percent-tariff-on-china-25percent-tariffs-on-canada-and-mexico.html

Truth Social 
https://truthsocial.com/@realDonaldTrump/posts/113546215408213585

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There are huge numbers being thrown around the stock market. Normally you can just ignore them since share prices go up almost no matter what. But these imbalances are now too big to simply dismiss and key sectors in the equity market aren't buying them. 

Eurodollar University's Money & Macro Analysis

WSJ Stocks on Pace for Best Two Years in a Quarter-Century
https://www.wsj.com/finance/stocks/stocks-on-pace-for-best-two-years-in-a-quarter-century-c5b5f9b3

NYT Wall St. Sees More Gains Ahead After Another Bumper Year for Stocks
https://www.nytimes.com/2024/12/31/business/stock-market-2025-predictions.html

Motley Fool Prediction: The Artificial Intelligence (AI) Bubble Will Burst in 2025. Here's Why.
https://www.barchart.com/story/news/30123360/prediction-the-artificial-intelligence-ai-bubble-will-burst-in-2025-heres-why

ECB Financial Stability Review November 2024
https://www.ecb.europa.eu/press/financial-stability-publications/fsr/html/index.en.html

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A plunge in Chicago kicks off more concerns over the global car business. Layoffs and plant closures keep coming as automakers are having enormous difficulties first aligning their businesses with the lack of recovery. On top of that, more indications beside Chicago pour in showing falling cyclical demand for cars, too. 

Eurodollar University's Money & Macro Analysis

Reuters Europe's embattled auto sector plans plant closures and layoffs
https://www.reuters.com/business/autos-transportation/europes-embattled-auto-sector-plans-plant-closures-layoffs-2024-12-02/

InsideEVs Honda's CEO Struggles To Explain Why Nissan Merger Makes Sense
https://insideevs.com/news/745625/honda-nissan-merger-struggling-reason/

Japan trade 
https://www.customs.go.jp/toukei/shinbun/trade-st_e/2024/2024115e.pdf

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The biggest surprise of 2024 wasn't any election results nor was it the fact central banks worldwide are more desperately accelerating rate cuts as the year draws to close. Or that other governments and officials are resorting to increasing panicky measures to calm markets in their areas. What caught everyone so off guard about '24 was the one outcome that stands behind all of those things. 

Eurodollar University's Money & Macro Analysis

IMF WEO January 2024
https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024

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After facing a major setback, the Reserve Bank of India has ditched its longshot desperation tactic aimed at 'speculators' betting against the rupee. They aren't the problem, the fundamentals are  - global fundamentals. There is a lot INR has to say about those as it becomes the latest to plunge. 

Eurodollar University's Money & Macro Analysis

Business Standard RBI dials down use of NDFs to fight dollar, balance rupee stability
https://www.business-standard.com/finance/news/rbi-dials-down-use-of-ndfs-to-fight-dollar-balance-rupee-stability-124121800613_1.html

Business Standard RBI asks some lenders to reduce speculative positions against rupee
https://www.business-standard.com/economy/news/reserve-bank-asks-some-lenders-to-cut-speculative-bets-against-rupee-124112200628_1.html

Business Standard Rupee falls to new low of 85.27 as importers stock up dollar at month end
https://www.business-standard.com/economy/news/rupee-falls-to-new-low-of-85-27-as-importers-stock-up-dollar-at-month-end-124122600861_1.html

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More indications of substantial problems for American workers - they can't find any jobs. But why? Moreover, what will it take to get this major hiring freeze to thaw? It isn't rate cuts or lower rates. Nor does it appear the election has worked, either. Consumers plunged back into fears over jobs and incomes in December.

Eurodollar University's Money & Macro Analysis

NBC News From 'Great Resignation' to 'Great Detachment': How the U.S. job market has slowed
https://www.nbcnews.com/business/economy/hard-to-find-a-job-get-hired-why-november-2024-jobs-report-rcna183102

Conference Board US Consumer Confidence Pulled Back in December
https://www.conference-board.org/topics/consumer-confidence

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Major shift in the Treasury curve with a critical spread uninverting for the first time in years. Bonds and central banks are on the move, which leaves some of Treasury market going the wrong way. And the only reason is Jay Powell. From swaps to other bonds, even something called term premia, the Fed is in the dark while bonds are lighting up. 

Eurodollar University's Money & Macro Analysis

FRBNY Term Premia calculations
https://www.newyorkfed.org/research/data_indicators/term-premia-tabs#/interactive

Bloomberg Treasury ‘Term Premium’ Gauge Positive for First Time Since 2021
https://www.bloomberg.com/news/articles/2023-09-27/treasury-term-premium-gauge-positive-for-first-time-since-2021

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LT Chinese bond rates have been falling fast for a while. Over the last two weeks, ST yields have completely collapsed; most of it last week, too. Why? Maybe more important, why now? The mainstream answer to either one is total nonsense and easily debunked from the September bazooka. What does that leave? Possibly an old familiar name. 

Eurodollar University's Money & Macro Analysis

Bloomberg Chinese Regulator Asks Insurers to Report Vanke Debt Holdings
https://www.bloomberg.com/news/articles/2024-12-18/chinese-regulator-asks-insurers-to-report-vanke-debt-holdings

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According to the latest conventional 'wisdom' - which changes with each and every CPI report and FOMC dot adjustment - inflation is back and so is the soft landing. The most recent update from the labor market says that's entirely backward. Job findings have utterly plunged right when the jobs market reaches that 'magical' unemployment inflection spot on this critical curve. 

Eurodollar University's conversation w/Steve Van Metre

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There's more to the Brazil story, especially since Brazil's story isn't strictly about Brazil. With markets there spiraling into chaos, the government is down to blaming 'speculators.' If that's the case, then speculation has gone global in a lot of critical ways. From currencies to job findings plunging, even something real like the Baltic Dry which is crashing now, too. 

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Bloomberg Brazil Central Bank Rejects Doubts Over Power of Monetary Policy
https://www.bloomberg.com/news/articles/2024-12-19/brazil-central-bank-rejects-doubts-over-monetary-policy

Bloomberg Brazil Traders ‘Sell First, Ask Later’ as Panic Hits Markets
https://www.bloomberg.com/news/articles/2024-12-17/brazil-traders-sell-first-ask-later-as-panic-sweeps-markets

FT Warren Buffett's record cash pile is starting to make people nervous
https://financialpost.com/financial-times/warren-buffett-cash-pile-investors-nervous

Bloomberg Brazil Finance Chief Says Real May Be Under ‘Speculative Attack’
https://www.bloomberg.com/news/articles/2024-12-18/brazil-finance-chief-says-real-may-be-under-speculative-attack

Bloomberg Brazil Spends $17 Billion in Reserves to Lift Cratering Real
https://www.bloomberg.com/news/articles/2024-12-20/central-bank-burns-17-billion-in-reserves-to-lift-brazil-s-real

Bloomberg Brazil’s Wealthy Lament Political Dysfunction as Fortunes Tumble
https://www.bloomberg.com/news/articles/2024-12-20/brazil-s-richest-people-lament-political-dysfunction-as-fortunes-tumble

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While everyone is hanging on the Fed and the FOMC's indecision about how many rate cuts next year, there are currency crises - plural - beginning to break out in key places. One of those is Brazil where it has gotten so dangerous the country's central bank is now regularly intervening in FX spot markets. What's really going on here? The black hole is angry.

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Stocks tanked, bond yields soared, the dollar jumped. All because the Fed doesn't know what it's going to do now? Partly, yeah. There's a lot more to the story, however. Given the tortuous road to rate cuts, it wasn't suddenly going to become smooth sailing now that they've started. 

Eurodollar University's Money & Macro Analysis

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Canada. France. Germany. What do they have in common? Central banks in each are cutting rates. Also, their governments have either collapsed or, Canada, about to. Why? Same reason there are rate cuts. It's not ideology nor really partisanship. It's the economy, stupid. 

Eurodollar University's Money & Macro Analysis

CNBC Canada finance minister quits after clash with Trudeau, deals blow to government
https://www.cnbc.com/2024/12/16/canada-finance-minister-quits-after-clash-with-trudeau-deals-blow-to-government-.html

Toronto Sun Trudeau says economy is great, Canadians can see truth
https://torontosun.com/opinion/columnists/trudeau-says-economy-is-great-canadians-can-see-truth

Bloomberg French Growth Prospects Slow as Political Uncertainty Weighs
https://www.bloomberg.com/news/articles/2024-12-16/france-s-growth-prospects-weaken-as-political-uncertainty-weighs
CNBC France’s new prime minister gets a baptism of fire after surprise Moody’s downgrade
https://www.cnbc.com/2024/12/16/frances-new-prime-minister-installed-hours-before-moodys-downgrade.html

NYT German Government Collapses at a Perilous Time for Europe
https://www.nytimes.com/2024/12/16/world/europe/germany-confidence-vote-scholz-snap-election.html

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Interest rates worldwide are hanging at the edge of a cliff. It may not seem like it from the current focus on the Fed and the possible pause in its rate cutting. This doesn't mean other central bank rate cuts, either. Instead, two very critical signals have absolutely plunged just in the past few days. Record lows in both are far more relevant than Jay Powell. 

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The dollar continues to threaten to make a big move higher. Not only is the main dollar index right at the top end of its multi-year range, the buck is creating big problems for major currencies. The more other central banks or authorities struggle to contain the fallout, the greater the chance for that breakout.  

Eurodollar University's conversation w/Steve Van Metre

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Update on T-bills. Last week's wild auctions repeated this week, only with flipped maturities. Other related data confirm the sharp demand as well as dealer participation in it. We discuss the implications plus dig into the reason why collateral is so important to begin with, and also why we don't know nearly enough about what's going on. 

Eurodollar University's Money & Macro Analysis

WEBINAR REPLAY, w/SPECIAL GUEST JIM RICKARDS
https://event.webinarjam.com/go/replay/26/7y53nc7mb44azzaw

FRBNY Primary Dealer Statistics
https://www.newyorkfed.org/markets/counterparties/primary-dealers-statistics

IOSCO Securities Lending Transactions: Market Development and Implications
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD96.pdf

OFR Why Is So Much Repo Not Centrally Cleared?
https://www.financialresearch.gov/briefs/files/OFRBrief_23-01_Why-Is-So-Much-Repo-Not-Centrally-Cleared.pdf

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Swiss shock - again. Now fearing outright deflation and over the next six months, SNB pulls the trigger on a fifty. Back in March, amidst the "sticky" "inflation" freakout, when the SNB was the first central bank to begin cutting rates it was a warning to other central bankers and the rest of the world what was coming wasn't more "inflation." OPEC concurs. 

Eurodollar University's Money & Macro Analysis

WEBINAR REPLAY, w/SPECIAL GUEST JIM RICKARDS
https://event.webinarjam.com/go/replay/26/7y53nc7mb44azzaw

SNB policy statement
https://www.snb.ch/en/publications/communication/press-releases-restricted/pre_20241212

CNBC Swiss National Bank takes leap with 50-basis-point interest rate cut amid franc strength
https://www.cnbc.com/2024/12/12/swiss-national-bank-takes-leap-with-50-basis-point-interest-rate-cut-amid-franc-strength.html

Chair Jerome H. Powell 
At the "Conference on Monetary Policy Strategy, Tools, and Communications Practices" sponsored by the Federal Reserve, Federal Reserve Bank of Chicago, Chicago, Illinois
https://www.federalreserve.gov/newsevents/speech/powell20190604a.htm

Bloomberg Franc Drop Seen Short-Lived With SNB Running Out of Room to Cut
https://www.bloomberg.com/news/articles/2024-12-12/swiss-franc-falls-to-two-week-low-affter-half-point-snb-rate-cut

Bloomberg OPEC Makes Deepest Cut Yet to 2024 World Oil Demand Forecast
https://www.bloomberg.com/news/articles/2024-12-11/opec-makes-deepest-cut-yet-to-2024-world-oil-demand-forecast

CNBC OPEC+ oil output delay a ‘reality check’ as group eyes demand, U.S. outlook, Saudi energy min says
https://www.cnbc.com/2024/12/06/opec-oil-output-delay-a-reality-check-as-group-eyes-demand-saudi.html

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Here comes Chinese central bank bond buying, but this is no QE. A report surfaced in China Daily strongly implying the Chinese government is beyond just exploring something called money-financed fiscal expansion. We'll go over what that is, how it is different from QE, and what the real takeaway is. 

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China Daily Unconventional monetary steps eyed
https://www.chinadaily.com.cn/a/202412/11/WS6758cfcca310f1265a1d2293.html

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Canada's official unemployment rate jumped in November, reaching its highest level since 2016 (outside 2020). And that was only the beginning. Given how highly synchronized US Treasury rates are with Canadian government bonds, not to mention the Fed and the Bank of Canada, we expect a lot of similarities in the real economy. This one is getting to be uncomfortably close. 

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Webinar w/Jim Rickards, Wednesday Dec 11 at 6:30pm ET. Sign up here:  https://event.webinarjam.com/register/26/x671piml

Yahoo!finance Canada's interest rates will likely fall. Where will they end up?
https://ca.finance.yahoo.com/news/canadas-interest-rates-will-likely-fall-where-will-they-end-up-150459864.html

CBC Jobless rate reaches 6.8% in November, highest since 2017, excluding pandemic
https://www.cbc.ca/news/business/jobs-unemployment-november-1.7403156

Bloomberg Canada Jobless Rate Jumps to 6.8%, Raising Odds of Big Cut
https://www.bloomberg.com/news/articles/2024-12-06/canada-jobless-rate-jumps-to-6-8-raising-odds-of-big-cut

Financial Post Canada's unemployment rate rises to 6.8%, raising odds of jumbo interest rate cut
https://financialpost.com/news/economy/canadas-unemployment-rate-rises-to-6-8

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China's top government body, the politburo, attempted to reignite the "stimulus" sentiment with another wordy communication chock full of more promises and platitudes. To begin with, this doesn't bode very well for the "bazooka." Global market reaction wasn't what Beijing was looking for, either. Even stocks and Economists. 

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Webinar w/Jim Rickards, Wednesday Dec 11 at 6:30pm ET. Sign up here:  https://event.webinarjam.com/register/26/x671piml

SCMP China’s consumer inflation hits 5-month low, leaves room for more stimulus
https://www.scmp.com/economy/economic-indicators/article/3289917/chinas-consumer-inflation-falls-short-november-factory-price-drag-continues

Bloomberg China Signals Bolder Stimulus for Next Year as Trump Returns
https://www.bloomberg.com/news/articles/2024-12-09/china-shifts-monetary-policy-stance-for-first-time-since-2011

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The BLS labor data had a chance to show that October's weakness really was just a combination of one-off factors, instead did everything to confirm that it wasn't those at all. That includes the headline payroll number, too. Unemployment is up and, when you properly account for everyone, up A LOT. Just like Canada.

Eurodollar University's conversation w/Steve Van Metre

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Wild week for a market that's supposed to be boring and go unnoticed. For the second straight month, heavy buying in bills right ahead of the payroll report. Except, in this case, buyers went utterly crazy for the 8-week bill in one of the most incredible bill auctions. But what is all this mess about? Yen, securities lending, and recession. 

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WEBINAR DEC 11 w/Jim Rickards
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Sign up for the webinar here https://event.webinarjam.com/register/26/x671piml

Eurodollar University's Money & Macro Analysis

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Recessions are a process and what past episodes all have in common is one key ingredient. Rather, one element that comes up missing every time. This critical factor doesn't just end up being the difference between downturn and full-blown contraction, it also turns a recession into a depression. And we've got the data for it plus how 2024 fits into the pattern. 

Eurodollar University's Money & Macro Analysis

Robert Shimer Reassessing the Ins and Outs of Unemployment
https://home.uchicago.edu/shimer/wp/reassess.pdf

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The Christmas shopping season is off to a poor start, with dim results coming in from various sources showing lower traffic and slower spending. The reason is easy enough to identify, starting with the latest labor report from the government. Hiring fell sharply before summer and never came back, all of that leading up to the holidays.

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WEBINAR DEC 11 w/Jim Rickards
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Bloomberg Tally of US Shoppers Slipped During Key Holiday Weekend
https://www.bloomberg.com/news/articles/2024-12-03/tally-of-us-shoppers-slipped-during-key-holiday-weekend

CSA Cyber Monday online sales hit new record of $13.3 billion
https://chainstoreage.com/cyber-monday-online-sales-hit-new-record-133-billion

Investing.com US JOLTs Job Openings Surpass Forecasts, Indicating Stronger Labor Market
https://za.investing.com/news/economic-indicators/us-jolts-job-openings-surpass-forecasts-indicating-stronger-labor-market-93CH-3450582

Observer.com ‘Ghost Jobs’ Are on the Rise—And They Are Hurting More Than Just Job Hunters
https://observer.com/2024/06/ghost-job-rise-labor-data/

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After a weekend of disappointing macro data (which was characterized as "mixed"), China's markets tanked. Not stocks, of course, instead more record lows in bonds plus a very sharp drop in CNY. As we know only too well, CNY DOWN = BAD and yuan is right back near multi-year lows. It's not the only one, either. 

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Bloomberg China’s Factory Activity Expands in Sign of Slow Recovery
https://www.bloomberg.com/news/articles/2024-11-30/china-s-factory-activity-continues-expansion-in-sign-of-recovery

Bloomberg China’s 10-Year Yield Sinks to Record Low on Bets PBOC Will Ease
https://www.bloomberg.com/news/articles/2024-12-02/china-s-10-year-yield-is-heading-toward-record-2-on-easing-bets

Bloomberg China Skips Politburo Readout as Investors Await Stimulus
https://www.bloomberg.com/news/articles/2024-12-02/china-skips-politburo-readout-as-investors-await-stimulus-clues

Bloomberg China Home Sales Drop Again as Sustained Stimulus Effect Missing
https://www.bloomberg.com/news/articles/2024-11-30/china-home-sales-drop-again-as-sustained-stimulus-effect-missing

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European banks have added a massive amount of government bonds to their holdings. At the same time, they refuse to lend into the real economy. Europe's depositories are hardly alone as we see the same defensive behavior all over the global system. There is only one reason why they all have become so incredibly defensive. 

Eurodollar University's conversation w/Steve Van Metre

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Black Friday/Cyber Monday Sale at Eurodollar University
https://www.eurodollar.university/black-friday

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India's RBI just recently has gone *massively* short the US dollar and in the NDF market, too, just to keep the crumbling rupee from sinking even more. This won't work exposing the central bank to losses and also potentially amplifying the downdraft in the currency. A big update on the fundamentals explains.

Eurodollar University's Money & Macro Analysis

Bloomberg India Plows Into NDF Market as It Fights Back Against Dollar
https://www.bloomberg.com/news/articles/2024-11-29/india-plows-into-ndf-market-as-it-fights-back-against-dollar

Bloomberg India’s Growth Shocker Puts Pressure on RBI to Cut Rates
https://www.bloomberg.com/news/articles/2024-11-29/india-s-economic-growth-weakens-to-almost-two-year-low

Bloomberg India’s Falling Wages Squeeze Urban Middle Class and Economy
https://www.bloomberg.com/news/articles/2024-11-29/india-s-falling-wages-squeezes-urban-middle-class-and-economy

Bloomberg RBI Inquiries on Liquidity Spur Speculation of Action Next Week
https://www.bloomberg.com/news/articles/2024-11-29/rbi-inquiries-on-liquidity-spur-speculation-of-action-next-week

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An entire batch of corporate reports from retailers to computer-makers, just in time for the key holiday season's critical moment. Each one warning that consumers in the US just aren't there, being held back. Why? The government also reported today with the answer to that question, the one factor that ties it all together. 

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Bloomberg Inflation-Battered Consumers Are Going to Extreme Lengths to Nab Holiday Deals
https://www.bloomberg.com/news/articles/2024-11-27/black-friday-deals-in-us-have-been-transformed-by-inflation

Bloomberg Kohl’s Troubles Deepen as Retailers Call Out Weak Spending
https://www.bloomberg.com/news/articles/2024-11-26/kohl-s-cuts-sales-outlook-on-weaker-spending-on-clothes-shoes

CNBC Retailers saw a dismal fall quarter. 
https://www.nbcnews.com/business/business-news/consumers-retailers-post-election-economic-outlook-rcna181794

CNBC HP forecasts first-quarter profit below estimates on sluggish demand in PC market
https://www.cnbc.com/2024/11/26/hp-earnings-report-q4-2024.html

Bloomberg Dell and HP Inc. Fall After Reporting Disappointing PC Sales
https://www.bloomberg.com/news/articles/2024-11-26/dell-reports-sales-that-miss-estimates-on-setback-for-pc-market

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Japan's yen has diverged from other currencies over the past few weeks, strengthening against the dollar. That suggests more carry trading dynamics, an interplay between different versions of them. Yes, there is more than one carry trade and understanding the distinctions is key to getting a sense of possible vulnerabilities here.

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Reuters Explainer: What are Japan's tactics based on latest suspected intervention?
https://www.reuters.com/markets/asia/what-are-japans-tactics-based-latest-suspected-intervention-2024-07-18

BIS Bulletin The market turbulence and carry trade unwind of August 2024
https://www.bis.org/publ/bisbull90.pdf

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Several critical financial measures continue to drop, reaching rather obscene comparisons. At first, that doesn't seem to make any sense; how would today be seen as similar to February 2009, for example. However difficult the economy is now, it certainly isn't that bad. What these measures are indicating go beyond specific moments, instead providing clues about a progression. 

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Is the bond selloff over? What caused it in the first place? With European rates, in particular, heading lower on recession (more than) risks, the tendency of Treasuries to converge with them raises the chances yields may not have much farther to go if they aren't topped out already. Given the fundamental background, it appears to be a matter of time more than anything. 

Eurodollar University's conversation w/Steve Van Metre

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The European situation is getting to be truly serious. And that means growing problems for...the dollar. Not the exchange value against other currencies, rather why that exchange value is rising and how trouble in Europe means trouble in global money. European banks have been back in a big way at the black hole's center. 

Eurodollar University's Money & Macro Analysis

President Ford Economic Report to Congress 1975
https://www.presidency.ucsb.edu/sites/default/files/books/presidential-documents-archive-guidebook/the-economic-report-of-the-president-truman-1947-obama-2017/1975.pdf

ECB Financial Stability Review
https://www.ecb.europa.eu/pub/pdf/fsr/ecb.fsr202411~dd60fc02c3.en.pdf

ECB Euro area banks as intermediators of US dollar liquidity via repo and FX swap markets
https://www.ecb.europa.eu/press/financial-stability-publications/fsr/focus/2024/html/ecb.fsrbox202411_04~9a4d04b582.en.html

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China and Japan selling record amounts of Treasuries. Do they hate the dollar? Donald Trump? You and me? Not only will we answer the questions, while those countries saw huge selling of USTs, curiously the Cayman Islands got a truly massive deposit of them and it showed up during July, August and September. Seems very carry trade-y. 

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A double whammy on US consumers. First, the government issued an alarming update to the biggest jobs data there is. Then retail giant Target stunned with its Q3 results and more so its guidance for Q4. The thing is, both of those are related; two sides of the macro coin. The one says the summer started really badly, the other it didn't get better. 

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Reuters Target raises 2024 profit forecast as price cuts draw shoppers
https://www.reuters.com/business/retail-consumer/target-raises-annual-profit-forecast-after-price-cuts-boost-quarterly-sales-2024-08-21/

CNBC Target shares plunge 20% after discounter cuts forecast, posts biggest earnings miss in two years
https://www.cnbc.com/2024/11/20/target-tgt-q3-2024-earnings.html

Bloomberg Target Shares Tumble After Retailer Cuts Profit Outlook
https://www.bloomberg.com/news/articles/2024-11-20/target-tgt-trims-profit-outlook-on-inventory-buildup-higher-costs

CNN As Americans bargain shop, six-figure earners flock to Walmart
https://www.cnn.com/2024/11/19/investing/walmart-stock-earnings/index.html

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Warren Buffett continues to sell tens of billions worth of stocks. Everyone wants to know why. This divergence between major stock index most likely holds the answer. Normally stock indexes don't mean much beyond their beauty, yet they can be important signals at times like now when they do diverge in such an obvious and sustained way. This is a key cyclical one, too. 

Eurodollar University's Money & Macro Analysis

CNBC Berkshire Hathaway’s cash fortress tops $300 billion as Buffett sells more stock, freezes buybacks
https://www.cnbc.com/2024/11/02/berkshire-hathaways-cash-fortress-tops-300-billion-as-buffett-sells-more-stock-freezes-buybacks.html

Franklin-Templeton 
https://www.franklintempleton.com/articles/equity-markets/the-foundry-quandary-owning-semis-late-in-the-cycle

Deloitte Industry Outlook
https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/semiconductor-industry-outlook.html

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The Federal Reserve reported a sharp rise in delinquencies, especially credit cards and auto loans. That wasn't all, as the New York branches also showed record high rejections strongly indicating where things really stand in the credit cycle. As a result, we have to pay some attention to CRTs, otherwise known as SRTs, the latest financial engineering akin to the 2020s version of credit default swaps. 

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FRBNY Household Debt and Credit Report Q3 2024
https://www.newyorkfed.org/microeconomics/hhdc/background.html

Bloomberg Ally Auto Borrowers With 2022 Loans Now Struggling, CFO Says
https://www.bloomberg.com/news/articles/2024-11-07/ally-auto-borrowers-with-2022-loans-now-struggling-cfo-says

Bloomberg Ally’s Charge-Offs, Bad-Loan Provisions Beat Expectations
https://www.bloomberg.com/news/articles/2024-07-17/auto-lender-ally-reports-stronger-than-expected-debt-management

Federal Reserve Frequently Asked Questions about Regulation Q
https://www.federalreserve.gov/supervisionreg/legalinterpretations/reg-q-frequently-asked-questions.htm

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Another retailer finds out the 2021 "recovery" was mostly an illusion. Prices may have soared and revenues looking good, it didn't last because it couldn't. As the company closes hundreds of stores and prepares to lay off an unknown number of workers, more stats show this is no isolated case. The cycle continues and continues to take its toll on businesses and workers alike. 

Eurodollar University's conversation w/Steve Van Metre

The yen and the euro are good currency indicators of global monetary conditions, but there are a couple even better and more consistent signals. When the 'dollar' goes up and these two are taking the hit because of it, that's when you really need to pay attention. It's not Trump, Jay Powell, interest rates or just random chance. 

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The dollar index jumped to a more than two-year high leaving everyone to ask why. Some say Trump, others the Fed. They might as well have said it was Burger King (who blames Wendy's). Though the dollar is rising here in the short run, to really understand what's going on you have to consider more than just developments in November 2024. This has been in the works for several years. 

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Reuters US dollar continues uptrend as Fed policy provides lift
https://www.reuters.com/markets/currencies/dollar-over-two-month-high-yen-near-150dlr-2024-10-15/

Bloomberg Wall Street Sees Dollar Soaring More, But Splits on How Much
https://www.bloomberg.com/news/articles/2024-11-12/dollar-s-trump-fueled-rally-unites-wall-street-on-bullish-bets

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After Germany's governing coalition collapsed last week, the country's ZEW added more solid evidence about why that was. The ZEW also collapsed into November. That's not just about Germany since the "zoo" is really what the rest of the world looks like from the German perspective. That also has a lot to say about the ongoing Treasury selloff (just like April).

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ZEW November 2024
https://www.zew.de/en/press/latest-press-releases/falling-economic-expectations-after-trump-victory

Bloomberg German Investor Confidence Slumps on Political Strife, Trump Win
https://www.bloomberg.com/news/articles/2024-11-12/german-investor-confidence-slumps-on-political-strife-trump-win

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The economic challenges the incoming Trump administration is facing are far and away greater than those confronted in 2016. From the cyclical standpoint, 2024 has far more in common with 2001. While structurally, there's nothing close to this in generations. Amidst the election euphoria there needs to be sober analysis. 

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Repo fails jumped by 50% in the latest weekly data, which just so happens to be the same week swap spreads plunged to record lows. It was also when the US economy, at least its labor data, took a turn for the worse. Understanding the connections between all these money and macro indications is critical. 

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Financial Times New York Fed examines banks’ role in money market turmoil
https://www.ft.com/content/83a5bb70-dbca-11e9-8f9b-77216ebe1f17

FOMC Chair Powell Press Conference Transcript October 2019
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20191030.pdf

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Credit card usage isn't really about spending. Americans use their credit cards when they're confident about jobs and incomes. The latest data from the Fed contains a more serious warning especially how it lines up with jobs and income data...and the Fed's actions. 

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Is there era of massive government "stimulus" finally over? Bonds are certain it is. The Chinese are doing their best to make sure that's the result, in large part because they don't know what to do. That much is becoming clear and the implications are already going global. Just ask anyone with oil.

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Bloomberg China Unveils $1.4 Trillion Debt Swap, Saves Stimulus for Trump
https://www.bloomberg.com/news/articles/2024-11-08/china-unveils-839-billion-debt-swap-to-rescue-local-governments

Bloomberg China Debt Plan Underwhelms Bond Market Betting on More Stimulus
https://www.bloomberg.com/news/articles/2024-11-08/china-bond-market-eyes-fiscal-plans-from-key-legislative-meeting

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Germany's government is the latest casualty of the "vibecession." Amid a flurry of political activity, the markets throw up another major warning with the first ever negative swap spread. Predictably, the mainstream media can't make sense of swaps, the situation, or the economics. It's the economy, stupid. 

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Bloomberg Germany’s Government Puts Itself Out of Its Misery
https://www.bloomberg.com/opinion/articles/2024-11-07/germany-s-coalition-government-puts-itself-out-of-its-misery

Bloomberg Fear of German Debt Binge Flips Key Market Gauge for First Time
https://www.bloomberg.com/news/articles/2024-11-07/fear-of-german-debt-binge-flips-key-market-gauge-for-first-time

Bloomberg Scholz Sees Germany Riding Out War in Ukraine Without Recession
https://www.bloomberg.com/news/features/2023-01-17/german-chancellor-olaf-scholz-on-2023-economic-outlook-war-in-ukraine

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Huge moves, major negatives, and record declines for one of the most critical pieces of the entire global system. While election euphoria has gripped certain financial markets, this one is doing the opposite. It is a key warning about where everything stands before even considering whether or not Trump's victory changes anything. 

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Demand for gasoil, the basic fuel which runs the entire modern world, is actually declining. Having stumbled over the summer, this exceptionally rare development is another really negative sign to go with, relatedly, even more production and job cuts across the auto industry. Energy, autos, economy. 

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Bloomberg Diesel Set For Growing Glut as Demand Falters
https://www.bloomberg.com/news/articles/2024-11-05/diesel-set-for-growing-glut-as-demand-falters

World Bank Commodity Markets Outlook
https://openknowledge.worldbank.org/server/api/core/bitstreams/bbda9ad3-4f12-4626-ad4b-94a4d20fbd52/content

Bloomberg OPEC Cuts Global Oil Demand Growth Forecasts for Third Consecutive Month
https://www.bloomberg.com/news/articles/2024-10-14/opec-cuts-global-oil-demand-growth-forecasts-for-third-consecutive-month

OPEC June 2
https://www.opec.org/opec_web/en/press_room/7339.htm

OPEC Sept 5
https://www.opec.org/opec_web/en/press_room/7369.htm

OPEC Nov 3
https://www.opec.org/opec_web/en/press_room/7409.htm

Bloomberg Even Some High-Income Americans Can’t Afford New Cars Anymore
https://www.bloomberg.com/news/articles/2024-11-04/soaring-2024-new-car-prices-turn-more-buyers-toward-used-vehicles

Nikkei Nissan cutting production of main U.S. models by 30%
https://asia.nikkei.com/Business/Automobiles/Nissan-cutting-production-of-main-U.S.-models-by-30

Guru Focus Nissan Cuts Production Amid Declining U.S. Demand, Threatening Global Sales Goals
https://www.gurufocus.com/news/2582356/nissan-cuts-production-amid-declining-us-demand-threatening-global-sales-goals

EuroNews Thousands of jobs to go at German car parts maker Schaeffler
https://www.euronews.com/business/2024/11/05/thousands-of-jobs-to-go-at-german-car-parts-maker-schaeffler

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Why are interest rates rising at one end of the yield at the same time falling on the opposite side? With more recession data coming in all the time, starting with payrolls, it seems as though there should be a uniform response from the marketplace. But that's not how steepening works. 

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Washington Post
House Passes Bush Tax Cut
https://www.washingtonpost.com/archive/politics/2001/03/09/house-passes-bush-tax-cut/99152799-f156-414f-82c4-bed4fca05bb3/

Time ‘The Worst Is Over’
https://time.com/archive/6917914/the-worst-is-over/

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October payrolls were exceptionally weak, yet LT rates jump? With more rate cuts from the Fed basically assured, questions swirl around the Treasury selloff having many people wondering if there is a 'Trump trade' going on here. The answers are right there in front of us.

Eurodollar University's conversation w/Steve Van Metre

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This isn't about October or hurricanes. Government just confirmed jobs market is in big f-ing trouble. 

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BLS Employment Situation October 2024
https://www.bls.gov/news.release/archives/empsit_11012024.pdf

CNN Messy October jobs report muddied by strikes and storms ahead of Election Day
 https://www.cnn.com/business/live-news/us-jobs-report-october-11-01-24/index.html

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The government's latest data confirms the dramatic slowdown sweeping across the labor market. We've been documenting hours being cut, quitters quitting quits, no one hiring, and now even a few layoffs. Not only do the latest figures back all that up, they also help explain consumer behavior and even the last GDP estimate. 

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CNBC Ford guides to low end of 2024 earnings forecast as it slightly tops Wall Street’s third-quarter expectations
https://www.cnbc.com/2024/10/28/ford-motor-f-earnings-q3-2024.html

Ford Q3 
https://media.ford.com/content/fordmedia/fna/us/en/news/2024/10/28/third-quarter-2024-financial-results.html

Challenger Gray & Christmas October 2024
https://www.challengergray.com/blog/job-cuts-fall-in-october-2024-but-ytd-up-4-from-last-year/

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Another seemingly solid US GDP report for the books thanks in large part to a huge allotment of missiles. Does this mean the soft landing has been achieved?  Even if it has been achieved, we wouldn't know it from GDP data. Instead, history shows cyclical changes all look decent just before them. The latest quarterly data is not just comparable, it is, surprisingly, worse than every other period entering recession.

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Repo fails make sense being an indicator of collateral difficulties. Same for the 4-week US Treasury bill rate when it falls substantially. But how does Japanese government bill yields fit into the US$ repo picture? And why are they such a solid fit for it? The answer lies in the carry trade and what it means for funding markets as well as US recession risks. 

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Bloomberg Mizuho Buys ‘Safe’ Assets on Risk That US Soft Landing Fails
https://www.bloomberg.com/news/articles/2024-10-08/mizuho-buys-safe-assets-to-cut-damage-if-us-soft-landing-fails

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Some unexpected bad news out of South Korea has implications for AI and a lot more. The investment boom triggered by ChatGPT has been a critical support for especially the Asian economy. Now there are signs it is cooling off along with a further setback in autos. Inopportune timing, to say the least.  

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Bloomberg South Korea’s Economy Ekes Out Growth as BOK Assesses Risks
https://www.bloomberg.com/news/articles/2024-10-23/south-korea-s-economy-ekes-out-growth-to-emerge-from-contraction

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Gold continues to soar to record highs, but why? Most will say inflation though bullion is actually a terrible inflation hedge. The reason why many people believe this is the one time during the Great Inflation. Gold's run in the seventies was instead about what happened in the sixties long before the inflation. And it's the same thing - the other end of it - that we're seeing today. 

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FRB Boston Bretton Woods Conference 1984
https://www.bostonfed.org/-/media/Documents/conference/28/conf28.pdf

Alan Greenspan Testimony Before the Committee on Banking and Financial Services, U.S. House of Representatives July 24, 1998
https://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

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A lot of people are asking if the Fed now regrets cutting rates by 50 bps in September, or maybe cutting at all. Recent data make it seem as though the soft landing never went anywhere, plus what appears to be happening with market interest rates. In truth, every part of this Fed "regret" trend is wrong, starting with the view from the central bank itself. 

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Federal Reserve Beige Books
https://www.federalreserve.gov/monetarypolicy/publications/beige-book-default.htm

FOMC Chair Powell Press Conference September 2024
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240918.pdf

Bloomberg Fed’s Beige Book Shows Little Growth Across Most of US
https://www.bloomberg.com/news/articles/2024-10-23/fed-s-beige-book-shows-little-economic-growth-across-most-of-us

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Another central bank moves up its rate cut plans, accelerating its rate reductions with a 50-bps cut. At the same time the IMF lowers growth projections and warns risks of more downside are rising. These two developments are related to the same thing. It's becoming clearer where this weakness is coming from and that's why the public sector is starting to become more aggressive. 

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Bank of Canada October 2024 Monetary Policy Report
https://www.bankofcanada.ca/wp-content/uploads/2024/10/mpr-2024-10-23.pdf

Bloomberg IMF Lowers Global Growth Forecast, Warns of Increasing Risks
https://www.bloomberg.com/news/articles/2024-10-22/imf-lowers-global-growth-forecast-warns-of-increasing-risks

IMF WEO October 2024 Policy Pivot, Rising Threats
https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024

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Huge thanks to Eric Basmajian and train-traveler Mike Green for answering member questions. Member/Subscriber Live Q&A recorded October 22, 2024.

We are seeing the full effects of the debt crisis paradox. And it only seems like a "paradox" from hte perspective of conventional wisdom on the matter. Government debt is indeed bad for the economy, but not AT ALL in the way most people are led to believe or assume. This creates another paradox, one where that mainstream criticism does a lot to discredit all criticism thereby making even more debt likely.  

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Milton Friedman Newsweek February 1981
https://miltonfriedman.hoover.org/internal/media/dispatcher/214251/full

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Does the Bank of Canada need to exist? Canada shares a lot more than just a common border with the US, interest rates, inflation, even changes in economic output. And those are all pointing in the wrong direction. The Canadian experience provides a perfect example of what globally synchronized really means in all its facets. 

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This may end up being the final straw for what's left of the global economy. With more highly negative signals from copper, gold, oil and swaps, even bond spreads here, we're getting more impressions that the part rolling recession is now rolling right on into the full thing. If this one goes, that's usually it. 

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Bloomberg Carmaker Misery Is Dragging Down Global Credit Market Returns
https://www.bloomberg.com/news/articles/2024-10-16/carmaker-misery-is-dragging-down-global-credit-market-returns

Bloomberg Rolling Manufacturing Recession Collides With US Election Angst
https://www.bloomberg.com/news/newsletters/2024-10-18/us-manufacturers-face-layoffs-weak-results-ahead-of-trump-harris-election

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A whopping 98% of American voters in one mainstream poll say the economy is a major concern, including 79% who rate it their top worry. Economists, the media, politicians, policymakers are at a loss to explain this. The latest data from the US government shows why that is, both the confusion and the underlying trouble. A vast majority of the evidence continues to consistently agree with what Americans are saying.

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NRF Census Retail Sales Data Shows Retail Sales Grew in September
https://nrf.com/media-center/press-releases/census-retail-sales-data-shows-retail-sales-grew-september

NRF CNBC/NRF Retail Monitor Shows Retail Sales Declined Monthly in September But Still Grew Year Over Year
https://nrf.com/media-center/press-releases/cnbc/nrf-retail-monitor-shows-retail-sales-declined-monthly-september

AP NORC
https://apnorc.org/projects/the-economy-tops-voters-minds-as-they-consider-their-vote-in-the-upcoming-election/

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Wall Street was rocked by a huge plunge in orders for ASML, a company which produces machines that touch practically every part of the global economy. That was followed by another four-letter firm, LVMH, which reported a shock decline in revenue. Both showing the same thing from very different angles, further confirming - along with swap markets - why there will be another leg down in interest rates.

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ASML Home
https://www.asml.com/en

ASML Q4 2023 Results
https://www.asml.com/en/news/press-releases/2024/q4-2023-financial-results

ASML Q3 2024 Results
https://www.asml.com/en/news/press-releases/2024/q3-2024-financial-results-dd3ac76a9d4d0f8c

Intel Q2 2024 Financial Results
https://www.intc.com/news-events/press-releases/detail/1704/intel-reports-second-quarter-2024-financial-results

LVMH Q3 2024 Results
https://www.lvmh.com/en/publications/lvmh-shows-good-resilience-in-the-current-context

NYT Shares of Louis Vuitton Owner Drop on Anxiety About Chinese Shoppers
https://www.nytimes.com/2024/10/16/business/dealbook/lvmh-dior-louis-vuitton-china.html

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We are in the thick of bank earnings and quarterly reports. The one theme they keep coming back to is...losses. It's become such a problem even JPM CEO Jamie Dimon snapped during his last earnings call. The thing is, in spouting off he told the truth about all of it. 

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Bloomberg Jamie Dimon Is Right. Forget the ‘Damn Number.’
https://www.bloomberg.com/opinion/articles/2024-10-14/jamie-dimon-is-right-analysts-need-to-look-beyond-their-models

Bank of America Quarterly Earnings
https://investor.bankofamerica.com/quarterly-earnings

JPM Third Quarter 2024 Results
https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2024/3rd-quarter/66269bb6-ecc5-4172-b461-6b7e7cd47aab.pdf

Citigroup Third Quarter 2024 Results
https://www.citigroup.com/rcs/citigpa/storage/public/Earnings/Q32024/2024pr-qtr3rslt.pdf

Bloomberg 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-says

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Another update from top Chinese officials on the status of "stimulus" comes amidst a flurry of macro and banking data from the country. While many will claim the former cancels out the increasingly grim nature of the latter, the previous data still matters at the very least to describe the size of the hole China will have to climb out of. Assuming it is even making a reasonable attempt to. That last press gathering provided few assurances. 

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China NBS Consumer Prices September 2024
https://www.stats.gov.cn/sj/zxfb/202410/t20241013_1956899.html

CNBC China’s Ministry of Finance is taking aim at local debt problems before tackling broader economic challenges
https://www.cnbc.com/2024/10/14/chinas-ministry-of-finance-tackles-debt-problems-before-economic-challenges.html

Caixin Exclusive: China May Add 6 Trillion Yuan in Treasury Bonds to Buttress Economy
https://www.caixinglobal.com/2024-10-14/exclusive-china-may-issue-6-trillion-yuan-in-treasury-bonds-to-buttress-economy-102245341.html

Reuters China's exports miss forecasts as lone bright spot fades
https://www.reuters.com/markets/asia/china-sept-export-growth-hits-5-month-low-global-demand-cools-2024-10-14/

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A big jump in jobless claims actually muddies the picture for the labor market. Meanwhile, consumer prices that many in the mainstream are claiming as sticky...are. But not for the reasons stated. We're seeing "sticky" prices in the technical sense, and that's not good. 

Eurodollar University's conversation w/Steve Van Metre 

Bloomberg Odd Lots Austan Goolsbee Explains the Fed’s Big Rate Cut
https://www.bloomberg.com/news/articles/2024-10-11/austan-goolsbee-explains-the-fed-s-big-rate-cut

Atlanta Fed Sticky Price CPI
https://www.atlantafed.org/research/inflationproject/stickyprice/

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The world’s major growth engine the past few years is showing more and worsening signs of finally cracking, including its currency hitting a record low just today. I’m not talking about the US, obviously, nor is it sickly China. India. If India has stumbled, too, as the rupee suggests, then there might be no escaping globally synchronized. 

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Bloomberg India’s Industrial Output Declines For First Time in Two Years
https://www.bloomberg.com/news/articles/2024-10-11/india-s-industrial-output-declines-for-first-time-in-two-years?srnd=phx-economics-v2

S&P Global
https://www.spglobal.com/en/research-insights/special-reports/india-forward/indias-growing-role-in-the-global-economy

HSBC India Total sales growth softens as export gains diminish
https://www.pmi.spglobal.com/Public/Home/PressRelease/8b2aeb7799e44b899c2651b5732e0878

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There is a story brewing in repo. Fails have broken a long run trend and they did it in early August. Latest data from FRBNY says that's still the case. It fits with a bunch of other data as well as brings up the ongoing unwind in the real yen carry trade. Finally, behind all of it is US recession fears driving fails, collateral, Japan's withdrawal, and more. And you don't have to take my word for it; hear it (or read it) straight from a carry trader himself. 

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Bloomberg Mizuho Buys ‘Safe’ Assets on Risk That US Soft Landing Fails
https://www.bloomberg.com/news/articles/2024-10-08/mizuho-buys-safe-assets-to-cut-damage-if-us-soft-landing-fails?srnd=phx-economics-v2

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While everyone - especially in Chinese and China-related stocks - get caught up in last month's "stimulus" frenzy, the overlooked the only real news that came out of it. Very quietly, the country's top bank regulator just casually mentioned the government was gathering a trillion yuan to "recapitalize" China's biggest six banks. Yeah. Meanwhile, volatility has hit the previously insane equity surge. 

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Bloomberg China to Add Capital at Big Banks for First Time in a Decade
https://www.bloomberg.com/news/articles/2024-09-24/china-to-boost-capital-at-mega-banks-for-first-time-in-a-decade

SCMP China weighs injecting US$142 billion of capital into top banks
https://www.scmp.com/business/china-business/article/3280008/china-weighs-injecting-us142-billion-capital-top-banks

Nikkei Asia China's state banks report more bad loans to hotels, restaurants and stores
https://asia.nikkei.com/Business/Finance/China-s-state-banks-report-more-bad-loans-to-hotels-restaurants-and-stores

Bloomberg China Markets Warn Xi That More Stimulus Is Needed to Fuel Rally
https://www.bloomberg.com/news/articles/2024-10-08/china-markets-warn-xi-that-more-stimulus-is-needed-to-fuel-rally

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Another recession warning and this one is related to brewing problems with unemployment. The September payroll report has put mainstream focus back on a soft- or no-landing scenario, but we've been there before not long ago. Meanwhile, apart from the unreliable payroll figure everything else continues to point to bigger trouble, including Americans who have stopped using their credit cards. 

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ABC News Blockbuster jobs report flexes economic strength, defying Americans' lukewarm attitudes
https://abcnews.go.com/Business/blockbuster-jobs-report-flexes-economic-strength-defying-americans/story?id=108887637

Challenger, Gray & Christmas Job Cuts Flat in September 2024 from August; YTD Surpasses 2023
https://www.challengergray.com/blog/job-cuts-flat-in-september-2024-from-august-ytd-surpasses-2023/

Robert Shimer Reassessing the Ins and Outs of Unemployment
https://home.uchicago.edu/~shimer/wp/reassess.pdf

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US economic weakness continues to show up outside the country as much as inside (last payroll estimate notwithstanding). Japan's government leading indicator just tanked, lowest value since 2020 and pointing to growing trouble in Japan. Same from Mexico and even according to one by JP Morgan. 

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Bloomberg Ueda Hints at Dovishness After New Prime Minister Urges Caution
https://www.bloomberg.com/news/articles/2024-10-02/ueda-hints-at-dovishness-after-new-prime-minister-urges-caution

S&P Global Mexico Manufacturing PMI
https://www.pmi.spglobal.com/Public/Home/PressRelease/5cbff538ec56483b8e9a77ce7c1c252e

JP Morgan Global Composite
https://www.pmi.spglobal.com/Public/Home/PressRelease/80a2d5d7d8554f7f909ba9ae30fd4016

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September's payroll estimate soared WAY above expectations. Is it a Fed miracle? This isn't the first time this has happened; in fact, each of the last two times the FOMC began cutting rates met eerily similar results. Steve and I talk about what those were and why, also why that means everything right now. 

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September 2024 Payroll Report
https://www.bls.gov/news.release/empsit.nr0.htm

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The bond rally is now one year old and it finally got to the point where central banks - including the Fed - are getting out of the way. Now that the market got what it "wants", there's no stopping it, right? Not quite. Nothing ever goes in a straight line, starting with policy pivots. The market will always surprise you. 

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There are several ways to know that the second phase for the global recession has started. While there is never a clear demarcation between any stages or just recession, for that matter, there are telltale signs and we are getting them bigtime. Summer keeps showing up as full of warnings, including one that explains everything from the economy to central bankers' increasingly panicking reaction to it. 

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Bloomberg ECB Can’t Ignore Headwinds to Economic Growth, Schnabel Says
https://www.bloomberg.com/news/articles/2024-10-02/ecb-can-t-ignore-headwinds-to-economic-growth-schnabel-says

Bloomberg ECB Momentum for an October Rate Cut Is Looking Unstoppable
https://www.bloomberg.com/news/articles/2024-10-02/ecb-momentum-for-an-october-rate-cut-is-looking-unstoppable

Bloomberg ECB Should Proceed Cautiously With Rate Cuts, Schnabel Warns
https://www.bloomberg.com/news/articles/2024-08-30/ecb-should-proceed-cautiously-with-rate-cuts-schnabel-warns

Nikkei Transcript: ECB board member Isabel Schnabel speaks with Nikkei
https://asia.nikkei.com/Editor-s-Picks/Interview/Transcript-ECB-board-member-Isabel-Schnabel-speaks-with-Nikkei

FT Lower borrowing costs risk ‘flare-up’ of inflation, warns ECB policymaker
https://www.ft.com/content/bdf3bb86-8a80-4bd5-b562-0c3c47f85f50

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The Bank of Japan's very recent change of heart has apparently been strong enough to do the same for incoming Prime Minister Shigeru Ishiba. Sounding aggressively hawkish where it came to interest rates just last week after his surprise ascent, suddenly he's completely changed his tune. Why? The answer can be found in another record low for a highly critical US$ market. 

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Bloomberg Ueda Keeps Rate Hikes in Play, Talks Down BOJ’s Part in Meltdown
https://www.bloomberg.com/news/articles/2024-08-23/boj-s-ueda-still-plans-to-hike-rates-if-economy-meets-outlook

Bloomberg Ueda Reiterates That BOJ Will Lift Rates If Outlook Realized
https://www.bloomberg.com/news/articles/2024-09-03/boj-ueda-reiterates-stance-of-lifting-rates-if-outlook-realized

The New York Times Stocks in Japan Tumble After Party’s Election of New Prime Minister
https://www.nytimes.com/2024/09/29/business/japan-stocks-nikkei-shigeru-ishiba.html

CNBC Here’s why Japan’s stocks are plunging after Shigeru Ishiba’s win
https://www.cnbc.com/2024/09/30/heres-why-japans-stocks-are-plunging-after-shigeru-ishibas-win.html

BNN Bloomberg Ishiba Ally Sends Signal to Warn BOJ Against Rate Hike Too Soon
https://www.bnnbloomberg.ca/business/international/2024/10/02/japans-ishiba-isnt-necessarily-pro-boj-hike-new-minister-says/

Bloomberg Japan’s Ishiba Rules Out BOJ Interest Rate Hikes For Now
https://www.bloomberg.com/news/articles/2024-10-02/boj-s-ueda-briefs-new-pm-ishiba-on-market-developments

Bloomberg Ueda Hints at Dovishness After New Prime Minister Urges Caution
https://www.bloomberg.com/news/articles/2024-10-02/ueda-hints-at-dovishness-after-new-prime-minister-urges-caution

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Jay Powell again reiterated that he believes the economy is "on solid footing." The most recent data on the labor market shows he's either wrong or lying. There is no equivocating these latest estimates in which hiring has collapsed. As if that wasn't enough, it was backed up by other sources. All of it pointing to summertime being the time for recession. It's all about hiring, and that has all but disappeared. 

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Bloomberg Powell Says Fed Not in a Hurry, Will Lower Rates ‘Over Time’
https://www.bloomberg.com/news/articles/2024-09-30/powell-says-fed-will-move-over-time-to-more-neutral-stance

Bloomberg Fed’s Goolsbee Sees ‘Many More’ Rate Cuts Over the Next Year
https://www.bloomberg.com/news/articles/2024-09-23/fed-s-goolsbee-sees-many-more-rate-cuts-over-the-next-year

CNN A sign of strength in the labor market: Job openings increased in August
https://www.cnn.com/2024/10/01/economy/us-jolts-job-openings-layoffs-august/index.html

ISM September 2024 Manufacturing ISM Report On Business
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/september/

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Car stocks got clobbered as the global auto industry is heading for a major fall. There was a flood of announcements from carmakers all over the world this weekend as carmakers are facing very difficult choices. The fallout from the growing reverse will be profound given how important a rising auto market had been up to now. 

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Stellantis Updates 2024 Financial Guidance
https://www.globenewswire.com/news-release/2024/09/30/2954870/0/en/Stellantis-Updates-2024-Financial-Guidance.html

Bloomberg Stellantis Cuts Forecasts in Further Blow to Besieged Carmakers
https://www.bloomberg.com/news/articles/2024-09-30/stellantis-cuts-2024-forecast-on-costs-for-us-global-slowdown

Dow Jones Aston Martin shares fall 25% after warning blamed on supply disruptions, China
https://www.morningstar.com/news/marketwatch/2024093033/aston-martin-shares-fall-25-after-warning-blamed-on-supply-disruptions-china

Volkswagen AG updates its forecast for the 2024 financial year
https://www.volkswagen-group.com/en/ad-hoc/volkswagen-ag-updates-its-forecast-for-the-2024-financial-year-18698

The Guardian Volkswagen has ‘a year, maybe two to turn around’, financial chief warns
https://www.theguardian.com/business/article/2024/sep/04/volkswagen-has-a-year-maybe-two-to-turn-around-financial-chief-warns

Bloomberg VW’s Second Profit Warning Exposes a Carmaker in Decline
https://www.bloomberg.com/news/articles/2024-09-30/volkswagen-s-second-profit-warning-exposes-a-carmaker-in-decline

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Now that everyone is coming to grips with economic weakness, particularly where it comes to employment conditions, understanding the high potential for a lot more or worse, people are trying to figure out where it is coming from therefore what might be done to turn it all around. Did the Fed break the economy? Are employers worried about the next President? 

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Americans continue to say they're alarmed about job prospects. That's what consumer confidence is truly about, not consumer spending. Workers see and understand labor market shifts before they show up in the major data sources. The latest income data show there is every reason to believe what consumers are seeing. 

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Conference Board September 2024
https://www.conference-board.org/topics/consumer-confidence/press/CCI-Sep-2024

FRBNY Consumer Confidence: A Useful Indicator of . . . the Labor Market?
https://libertystreeteconomics.newyorkfed.org/2013/09/consumer-confidence-a-useful-indicator-of-the-labor-market/

FRBNY Survey of Consumer Expectations
https://www.newyorkfed.org/microeconomics/sce#/earnuncert-1

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Not content to leave it with the PBOC's Oprah-fest of rate cutting, China's central authorities announced what's being called a massive stimulus push. The response has been near-euphoria in Chinese and other stocks, but the opposite in more crucial markets and places. All the more curious given how much other "stimulus" is being offered around the world, central bank rate cuts that are accelerating. 

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The Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work.
https://www.gov.cn/yaowen/liebiao/202409/content_6976686.htm

Reuters Exclusive: China to issue $284 billion of sovereign debt this year to help revive economy
https://www.reuters.com/markets/asia/china-issue-284-bln-sovereign-debt-this-year-help-revive-economy-sources-say-2024-09-26/

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It's not just USTs. Rates are falling all over the world faster in shorter maturities than long. That means a global wave of un-inversions and bull steepening right as more and more central banks plan to accelerate their own rate cutting. All of it for the same reason. Globally synchronized.

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NBB Is a recession imminent? The signal of the yield curve
https://www.nbb.be/doc/ts/publications/economicreview/2019/ecorevi2019_h4.pdf

Bloomberg Riksbank Cuts Rate Again and Opens Door to Half-Point Move
https://www.bloomberg.com/news/articles/2024-09-25/riksbank-cuts-rate-a-quarter-point-and-opens-door-to-bigger-move

Chinese authorities held a surprise press conference early this morning where PBOC Governor Pan Gongsheng did his best Oprah Winfrey impression handing out rate cuts to practically everyone. All that does is further expose the gravity of the situation: the more the central bank or any authority does, the worse you know it is since rate cuts never work. China just announced a lot of them. 

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Bloomberg China Unleashes Stimulus Package to Revive Economy, Markets
https://www.bloomberg.com/news/articles/2024-09-24/china-frees-banks-to-lend-more-cuts-key-interest-rate

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More confirmation that recession is coming back with a vengeance in Europe. The latest data indicates the dangers this time around including jobs and layoffs. This situation in Europe is hardly unique. This is why central bankers are out in force downplaying their own rate cuts; to the point a few policymakers are outright lying why they voted for them.  

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Bloomberg Fed’s Waller Says Slowing Inflation Led Him to Support Large Rate Cut
https://www.bloomberg.com/news/articles/2024-09-20/waller-says-slowing-inflation-led-him-to-support-large-rate-cut

Bloomberg Fed’s Kashkari Says Interest-Rate Hikes Not Entirely Ruled Out
https://www.bloomberg.com/news/articles/2024-05-28/fed-s-kashkari-says-rate-hike-not-entirely-ruled-out

Bloomberg Fed’s Neel Kashkari Expects Two Quarter-Point Cuts Before Year’s End
https://www.bloomberg.com/news/articles/2024-09-23/neel-kashkari-backed-fed-s-large-cut-and-another-half-point-this-year

Bloomberg Fed’s Bostic Says He Now Might Favor More Than One 2024 Cut
https://www.bloomberg.com/news/articles/2024-08-23/fed-s-bostic-says-he-now-might-favor-more-than-one-cut-this-year

Atlanta Fed On the State of the US Economy and Monetary Policy
https://www.atlantafed.org/news/speeches/2024/09/23/bostic--on-the-state-of-the-us-economy-and-monetary-policy

S&P Global  S&P Global Flash US Composite PMI September 2024
https://www.pmi.spglobal.com/Public/Home/PressRelease/35c60149cdbe461fb6bc3c959a58a551

S&P Global/Hamburg Commercial Bank HCOB Flash Eurozone PMI September 2024
https://www.pmi.spglobal.com/Public/Home/PressRelease/cf25d7bb494046ae9256a00ca028f09a

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The Fed just cut its benchmark rate by 50-bps even though jobless claims are among the lowest in their history. At the same time, CPI shelter prices have accelerated. Neither seems like it would warrant the Fed action yet there are good reasons to believe true unemployment is very different from claims and current market rents are plunging. 

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FedEx's CEO admitted some truth about the Fed's rate cut this week, and the stock was immediately punished for it, dropping 15% on Friday. This raises a bunch of questions, starting with: what happens to stocks in general when the Fed cuts rates? The answer is not what you think.

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CNBC FedEx quarterly profit disappoints as demand for speedy delivery wanes
https://www.cnbc.com/2024/09/19/fedex-reports-drop-in-quarterly-earnings-on-lower-demand-for-priority-services.html

Robert Shiller 2013 Nobel Speculative Asset Prices
https://www.nobelprize.org/uploads/2018/06/shiller-lecture.pdf

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Now that the Fed has done it, everyone wants to get in on the act. They call it "undershooting" which is just a fancy word for "bonds were right." Switzerland, Canada, even the Europeans all thinking hefty and accelerated schedules. Leave it to the Brits to be the lone exception. 

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Bloomberg Bank of Canada Officials Split on Balance of Inflation Risks
https://www.bloomberg.com/news/articles/2024-09-18/bank-of-canada-officials-are-split-on-balance-of-inflation-risks

Bloomberg Swiss Government Sees Sharp Drop in Inflation Rate Next Year
https://www.bloomberg.com/news/articles/2024-09-19/swiss-government-sees-sharp-drop-in-inflation-rate-next-year

Bloomberg Swiss Economists See ‘Substantial’ Chance of SNB Half-Point Cut
https://www.bloomberg.com/news/articles/2024-09-19/swiss-economists-see-sustantial-chance-of-snb-half-point-cut

Politico EU Portuguese bank chief: ECB may need to accelerate interest rate cuts
https://www.politico.eu/article/mario-centeno-ecb-may-need-accelerate-easing-interest-rate-date-bank-portugal/

ZEW Hopes of a Recovery Are Fading
https://www.zew.de/en/press/latest-press-releases/hopes-of-a-recovery-are-fading

Bloomberg Germany May Already Be in Mild Recession, Bundesbank Says
https://www.bloomberg.com/news/articles/2024-09-19/germany-may-already-be-in-mild-recession-bundesbank-says

Euronews US chip-maker Intel has announced plans to postpone the construction of a factory in Germany for at least two years.
https://www.euronews.com/business/2024/09/17/intel-postpones-construction-of-german-chip-factory-for-two-years

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The Fed cut its benchmark rates by 50 bps in a panicky move to catch up to both the economy and the marketplace. Reaction in the latter was muted because this wasn't unexpected. All the FOMC did was confirm everything - and then deny that it did. 

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Bloomberg Fed Minutes Show Officials Rally Around Higher-for-Longer Rates
https://www.bloomberg.com/news/articles/2024-05-22/minutes-show-officials-rallying-around-higher-for-longer-rates

FOMC September statement
https://www.federalreserve.gov/monetarypolicy/files/monetary20240918a1.pdf

FOMC September projections
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf

FOMC June projections
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240612.pdf

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People imagine a recession is when masses of people are being laid off and so consumer spending isn't just negative, it must be crashing. While those can happen in a downturn, they tend to show up at the end. So, if you're waiting for those to make a determination you'll be way too late. Evidence consistently and conclusively shows hiring not firing creates the recession environment that is marked by a drop in real spending. We have both.

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Robert Shimer Reassessing the Ins and Outs of Unemployment∗
https://home.uchicago.edu/~shimer/wp/reassess.pdf

Challenger, Gray & Christmas Job Cuts Announced by US-Based Companies Surge in August 2024; Hiring Falls to Lowest YTD Since Challenger Began Tracking in 2005
https://www.challengergray.com/blog/job-cuts-announced-by-us-based-companies-surge-in-august-2024-hiring-falls-to-lowest-ytd-since-challenger-began-tracking-in-2005/

NYT Layoffs Are Few. So Why Are Jobs Harder to Find?
https://www.nytimes.com/2024/09/12/business/economy/layoffs-jobs-economy.html

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Americans' hopes and dreams of better opportunities have utterly crashed and burned over the past five months. This isn't about more price increases, rather how those in the past have combined with recession prospects to rob the future. The 2020s have taken the worst aspect of the 2010s and added more trouble on top. 

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Larry Summers The Age of Secular Stagnation
https://larrysummers.com/2016/02/17/the-age-of-secular-stagnation/

Larry Summers IMF Accepting Secular Stagnation
https://www.imf.org/en/Publications/fandd/issues/2020/03/larry-summers-on-secular-stagnation

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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. 

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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. 

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China Xinhua Xi Jinping presided over a symposium on comprehensively promoting ecological protection...
https://www.gov.cn/yaowen/liebiao/202409/content_6974190.htm

Bloomberg 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-doubt

Bloomberg 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-intervention

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-stage

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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. 

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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-v2

Volkswagen 2023 Annual Report Income Statement
https://annualreport2023.volkswagen-group.com/consolidated-financial-statements/income-statement.html

Volkswagen 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.html

Bloomberg 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-ice

Statista 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.html

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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. 

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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-rules

Bloomberg Ally Drops After CFO Flags Consumer Stress, Underperformance
https://www.bloomberg.com/news/articles/2024-09-10/ally-drops-after-cfo-flags-consumer-stress-underperformance

Bloomberg 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-says

FRBNY Household Debt and Credit Report
https://www.newyorkfed.org/microeconomics/hhdc.html

CNBC 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.html

Bloomberg 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-loans

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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. 

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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-updates

FOMC Transcript Conference Call January 3, 2001
https://www.federalreserve.gov/monetarypolicy/files/FOMC20010103ConfCall.pdf

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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. 

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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-stage

Wall 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=cb

China's NBS Consumer Prices August 2024
https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956311.html

China's NBS Producer/Factory Gate Prices August 2024
https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956310.html

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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. 

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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?

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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. 

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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-delegate

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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. 

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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.pdf

Arthur Burns Testimony before Congress Joint Economic Committee June 1971
https://fraser.stlouisfed.org/files/docs/historical/burns/Burns_19710630.pdf?utm_source=direct_download

Arthur Burns Testimony before Congress Joint Economic Committee July 1971
https://fraser.stlouisfed.org/files/docs/historical/burns/Burns_19710723.pdf?utm_source=direct_download

NYT 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.html

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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.

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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.html

CNBC 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.html

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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.

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FRB Michael Barr The Importance of Effective Liquidity Risk Management
https://www.federalreserve.gov/newsevents/speech/barr20231201a.htm

Reuters 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=en

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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. 

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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.html

The Globe & Mail Crude Prices Fall on Energy Demand Concerns and Increased Russian Crude Exports

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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.htm

BLS 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.htm

Challenger, 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/

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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. 

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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.pdf

CNBC 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.html

CNBC Lululemon cuts guidance, misses sales estimates after botched product launch
https://www.cnbc.com/2024/08/29/lululemon-lulu-earnings-q2-2024.html

Morningstar 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-hold

UBS “Vibecession”? - The paradox between hard data and sentiment
https://www.ubs.com/us/en/wealth-management/insights/market-news/article.1608955.html

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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.

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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.html

FRB Philadelphia August 2024 Nonmanufacturing Business Outlook Survey
https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/nbos-2024-08

Fifth District Survey of Service Sector Activity
https://www.richmondfed.org/region_communities/regional_data_analysis/surveys/service_sector

Texas Service Sector Outlook Survey
https://www.dallasfed.org/research/surveys/tssos/2024/2408

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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.

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IFO Business Climate Index deteriorates (August 2024)
https://www.ifo.de/en/facts/2024-08-26/ifo-business-climate-index-deteriorates-august-2024

Dow Jones German business increasingly in trouble, Ifo survey finds
https://www.morningstar.com/news/marketwatch/2024082620/german-business-increasingly-in-trouble-ifo-survey-finds

WSJ 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-944996b5

S&P Global/HCOB Germany PMIs August 2024
https://www.pmi.spglobal.com/Public/Home/PressRelease/3c59ed1870c24259ac3e62cfb7792724

deStatis Germany June Trade
https://www.destatis.de/EN/Press/2024/08/PE24_300_51.html

Bundesbank 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

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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.

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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-firms

CNBC 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.html

Bloomberg 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-v2

Bloomberg 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-v2

Bloomberg 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-frenzy

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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.

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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.pdf

FT People are flipping out about T-bill issuance
https://www.ft.com/content/f0f62f0b-fee2-463a-a075-3b8dab333f40

TBAC Fiscal Year 2023 Q3 Report
https://home.treasury.gov/system/files/221/TreasuryPresentationToTBACQ32023.pdf

TBAC April 30, 2024
https://home.treasury.gov/system/files/221/TBACCharge1Q22024.pdf

CNN '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-business

Bloomberg 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-economy

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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. 

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Jay Powell Jackson Hole
https://www.federalreserve.gov/newsevents/speech/files/powell20240823a.pdf

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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. 

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EDU YT Japan is buying MASSIVE Amounts of Junk Credit
https://www.youtube.com/watch?v=_a_2J6mU48o

CNBC Jay Powell Jackson Hole
https://www.youtube.com/watch?v=zpiMF6bZ0sg

Text of Powell Speech
https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm

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The economy really has deteriorated quickly, enough that what seemed highly unlikely if not impossible early in July was very near to happened at the end of the month. I said a July Fed rate cut was in play on the 3rd and now according to the FOMC's minutes...it was. That, along with panicky central bankers seeking to quicken the pace of cutting, is definitely not a good sign. 

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EDU YT This Could Force the Fed to Cut Rates in July
https://www.youtube.com/watch?v=B03jMrfetks

 Pascal Michaillat, Emmanuel Saez Has the Recession Started? August 2024
https://pascalmichaillat.org/16.pdf

FOMC July 2024 minutes
https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240731.pdf

Politico Sharp slowdown in wage growth boosts ECB rate cut hopes
https://www.politico.eu/article/big-slowdown-in-wages-boosts-ecb-rate-cut-hopes/

Bloomberg ECB’s Rehn Says Growth Risks Bolster Case for September Cut
https://www.bloomberg.com/news/articles/2024-08-19/ecb-s-rehn-says-growth-risks-bolster-case-for-september-cut

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Was Macy's the latest victim of the strong labor market? That doesn't make sense, of course, and now the government data has been revised massively lower to better align what really happened last year with where we are this year. The new figures show not just one-third fewer jobs gained, more importantly what that does the rate of change in the rate of change (2nd derivative). It ends up in Macy's sales forecast.

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CNBC Macy’s cuts sales forecast as department stores struggle to draw shoppers
https://www.cnbc.com/2024/08/21/macys-m-q2-2024-earnings.html

Macy's Quarterly Results
https://www.macysinc.com/newsroom/news/news-details/2024/Macys-Inc.-Reports-Second-Quarter-2024-Results/default.aspx

BLS QCEW Home
https://www.bls.gov/cew/

BLS QCEW CES Preliminary Benchmark Announcement
https://www.bls.gov/web/empsit/cesprelbmk.htm

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Gold jumped to another record high at the same time stocks are back closing in on theirs. Only two weeks after global financial chaos that has everyone wondering where things are heading, the implications of each could not be more different. So, where does everything else stack up? Is it just gold vs equities?

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Reuters Gold extends record rally on dollar weakness, rate-cut bets
https://www.reuters.com/markets/commodities/gold-steady-near-record-high-investors-seek-more-fed-cues-2024-08-20/

Bloomberg S&P 500’s Furious ‘Momentum Rally’ Takes a Break: Markets Wrap
https://www.bloomberg.com/news/articles/2024-08-19/stock-market-today-dow-s-p-live-updates

CNBC U.S. crude oil falls nearly 3% as U.S. pushes for Gaza cease-fire, China demand weighs on market
https://www.cnbc.com/2024/08/19/crude-oil-prices-today.html

Bloomberg Diesel Demand Hits 26-Year Seasonal Low in US on Slowing Economy
https://www.bloomberg.com/news/articles/2024-05-31/diesel-demand-hits-26-year-seasonal-low-in-us-on-slowing-economy

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Economists and officials therefore the financial media continue to downplay the plunge in US consumer confidence, repeatedly referring to it as a "vibe-cession" that doesn't fit with the current data or modeled forecasts. History, common sense, and even econometric math isn't on their, or the data's, side. All of those say unemployment is about to surge.

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Washington Post Why We're Gloomier Than The Economy
https://www.washingtonpost.com/wp-dyn/content/article/2008/06/17/AR2008061702463_pf.html

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Revisions are a normal part of high frequency data. Constant, near-exclusive downward revisions are not. Rewrites should be more evenly distributed which means these stats are overstating the economy. Plus, the problem is spreading hitting retail sales and IP as well as payrolls. While everyone went nuts over retail sales, the problem with July's number isn't just the likely downward revision.

Eurodollar University's conversation w/Steve Van Metre

Bloomberg Fed’s Goolsbee Says He’s Growing More Concerned About Employment
https://www.bloomberg.com/news/articles/2024-08-14/fed-s-goolsbee-says-he-s-growing-more-concerned-about-employment

Bloomberg Manufacturers Axe Products as a Factory Slowdown Lingers
https://www.bloomberg.com/news/newsletters/2024-08-16/rockwell-rok-xylem-xyl-axe-products-as-factory-slowdown-deepens

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Financial volatility. Recession conditions. Lower growth and inflation. The rate cuts are still coming. So, that means interest rates around the world are about to go...UP? The fundamentals haven't changed - the calendar has. 

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Steel prices are plunging, down a quarter since May at lows not seen since 2016. The chairman of the world's largest producer just said he expects it to get much worse in terms of prices and for industry. The implications are far broader than steel or China. 

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Bloomberg World’s Biggest Steel Producer Warns of ‘Severe’ Industry Crisis
https://www.bloomberg.com/news/articles/2024-08-14/china-steel-industry-in-crisis-as-baowu-warns-of-severe-winter

Bloomberg ArcelorMittal Cries Foul on Steel Exports From China
https://www.bloomberg.com/news/articles/2024-08-01/arcelormittal-cries-foul-on-china-steel-exports-as-profit-falls

Bloomberg Iron Ore Takes Fresh Hit as Concerns Over Global Glut Exact Toll
https://www.bloomberg.com/news/articles/2024-08-12/iron-ore-in-retreat-as-concerns-over-global-surplus-take-toll

S&P Global China's steel output remains strong; downstream outlook still dim
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/metals/071524-chinas-steel-output-remains-strong-downstream-outlook-still-dim

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This was supposed to be all about "inflation" and instead everything is coming up jobs - including the latest CPI report. From Home Depot's most recent admission to now US refiners taking drastic steps to avoid getting caught with an energy glut (yep, that's right), the entire economy flipped from "sticky inflation" to Uh-Oh over employment. 

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Bloomberg It’s Inflation Week in the US. But Everyone’s Talking About Jobs
https://www.bloomberg.com/news/newsletters/2024-08-12/fed-rate-cuts-it-s-us-inflation-week-and-everyone-s-talking-jobs

Home Depot 
https://corporate.homedepot.com/news/earnings/home-depot-announces-second-quarter-2024-earnings

CNBC Home Depot expects sales to weaken as consumers grow more cautious
https://www.cnbc.com/2024/08/13/home-depot-hd-q2-2024-earnings.html

Bloomberg Oil Refiners in US Slow Down, Stoking Global Crude Glut Worries
https://www.bloomberg.com/news/articles/2024-08-11/oil-refiners-in-us-slow-down-stoking-global-crude-glut-worries

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While the world was distracted by US recession provoking a Japanese stock market crash, China was continuing to meltdown. In just the past few days the country reported: a record drop in foreign money fleeing China; the first contraction in bank lending to the real economy in nineteen years; record low market interest rates; and the PBOC going off the rails trying to derail that bond rally. And we thought China was in rough shape...last month. 

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Bloomberg China Goes to New Extreme in Crackdown on Bond-Market Frenzy
https://www.bloomberg.com/news/articles/2024-08-13/china-goes-to-new-extremes-in-crackdown-on-bond-market-frenzy

Bloomberg China Regulators Tell Some Rural Banks to Renege on Bond Trades
https://www.bloomberg.com/news/articles/2024-08-12/china-regulators-tell-some-rural-banks-to-renege-on-bond-trades

Bloomberg China Brokers Curb Bond Trading Amid PBOC Warnings on Rally
https://www.bloomberg.com/news/articles/2024-08-12/chinese-brokers-curb-bond-trading-amid-warnings-on-rally

Bloomberg China Asked State Banks to Keep Record of Government Bond Buyers
https://www.bloomberg.com/news/articles/2024-08-09/china-s-state-banks-asked-to-record-buyers-of-government-bonds

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How in the world does sudden fear over a US recession lead to a crash in Japanese stocks? Even more important, what might that crash suggest about the US recession? Our world is more interconnected than you've been led to believe. Our entire economic worldview is oriented around national groupings not because that’s the way the world works but because it keeps central bankers in a job. What globally synchronized is telling us now is that job losses are going to painfully rise - ours, not theirs. 

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Bank of Japan New Procedures for Money Market Operations and Monetary Easing
https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2001/k010319a.htm

World Bank Research Paper Global Recessions
https://documents1.worldbank.org/curated/en/185391583249079464/pdf/Global-Recessions.pdf

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After a chaotic, somewhat panicky prior week, the talking points went out with a clear aim to restore calm. That meant downplaying every last concerning development, starting with Jeremy Siegel. Sure enough, he played along and on it went from there. Even Fed officials know what's coming yet they'll keep denying anything's wrong right up until the first emergency meeting rate cut. 

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CNBC Jeremy Siegel backs off on calls for the Fed to do an emergency interest rate cut
https://www.cnbc.com/2024/08/08/jeremy-siegel-backs-off-on-calls-for-fed-to-do-an-emergency-rate-cut.html

Bloomberg Barkin Says Economy Healthy With Key Questions Around Job Market
https://www.bloomberg.com/news/articles/2024-08-03/barkin-says-economy-healthy-with-key-questions-around-job-market

Bloomberg Layoffs Are a Last Resort Looming for More US Companies
https://www.bloomberg.com/news/articles/2024-08-08/us-edges-towards-layoffs-as-job-market-cools-fed-rates-pressure-firms

Bloomberg Layoffs Are a Last Resort Looming for More US Companies
https://www.bloomberg.com/news/articles/2024-08-08/us-edges-towards-layoffs-as-job-market-cools-fed-rates-pressure-firms

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Though calm was restored after a wild few days in global financial markets, key market signals remained steadfastly negative. One of the most crucial of those even dropped to a level we've only seen three other times in more than 35 years - all three some of the worst cases. Moreover, that one was corroborated by a record low for swaps also set this week. 

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CNN Money Fed explains the big rate cut
https://money.cnn.com/2007/10/09/news/economy/fed_minutes_analysis/index.htm?postversion=2007100914

The New York Times Dow Breaks 3,000 but Ends at 2,980.20
https://www.nytimes.com/1990/07/14/business/dow-breaks-3000-but-ends-at-2980.20.html

The New York Times 10.08 RISE PUTS DOW AT 1,020.35
https://www.nytimes.com/1981/04/25/business/10.08-rise-puts-dow-at-1020.35.html

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Last week, the markets and the media melted down over well-founded recession fear. This week, in the aftermath, everyone will say it was all overblown. That's just normal. Meanwhile, the actual recession continues to progress and the data keeps showing momentum is all on that side. This includes yet another signal strongly correlated with unemployment. If that wasn't enough, yet more warnings from leisure and travel companies. 

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CNBC Everyone is talking about the Sahm recession indicator.
https://www.cnbc.com/2024/08/05/recession-what-is-the-sahm-rule-and-why-is-everyone-talking-about-it.html

CNBC Airbnb shares drop 14% on earnings miss as company warns of slowing U.S. demand
https://www.cnbc.com/2024/08/06/airbnb-shares-drop-14percent-on-earnings-miss-as-company-warns-of-slowing-us-demand.html

CNBC Southwest profit falls 46% as airline takes ‘urgent’ steps to increase revenue
https://www.cnbc.com/2024/07/25/southwest-airlines-luv-earnings-q2-2024.html

Bloomberg Delta’s Disappointing Outlook Sends Warning on Summer Travel
https://www.bloomberg.com/news/articles/2024-07-11/delta-s-outlook-misses-estimates-as-carriers-slash-summer-fares

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The date July 11 keeps coming up in a lot of different markets, starting with stocks. The Nikkei's last all-time high was on that day and so was the NASDAQ's. But July also features prominently in commodities and even Treasuries. The reason for it confirms so many suspicions about what just happened this past weekend therefore what it means going forward.  

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BLS June CPI
https://www.bls.gov/news.release/pdf/cpi.pdf

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When even big-name mainstream Economists are begging the Fed for emergency rate cuts, you might already have the sense this wasn't just a one-weekend show. US recession scrambles a lot of fundamental perceptions and values, causing a substantial and sizable repricing across asset classes. That repricing just happened to be most obvious and violent in Japan.
 
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Paul Krugman X
https://x.com/paulkrugman/status/1820426175031673269

CNBC Wharton’s Jeremy Siegel says Fed needs to make an emergency rate cut
https://www.cnbc.com/2024/08/05/whartons-jeremy-siegel-says-fed-needs-to-make-an-emergency-rate-cut.html

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Japan was the epicenter for a wave of liquidations in smashing financial markets all over the world. It had all the telltale signs of a collateral and margin call. This wasn't about Japanese banks or even Japan, rather the sudden realization over the US soft landing narrative going up in smoke triggered a monster repricing and revaluation. So, what does all that mean?

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CNBC Japan’s Nikkei logs worst day since 1987 Black Monday crash
https://www.cnbc.com/2024/08/05/asia-markets.html

The Economist Why Japanese markets have plummeted
https://www.economist.com/finance-and-economics/2024/08/05/why-japanese-markets-have-plummeted

Bloomberg Jolt in Credit Fear Gauges Pushes Company Borrowers to Sidelines
https://www.bloomberg.com/news/articles/2024-08-05/asia-high-grade-dollar-bond-spreads-widen-the-most-in-22-months

Bloomberg Wall Street Hit by Fears Economy in ‘Danger Zone’: Markets Wrap
https://www.bloomberg.com/news/articles/2024-08-05/japanese-stocks-tumble-leading-equities-selloff-markets-wrap?itm_source=record&itm_campaign=Global_Stocks_Selloff&itm_content=%27Mad_Rush%27_for_Treasuries-3

CNBC Dow drops 900 points, Nasdaq craters 3% in global market rout: Live updates
https://www.cnbc.com/2024/08/04/stock-market-today-live-updates.html

Deutsche Bank What impact is “higher for longer” having on the CLO market in 2024?
https://flow.db.com/trust-and-agency-services/what-impact-is-higher-for-longer-having-on-the-clo-market-in-2024

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The July payroll report confirmed the US economy is heading for trouble. Key parts of it showed recession has likely already begun. As reality dawns across the marketplace, focus turns to what comes next now that the soft landing didn't land. 

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With the questions of "what" and "when" now mainly answered, we can finally focus on "how bad." To start putting together some answers, we'll use three different markets and sets of indications each examine a separate aspect of the recession proposition; short run, intermediate, and the long term. 

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A whole bunch of bad data, much of it focused on deterioration in the US labor market (pre-July payrolls). That unleashed huge swings in rates markets and forward rates. One reason for all this is the historical pattern is perfectly clear. What we're seeing right now happens EVERY TIME. No exceptions. 

Eurodollar University's Money & Macro Analysis

FOMC Monetary Policy Statement
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240731a.htm

Federal Reserve Chair Powell Press Conference July 31
https://www.youtube.com/watch?v=hb1eHcqGpY0

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Central banks don't hike rates during a recession. Or do they? The Bank of Japan just did and for the second time. By doing it, BoJ is laying itself bare; both in terms of transparently acting politically and maybe more important exposing the lie about interest rate policies. Peter Pan is not happy. 

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Bank of Japan Change in the Guideline for Money Market Operations and Decision on the Plan
for the Reduction of the Purchase Amount of Japanese Government Bonds
https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2024/k240731a.pdf

Nikkei Bank of Japan raises interest rate to 0.25%, open to further hike this year
https://asia.nikkei.com/Economy/Bank-of-Japan/Bank-of-Japan-raises-interest-rate-to-0.25-open-to-further-hike-this-year

Japan Times Bank of Japan delivers one-two punch few were expecting
https://www.japantimes.co.jp/business/2024/07/31/economy/boj-rates/

Wall Street Journal Bank of Japan Raises Rates, Driving Up Yen
https://www.wsj.com/economy/central-banking/bank-of-japan-hikes-rates-tapers-bond-buying-in-fresh-step-to-policy-normalization-bc8c33fb

Bloomberg  Japan’s Central Bank Hikes Key Rate Hours Before the Fed
https://www.bloomberg.com/news/articles/2024-07-31/boj-hikes-interest-rate-unveils-plan-to-cut-back-bond-buying

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Hiring in the US absolutely plunged in June, so much you really have to see it to believe it. At the same time, global fast food giant McDonalds reported lower same store sales for the first time since 2020. The reason why people can no longer afford to eat as much under the golden arches isn't necessarily price changes, what's changed recently is the alarming retreat in employment. 

Eurodollar University's Money & Macro Analysis

BLS JOLTS press release July 30, 2024
https://www.bls.gov/news.release/jolts.nr0.htm

CNBC McDonald’s earnings, revenue miss estimates as consumer pullback worsens
https://www.cnbc.com/2024/07/29/mcdonalds-mcd-q2-2024-earnings.html

CNBC McDonald’s executives admit diners think prices are too high, say they’re working to create value
https://www.cnbc.com/2024/07/29/mcdonalds-earnings-executives-say-prices-are-too-high.html

Philly Fed Large Bank Credit Card and 
Mortgage Data
https://www.philadelphiafed.org/surveys-and-data/large-bank-credit-card-and-mortgage-data
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A whole lot going on in the eurodollar shadows. Record high repo pool (reverse repo) at the Fed. Bull steepening even more aggressively outside of Treasuries. Primary dealers absolutely hoarding collateral to a degree we haven't seen since March 2020. Banks around the world heavily buying safety and liquidity. The dollar hammering currencies. But why?

Eurodollar University's Money & Macro Analysis

Reuters Rupee hits record low on month-end dollar demand; RBI helps cap losses
https://www.reuters.com/markets/currencies/rupee-hits-record-low-month-end-dollar-demand-rbi-helps-cap-losses-2024-07-29/

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According to the latest update, US consumers are out of savings. As nominal incomes have slowed way down, consumers have cut back only somewhat mainly spending on goods - causing the goods recession every big-name company is currently warning over. With unemployment rising and savings gone, there's no margin left even to maintain the current rate of decline. 

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Companies around the economy are increasingly warning about the negative effects of the goods recession, one after another missing revenue and sales targets/expectations. The latest from several of the largest global businesses point to deepening macroeconomic setbacks. Even the automobile industry is showing signs of serious weakness, starting with pricing. No surprise commodity markets are sharply lower in spite of supply factors as the downturn is set to spread.

Eurodollar University's Money & Macro Analysis

Bloomberg Markets Tear Up Popular Trades That Reached ‘Stupid Levels’
https://www.bloomberg.com/news/articles/2024-07-25/everything-you-thought-you-knew-about-2024-markets-has-changed

EuroNews Nestlé downgrades sales outlook and looks to new products for growth
https://www.euronews.com/business/2024/07/25/nestle-downgrades-sales-outlook-and-looks-to-new-products-for-growth

CNBC Unilever pops 6% on margin guidance raise, Ben & Jerry’s spinoff on track to complete by end of 2025
https://www.cnbc.com/2024/07/25/unilever-pops-6percent-on-guidance-raise-says-ben-jerrys-spinoff-on-track.html

STMicroelectronics Reports 2024 Second Quarter Financial Results
https://investors.st.com/static-files/9f07c6a1-5da9-49cf-8a95-4c301436fb0b

The Detroit News Ford CFO says growing dealer inventory 'worries me'
https://www.detroitnews.com/story/business/autos/ford/2024/06/11/ford-cfo-john-lawler-growing-dealer-inventory-worry/74056579007/

J.D. Power-GlobalData U.S. Automotive Forecast for July 2024
https://www.morningstar.com/news/business-wire/20240726147635/jd-power-globaldata-us-automotive-forecast-for-july-2024

CNBC U.S. crude oil on pace for third weekly decline as China demand outweighs U.S. growth
https://www.cnbc.com/2024/07/26/crude-oil-prices-today.html

CNBC U.S. crude oil falls nearly 2% to lowest levels in six weeks
https://www.cnbc.com/2024/07/23/oil-prices-drop-to-lowest-levels-in-more-than-a-month.html

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A majority of Americans believe the US is in recession and has been for some time. Second quarter GDP just came out wildly above expectations. So is everyone wrong? Not quite. In fact, the GDP estimates actually explain why people are so mad, what they are already doing about it, and why that spells trouble for the entire economy. 

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It doesn’t matter what experts say — 3 in 5 believe America is in a recession
https://studyfinds.org/3-in-5-america-in-recession/

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The Treasury curve continues to make escalating even decisive bull moves. It's not difficult to see why, as another global consumer company admits its having trouble selling its products and in this case to the more well-to-do segment. In addition, former Fed members are urging immediate rate cuts openly wondering if it might be too late. One neighboring central bank is waiting to find out, unleashing another cut of its own and saying there are surely more coming. 

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CNBC World’s largest luxury group LVMH slumps 4% after second-quarter revenue miss
https://www.cnbc.com/2024/07/24/worlds-largest-luxury-group-lvmh-slumps-5percent-after-reporting-revenue-miss.html

Bloomberg LVMH Shows the Luxury Sector Is in Pain
https://www.bloomberg.com/opinion/articles/2024-07-24/what-lvmh-tells-us-about-luxury-s-financial-prospects

Bloomberg I Changed My Mind. The Fed Needs to Cut Rates Now.
https://www.bloomberg.com/opinion/articles/2024-07-24/the-fed-needs-to-cut-interest-rates-now

WSJ Bank of Canada Cuts Policy Rate to 4.5%, Frets Over Downside Risks
https://www.wsj.com/articles/bank-of-canada-cuts-policy-rate-to-4-5-frets-over-downside-risks-78a7a81b

Bank of Canada Policy Statement
https://www.bankofcanada.ca/2024/07/fad-press-release-2024-07-24/

Bank of Canada Press Conference
https://www.bankofcanada.ca/multimedia/press-conference-monetary-policy-report-july-2024/

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Replay of the livestream Member Q&A 100 epic discussion. George. Jim. Steve. Mike. Eric. Brent. Emil and Jeff back together again. Two hours of back and forth. Including why Home Alone lied to you.

There was so much all in one place. Spirited back and forth between all the fellas, a real deep dive in true Eurodollar University style. Arguing about the past. Angling toward the future. Even a few questions from EDU members. We just might have to do this again. 

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China's dollar woes have jumped in recent months, so much that they've come out of the eurodollar shadows enough to impact the onshore banking system in an unexpected way. Foreign holdings of negotiable bank CDs have exploded. We'll discuss what that means and how it relates to China's dollar shortage and the surprise set of rate cuts announced by the PBOC earlier today.

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Bloomberg Global Funds Pile Up Nearly a Trillion Yuan of China Bank Bonds
https://www.bloomberg.com/news/articles/2024-07-22/global-funds-pile-up-nearly-a-trillion-yuan-of-china-bank-bonds

Bloomberg China Surprises With Rate Cut After Xi’s Big Meeting Disappoints
https://www.bloomberg.com/news/articles/2024-07-22/pboc-cuts-seven-day-reverse-repo-rate-to-1-7-to-support-economy

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To way too many Americans and other workers, this is already a recession of opportunity. Without the major statics yet to show it, mainstream commentary has mocked their plight as a "vibe-cession." Now the data is beginning to more clearly align with the recession "vibe", suddenly even authorities are starting to worry so out comes the rate cuts. As Steve says, that's not what you want. 

Eurodollar University's conversations w/Steve Van Metre

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Bloomberg Goolsbee Says Fed Risks ‘Golden Path’ If It Doesn’t Cut Soon
https://www.bloomberg.com/news/articles/2024-07-18/goolsbee-says-fed-risks-golden-path-if-it-doesn-t-cut-soon

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All year all anyone has heard is the Fed and its rate cuts. Soft landings imply a little weakness but no worry, Jay Powell will cut rates once maybe twice and everything will be just fine. The only question is, why on earth does anyone believe this? The evidence and history of interest rate targeting - as you'll see - is indeed 100%, as in total failure. Rate cuts (like hikes) are pure superstition. 

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PBS Is the Fed going to cut interest rates? What was once a question of ‘when’ is now less certain
https://www.pbs.org/newshour/economy/is-the-fed-going-to-cut-interest-rates-what-was-once-a-question-of-when-is-now-less-certain

Morningstar We Expect GDP Growth to Weaken Until Fed Starts Cutting Interest Rates
https://www.morningstar.com/economy/we-expect-gdp-growth-weaken-until-fed-starts-cutting-interest-rates

FOMC Transcript March 1991
https://www.federalreserve.gov/monetarypolicy/files/FOMC19910326meeting.pdf

Remarks by Chairman Alan Greenspan
Rules vs. discretionary monetary policy
At the 15th Anniversary Conference of the Center for Economic Policy Research at Stanford University, Stanford, California
September 5, 1997
https://www.federalreserve.gov/boarddocs/speeches/1997/19970905.htm

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In the midst of other major warnings, here comes another substantial one. Copper has moved way past its supply squeezed record high from just two months ago and is now crashing. At the same time, gold is reaching new heights. The copper to gold ratio therefore just dropped to its lowest since...November 2020. Taking a deeper look at what all this means. 

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Bloomberg China’s Unusually Large Copper Stockpiles Fuel Demand Concerns
https://www.bloomberg.com/news/articles/2024-06-05/china-s-unusually-large-copper-stockpiles-fuel-demand-concerns

Bloomberg Gold Slips From Record High as Traders Ponder Bet on Fed Pivot
https://www.bloomberg.com/news/articles/2024-07-17/gold-holds-at-record-high-as-rate-cut-bets-fuel-demand-rush

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Swaps are of paramount importance to the financial world, priced by the very monetary system itself. As a consequence, swap market indications are even more critical than the yield curve. But what does it all mean, and how can you decipher what appear its confusing signals? A few minutes on some manageable basics and you're ready to read the market's big move.

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Another part of the yield curve un-inverted, this time the short to long segment. Demonstrating the perpetual inability to make sense of it, mainstream sources are suggesting some "Trump trade" is behind this. No. Unequivocally no. The classic bull case is building and this is merely the latest nascent signal. It isn't complete yet, but incoming data including today's negative retail sales continues to suggest the same case.

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NYT 30-year U.S. bond is back in big way
https://www.nytimes.com/2006/02/09/business/worldbusiness/30year-us-bond-is-back-in-big-way.html

It started Friday when China's central bank reported more than just new record low credit stats, the deterioration over the past few months has been astounding. That obviously spread to the Chinese economy which the government confirmed today with ugly data across-the-board, big miss in GDP and grim numbers on retail sales. Yet, everyone wants more "stimulus" that all this data proves didn't stimulate a thing. Something to keep in mind when thinking about upcoming Fed rate cuts.

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CNN How ready is China’s military? Dramatic downfall of two defense ministers raises questions
https://www.cnn.com/2024/07/01/china/china-defense-ministers-downfall-analysis-intl-hnk/index.html

FxStreet China: GDP miss calls for faster fiscal spending – Standard Chartered
https://www.fxstreet.com/news/china-gdp-miss-calls-for-faster-fiscal-spending-standard-chartered-202407151119

FT China plays down hopes for ‘strong medicine’ at top economic policy meeting
https://www.ft.com/content/6f4079ea-e8fe-46c8-84b3-75aff56b7011

Reuters China June new bank loans miss forecasts, some money gauges hit record lows
https://www.reuters.com/business/finance/china-june-new-bank-loans-miss-forecasts-some-money-gauges-hit-record-lows-2024-07-12/

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Why does the Japanese government keep intervening trying to prop up the yen, and why does it keep failing? This isn't just about the yen or Japan, nor is it completely a matter of what's unfolding right now. There is a deeper truth that needs to be made more widely which applies universally to monetary systems around the world. And the yen's crash is the clearest example. 

Eurodollar University's conversation w/Steve Van Metre

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There was an unnoticed yet absolutely critical detail in the June CPI report that pointed to a lot more than just benign disinflation, a development that has only rarely been observed in decades of history. More disturbing still, the context behind this one is consistent with those few past instances including a few new pieces of subsequent information. 

Eurodollar University's Money & Macro Analysis

FOMC Transcript April 2010
https://www.federalreserve.gov/monetarypolicy/files/FOMC20100428meeting.pdf

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The June consumer price estimates at first seemed like good news. Two months in a row at low and now negative changes. But these past two months have shown a little more weakness than most had bargained for, instead so many of the details consistent with recession indications spilling out from all over the economy. No wonder bond yields dropped sharply, though, alarmingly, swap spreads got there well before today. 

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BLS June 2024 CPI
https://www.bls.gov/news.release/pdf/cpi.pdf

Bloomberg Stocks See Big Rotation as Yields Sink on Fed Bets: Markets Wrap
https://www.bloomberg.com/news/articles/2024-07-10/stock-market-today-dow-s-p-live-updates

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Chinese authorities are becoming increasingly desperate over their inability to stabilize any of the economy, banking system, or markets. CNY keeps going down, as does the economy. Banks in China aren't lending while dozens are now 'disappearing.' Safety/liquidity of government bonds makes perfect sense. Not to the PBOC which is going to be shorting it by hundreds of billions and this is why.

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Bloomberg Closer Yen, Yuan Correlation Is Danger Sign for Asian Currencies
https://www.bloomberg.com/news/articles/2024-07-10/closer-yen-yuan-correlation-is-danger-sign-for-asian-currencies?srnd=economics-v2

X Video showing Jiangxi Bank 'protest'
https://twitter.com/BitcoinNewsCom/status/1810456112652779538

The Economist Why Chinese banks are now vanishing
https://www.economist.com/finance-and-economics/2024/07/04/why-chinese-banks-are-now-vanishing

Bloomberg China Merges Hundreds of Rural Banks as Financial Risks Mount
https://www.bloomberg.com/news/articles/2024-01-31/china-merges-hundreds-of-rural-banks-as-financial-risks-mount

Bloomberg China's PBOC Readies Multibillion-Yuan Pool of Bonds to Sell by Tapping Major Banks
https://www.bloomberg.com/news/articles/2024-07-05/pboc-readies-hundreds-of-billions-of-yuan-bond-sale-capacity

CNN Chinese government bonds are on fire. That’s ringing alarm bells in Beijing
https://www.cnn.com/2024/07/03/business/china-bond-market-bank-crisis-svb-intl-hnk/index.html

China NBS June 2024 CPI
https://www.stats.gov.cn/sj/zxfb/202407/t20240710_1955508.html

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From 'strong and resilient' to 'uh oh' in a heartbeat. The unemployment rate has intruded itself on the soft landing narrative, forcing a near-total rethink of the situation all across the mainstream. Some major bank strategists are now calling for aggressive rate cuts from the Fed at the same time the yield curve is beginning to flash bull. 

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Fed Chair Powell testimony (courtesy CBS News)
https://www.youtube.com/watch?v=Og8W_VK1gMM

Fed Chair Powell prepared remarks before Congress
https://www.federalreserve.gov/newsevents/testimony/powell20240709a.htm

CNBC The Fed is ‘playing with fire’ by not cutting rates, says creator of ‘Sahm Rule’ recession indicator
https://www.cnbc.com/2024/06/18/economist-sahm-who-devised-recession-rule-says-the-fed-is-playing-with-fire-.html

Fortune The Fed could slash rates by 200 points over 8 straight meetings as the economy heads for a sharper downtrend, Citi says
https://fortune.com/2024/07/07/fed-rate-cuts-outlook-200-points-economy-sharper-slowdown-citi/

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Political turmoil in Europe is very easy to understand. The European economy is supposed to be recovering from its unofficial recession, and yet the most recent data shows instead alarming (re)acceleration to the downside in a number of places. Realizing this means the path to clawing back some of the supply shock's price increases is disappearing, voters are simply voting accordingly. 

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Pew Research Center Economic ratings across 34 countries are more negative than positive
https://www.pewresearch.org/short-reads/2024/06/07/economic-ratings-across-34-countries-are-more-negative-than-positive/

World Bank Global trade has nearly flatlined. Populism is taking a toll on growth
https://blogs.worldbank.org/en/voices/global-trade-has-nearly-flatlined-populism-taking-toll-growth

UN Trade and Development  Global economic growth set to slow to 2.6% in 2024, just above recession threshold
https://unctad.org/news/global-economic-growth-set-slow-26-2024-just-above-recession-threshold

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Unemployment in the US is now steadily moving higher. The June 2024 employment report contained more substantial downward revisions, evidence more employers are cutting hours, and most concerning is another increase to the unemployment rate. And, contrary to many claims, it's not the "good" kind of rising unemployment.

Eurodollar University's conversation w/Steve Van Metre

BLS Employment Situation Summary June 2024
https://www.bls.gov/news.release/empsit.nr0.htm

Bloomberg The US Economic Slowdown Is Looking More Threatening
https://www.bloomberg.com/opinion/articles/2024-07-05/us-jobs-report-economic-slowdown-is-looking-more-threatening

FOMC June 2024 Minutes
https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240612.pdf

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According to multiple recent reports, banks are very quietly selling out of CRE positions. Those reports are backed up by banking data which clearly shows an inflection in systemic loans in the space. Combined, we have strong evidence showing the second stage of the CRE bust has now started. 

Eurodollar University's Money & Macro Analysis

Reuters Big US banks withstand Fed's commercial real estate shock scenario
https://www.reuters.com/markets/us/big-us-banks-withstand-feds-commercial-real-estate-shock-scenario-2024-06-26/

Federal Reserve Stress Test Results 2024
https://www.federalreserve.gov/publications/files/2024-dfast-results-20240626.pdf

NYT Office Building Losses Start to Pile Up, and More Pain Is Expected
https://www.nytimes.com/2024/06/06/business/office-building-foreclosures-losses.html

NYT Fearing Losses, Banks Are Quietly Dumping Real Estate Loans
https://www.nytimes.com/2024/06/24/business/commercial-real-estate-loans.html

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Modern economies have been moving in the direction of ledger money not for years or decades, for centuries. The world's current reserve currency, the eurodollar, merely represented the second stage in the evolutionary process. Now that it has surpassed its useful life, the door is wide open for the third stage which seems tailor-made for something like Bitcoin. Why hasn't the digital ledger taken advantage of the opportunity? Is there some other kind which is?

Eurodollar University's Special Presentation: Ledger Money Won't Be Perfect

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Subscriptions on current events and topics. 
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Fed officials have repeatedly stated they are going to be patient before pivoting to rate cuts. But that would only be the case if the economy is actually strong and resilient. Should the labor market show signs of falling off dramatically, they'd cut their rates in a hurry. Today's macro data were filled with exactly those kinds of warning signs. 

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Bloomberg Powell Welcomes Recent Data But Fed Needs More Confidence to Cut
https://www.bloomberg.com/news/articles/2024-07-02/powell-welcomes-recent-data-but-fed-needs-more-confidence-to-cut

Bloomberg Bond Traders Boldly Bet on 300 Basis Points of Fed Cuts by March
https://www.bloomberg.com/news/articles/2024-06-25/bond-traders-boldly-bet-on-300-basis-points-of-fed-cuts-by-march

Bloomberg US Services Activity Contracts at Fastest Pace in Four Years
https://www.bloomberg.com/news/articles/2024-07-03/us-services-activity-contracts-at-fastest-pace-in-four-years

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Everyone wants to know the answer to the recession question. So, by very popular demand, Eric Basmajian of EPB Macro Research checks in with Jeff on the unusual state and status of the US business cycle. The whole monumental matter just might come down to houses. 

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Government bond yields in China just plunged to more record lows as market agents are growing even more pessimistic. The unquenchable demand for safe and liquid assets has the PBOC getting ready to sell bonds into a marketplace that is increasingly concerned about a lot more than Chinese issues. More strong evidence for globally synchronized.

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Bloomberg Economists Raise China Growth Forecasts as Exports Improve
https://www.bloomberg.com/news/articles/2024-06-25/economists-raise-china-growth-forecasts-as-exports-improve

Bloomberg El-Erian Says Slowing Economy Raises Fed Policy-Error Risk
https://www.bloomberg.com/news/articles/2024-06-28/el-erian-says-slowing-economy-raises-fed-policy-error-risk

Bloomberg A $100 Billion Bet on China’s Economy Sours as Warehouses Empty
https://www.bloomberg.com/news/articles/2024-07-01/china-s-third-plenum-and-what-it-means-for-tax-reform-and-supply-chains?srnd=economics-v2

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Soft landings and resilient economy supported by strength in labor markets. At least that's the narrative, the truth is completely different. Much of the developed world is being swept up in a wave of rising unemployment. Yes, including the US.;/

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Bank of Canada
https://www.bankofcanada.ca/2024/06/opening-statement-2024-06-05/

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Another new low for JPY as the Japanese government is shuffling up its top Finance Ministry people. Everyone continues to blame the Fed for the yen's crash but the evidence conclusively shows that's not it. This only raises the question, what is it? The yen's own track record holds the answer and it is one that applies to you.

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Reuters Japan names new FX diplomat as yen hits 38-year low
https://www.reuters.com/markets/asia/japan-appoints-atsushi-mimura-top-fx-diplomat-replacing-masato-kanda-2024-06-28/

Reuters Japan warns against rapid FX moves, reiterates readiness for action
https://www.reuters.com/markets/currencies/japan-warns-against-rapid-fx-moves-reiterates-readiness-action-2024-06-24/

Bloomberg Yen Falls Through 161 Per Dollar, Putting Intervention in Focus
https://www.bloomberg.com/news/articles/2024-06-28/yen-falls-through-161-per-dollar-as-intervention-wagers-increase

Barrons The Fed’s Higher for Longer Policy Is Breaking the Yen
https://www.barrons.com/articles/fed-yen-b66308af

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Retail and Pharmacy giant Walgreens now says there won't be a second half rebound after all, not according to its view of the consumer economy. It was seconded by Levi's and then European behemoth H&M. All of that ties together with a record low in US pending home sales and a summer driving season that's already an enormous bust as recession forces bear down.

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NBCNews Walgreens plans store closures as CEO says consumers 'stunned' by prices
https://www.nbcnews.com/business/business-news/walgreens-plans-store-closures-ceo-says-consumers-stunned-prices-rcna159208

CNBC Levi’s shares drop 15% as jeans maker’s sales disappoint despite denim craze
https://www.cnbc.com/2024/06/26/levi-levi-earnings-q2-2024.html

CNBC H&M plunges 13% on doubts over full-year margin target, June sales outlook
https://www.cnbc.com/2024/06/27/hm-plunges-12point5percent-on-doubts-over-full-year-margin-target-june-sales-outlook.html

Bloomberg US Pending Home Sales Index Slides to Record Low on High Rates
https://www.bloomberg.com/news/articles/2024-06-27/us-pending-home-sales-index-slides-to-record-low-on-high-rates

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China's top central banker confirmed last week the intention to radically change the operations of the Peoples' Bank of China. Some have speculated this equates to an imminent QE, but that has nothing to do with the reform. We've seen this before. The issue is bank, not central bank. 

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BNP Implications of China's Impaired Transmission Mechanism
https://docfinder.bnpparibas-am.com/api/files/f3e3ee55-9e19-455f-a1a6-08123581e2e9

SCMP Xi Jinping to China’s central bank: restart treasury-bond trade, after 2-decade hiatus
https://www.scmp.com/economy/china-economy/article/3256967/xi-jinping-chinas-central-bank-restart-treasury-bond-trade-after-2-decade-hiatus

Pan Gongsheng's speech at Shanghai
http://www.pbc.gov.cn/en/3688110/3688172/5188125/5379416/index.html

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There have been a whole bunch of ripples through the monetary system coming in from all angles pointing toward a sizable collateral disruption. The primary culprit(s) appears to be from Europe, starting in bond spreads surging off election uncertainty though we can't discount the ECB's rate cut as a factor. The eurodollar aftershocks are pronounced regardless of origin.

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IOSCO Securities Lending Transactions: Market Development and Implications
https://www.bis.org/cpmi/publ/d32.pdf

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Japanese banks have been bulking up on US junk corporate credit for the last year, driven entirely by an increasingly difficult reach for yield. That means overlooking dangers and risks which in other less distorted times would have been taken more seriously. The end result is a large and growing distortion in a key part of the credit markets.

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Bank of Japan Financial System Report October 2019
https://www.boj.or.jp/en/research/brp/fsr/data/fsr191024a.pdf

VanEck Looking Beyond AAA Rated CLOs Pays Off
https://www.vaneck.com/us/en/blogs/income-investing/looking-beyond-aaa-rated-clos-pays-off/

Deutsche Bank What impact is 'higher for longer' having on the CLO market in 2024
https://flow.db.com/trust-and-agency-services/what-impact-is-higher-for-longer-having-on-the-clo-market-in-2024

Bloomberg A $1.3 Trillion Fund Pool for Junk-Rated US Firms Has Unlikely Lifeline: Japan's Banks
https://www.bloomberg.com/news/articles/2023-04-20/the-1-3-trillion-clo-market-grows-more-dependent-on-japan-banks

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Copper and aluminum were soaring and so were reflation expectations for the global economy. If the world wasn't too careful, those might even lead to resurgent inflation. What's happening in those and other commodities has shocked market observers. As has the most recent global macro data. 

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Another CRE securitized structure is reportedly causing losses for its top tier, this one in another country and from a different corner of the real estate market. This matches recent reports that big banks are quietly beginning to sell their seniors in the space. Moreover, US homebuilder activity has plunged to new lows as the crosscurrents in the economy and financing are getting more unfavorable. 

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Bloomberg Pimco Warns of More Regional Bank Failures on Property Pain
https://www.bloomberg.com/news/articles/2024-06-11/pimco-warns-of-more-regional-bank-failures-on-commercial-property-pain

Bloomberg CMBS Buyers Face First Europe AAA Loss Since Credit Crunch
https://www.bloomberg.com/news/articles/2024-06-19/cmbs-buyers-set-for-first-europe-aaa-loss-since-credit-crunch

Bloomberg Losses Pile Up in Top-Rated Bonds Backed by Commercial Real Estate Debt
https://www.bloomberg.com/news/articles/2024-05-23/cmbs-buyers-suffer-first-loss-on-aaa-debt-since-financial-crisis

CREDiQ CRE CLO Distress Rate Widens to 9.74%
https://cred-iq.com/blog/2024/06/14/cre-clo-distress-rate-widens-to-9-74/

CREDiQ Loan Modifications Swell 195% in 12 Months
https://cred-iq.com/blog/2024/06/21/loan-modifications-swell-195-in-12-months-cred-iq/

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The Swiss National Bank surprised Economists by cutting rates for the second time in a row. Citing a number of potential worries starting with more recession, the rate cuts are aligned with growing dollar troubles roiling the rest of the world. Major currencies are sinking fast, hitting new lows and pointing toward the same reasoning just acted on in Switzerland. 

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Bloomberg SNB Silence Sets Up Another Rate-Cut Cliffhanger
https://www.bloomberg.com/news/articles/2024-06-19/swiss-national-bank-interest-rate-cuts-central-bank-silence-sets-up-cliffhanger

Switzerland Economic forecast largely unchanged: Swiss growth in 2024 to be below average
https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-101432.html

SNB Monetary Policy Assessment June 20, 2024
https://www.snb.ch/en/publications/communication/press-releases-restricted/pre_20240620

CNBC Switzerland makes second interest rate cut as major economies diverge on monetary policy easing
https://www.cnbc.com/2024/06/20/switzerland-trims-key-interest-rate-to-1point25percent-in-second-cut-of-the-year.html

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A Japanese bank giant announced it was going to begin selling tens of BILLIONS in USTs and other European government bonds knowing full well the institution is going to take huge losses on the sales. Is this the start of another bank run? Will this kill the Treasury market? 

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About Norinchukin Bank
https://www.nochubank.or.jp/en/about/

Norinchukin Financial Summary Fiscal Year 2023
https://www.nochubank.or.jp/en/ir/results/pdf/cap_results2023_04_02.pdf

Bloomberg Echoes of 2009 Crisis Thrust Japanese Bank Norinchukin Back Into Spotlight
https://www.bloomberg.com/news/articles/2024-05-21/japan-s-bank-for-farmers-and-fishermen-returns-to-spotlight-for-overseas-losses

Bloomberg Norinchukin Bank to Sell $63 Billion of Sovereign Bonds
https://www.bloomberg.com/news/articles/2024-06-18/norinchukin-bank-to-sell-63-billion-of-bonds-to-stem-losses

Bloomberg A $1.3 Trillion Fund Pool for Junk-Rated US Firms Has Unlikely Lifeline: Japan's Banks
https://www.bloomberg.com/news/articles/2023-04-20/the-1-3-trillion-clo-market-grows-more-dependent-on-japan-banks

FRBNY Standing Repo Facility Approved Counterparties
https://www.newyorkfed.org/markets/srflist-231201

CBO Budget Update June 2024
https://www.cbo.gov/system/files/2024-06/60039-Outlook-2024.pdf

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The data continues to pour in showing US consumers have indeed hit the wall. Spending is down according to a variety of sources, including the latest update on retail sales for May. There is also a growing body of evidence indicating there is more weakness to come starting with summer vacations. All this indicates the chances of full-blown recession are rising sharply. 

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CNN  Evidence is mounting that the American shopper is cutting back
https://edition.cnn.com/2024/06/18/economy/us-retail-sales-may/index.html

McKinsey & Company An update on US consumer sentiment: Are consumers on the cusp of a shift?
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-state-of-the-us-consumer

Deloitte Summer Travel Survey 2024
https://www2.deloitte.com/content/dam/insights/articles/us187281_cic_summer-travel/DI_2024-summer-travel.pdf

Federal Reserve Beige Book May 29, 2024
https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20240529.pdf

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Housing prices in China plunged in May, accelerating sharply after April's big drop indicating the situation in the real estate market is getting closer to becoming disorderly. There will be fallout across the world should that happen, as there already is across China's economy as the latest data also showed. 

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Bloomberg China Real Estate, Production Slide Highlights More Stimulus Needed
https://www.bloomberg.com/news/newsletters/2024-06-17/world-economy-latest-china-property-sector-plunge-needs-more-support

China's NBS Situation in Real Estate
https://www.stats.gov.cn/sj/zxfb/202406/t20240617_1954711.html

Bloomberg China Steps Up Warning on Relentless Bond-Buying Frenzy
https://www.bloomberg.com/news/articles/2024-06-17/china-steps-up-warnings-on-relentless-bond-buying-frenzy

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Consumer confidence has dropped sharply over the past few months as Americans are now more concerned about jobs and incomes than prices. The shift has been so pronounced that even members of the mainstream media are questioning FOMC officials. Hardly strong and resilient, there's rising unemployment and declining confidence mixed with a bevy corporate warnings.

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FRB Chair Jay Powell Press Conference June 12, 2024
https://www.youtube.com/watch?v=YqaxWf7gsQA
Transcript:
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240612.pdf

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Conventional 'wisdom' says that when US$ interest rates go down the dollar goes down with them. Yet, it hasn't been uncommon to find Treasury yields falling as the dollar's exchange value jumps. When that has happened, nothing good comes from it. We're starting to see what looks to be that scenario setting up right now. 

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I said the payroll number is wrong and Jay Powell of all people agrees. But if the real question is how wrong, that's where the debate is even though it should already be settled. There is plenty of evidence the US is tilting in the direction of the HH Survey and unemployment rate. And that includes the rates market which ignored the FOMC's hawkish dots. 

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Jay Powell's Press Conference
https://www.youtube.com/watch?v=q3ZE5tF_IMU

CNBC Quotes from Jay Powell Press Conference
https://www.cnbc.com/2024/06/12/fed-meeting-today-live-updates-on-june-fed-rate-decision.html

Politico Biden’s economy: Good metrics, bad vibes, few levers
https://www.politico.com/news/2024/06/07/biden-has-an-economic-story-to-tell-and-yet-00162338

Guardian Majority of Americans wrongly believe US is in recession – and most blame Biden
https://www.theguardian.com/us-news/article/2024/may/22/poll-economy-recession-biden

BLS Business Employment Dynamics Summary
https://www.bls.gov/news.release/cewbd.nr0.htm

Table 4'
https://www.bls.gov/news.release/cewbd.t04.htm

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Walgreens is the latest Big Name to cut prices because Americans have run out of money. As the company's prices go down, those will add even more to the disinflationary environment; and that's the bad side of smaller price changes. Today's May CPI completely backs up everything we've been seeing. 

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Walgreens Walgreens Introduces Summer of Savings
https://www.walgreensbootsalliance.com/news-media/press-releases/2024/walgreens-introduces-summer-savings

Quartz Amazon, Walmart, and Big Retail’s race to cut prices
https://qz.com/target-walmart-amazon-walgreens-price-cuts-consumers-1851507920

Bloomberg  Big Oil’s Blockbuster $114 Billion Investor Payout Is Most Ever
https://www.bloomberg.com/news/articles/2024-02-07/big-oil-pays-out-record-114-billion-in-share-buybacks-and-dividends

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Last week's ECB rate cut was...odd. Sure, officials had said for months they were going to do it. Yet, the conditions that would have to be met were not. Policymakers went ahead anyway and this past weekend's developments are a big Big Picture reason why. 

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Bloomberg Italy’s Tajani Calls for Quick Second ECB Cut After June Move
https://www.bloomberg.com/news/articles/2024-06-05/italy-s-tajani-calls-for-quick-second-ecb-cut-after-june-move

The Times Back me for low interest rates, Rishi Sunak tells voters
https://www.thetimes.com/uk/politics/article/rishi-sunak-tories-interest-rates-general-election-962mpcmjx

AP UK inflation lowest in 3 years. Prime Minister Sunak makes it a focus in election call for July 4
https://apnews.com/article/britain-economy-inflation-interest-rates-090db19af939b9c532da1fb15ab40a0a

LeMonde Moody's warns that France's snap election could lower credit rating
https://www.lemonde.fr/en/france/article/2024/06/11/moody-s-warns-that-french-snap-election-could-lower-credit-rating_6674498_7.html#

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Consumer credit has historically been a solid recession signal, particularly how consumers alter their usage of credit cards. Some of that by choice, for many it is the bank's. Either way, when this happens it is more compelling evidence backing the rise in the unemployment rate.

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September 2008 FOMC Transcript
https://www.federalreserve.gov/monetarypolicy/files/FOMC20080916meeting.pdf

March 2001 FOMC Transcript
https://www.federalreserve.gov/monetarypolicy/files/FOMC20010320meeting.pdf

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