‘toon of the Day: Tutor In Chief

Posted on June 14, 2018 by macromon

https://twitter.com/markdistef/status/1006950084423110658?s=21

Posted in Uncategorized | Leave a comment

TOTD: Derivatives Per Capita

Posted on June 14, 2018 by macromon

(TOTD = Tweet of the Day)

Posted in Banking, Germany, Uncategorized | Tagged , | Leave a comment

Europe’s Wage Inequality Wedge: a crash course

Posted on June 13, 2018 by macromon
Posted in Uncategorized | Leave a comment

Swan Lake – June 13

Posted on June 13, 2018 by macromon

The Global Macro Monitor defines “macro swan” as any global macroeconomic or financial event with the capacity to spill over into world markets causing risk aversion and lower asset prices.  – GMM

The Euro swans continue to stabilize.   Barry Eichengreen out with a good piece on the row between Rome and Brussels.  See here.   The real news came with the dustup between Angela Merkel and her own government     See here,  We suspect Frau Merkel’s government is not all that stable and is under pressure from Germany’s own populist flirtations.   Watch that space.

EM

Same story, different day.  EM currencies remain under pressure with the weakness accelerating after the hawkish FOMC release.   Our friend Sri lays it out,

Countries that feasted on the cheap money that resulted from the quantitative easing and near-zero interest rates initiated by the Federal Reserve almost a decade ago are now suffering from a withdrawal of global liquidity, – Komal Sri-Kumar, the president and founder of Global Strategies.

 

June13_Bloomberg_EM FX

 

June13_Bloomberg_EM FX_2

 

SwanLake_Table

Posted in Black Swan Watch, Uncategorized | Tagged , , , | Leave a comment

S&P Hesitates At Key Level

Posted on June 12, 2018 by macromon

The S&P500 looks hesitant to take out the key  .764 Fibonacci retracement level at 2792.59 before the Fed and ECB announcements.  Note the back-to-back Doji candlesticks.

When and if the swing high of the correction at 2801.90 clears, the technical case will be for a boring summer of a slow grind to challenge the all-time high at 2872.87, which is a little over 3 percent from current levels.  The technicals don’t square with our fundamental case of what we suspect is coming to the bond market and interest rates, however.

As the Fed continues to turn the monetary screws, we are looking for a decent move higher in long-term interest rates.   Either the market:  1) doesn’t care about an interest rate spike, as Tudor Jones believes;  2) we are entirely wrong,  3)  or the market is much too complacent.

Pick one.

Jun12_S&P500

Posted in Equities, Uncategorized | Tagged , | Leave a comment

The Bund With A Draghi Tattoo

Posted on June 12, 2018 by macromon

The consequences for global markets of an end to ECB QE will be much bigger than those associated with the end of the Fed’s QE –  Guillermo Tolosa, Oxford Economics

Huge ECB meeting on Thursday.   Will Mario Draghi announce a path to normalize monetary policy and  interest rates, which will burst the European bond market bubble? 

Based on the 10-year interest rate-nominal GDP growth heuristic,  German yields have a lot of runway to move higher once the ECB removes its thumb from the scale.

The below chart illustrates the German 10-year sovereign yield rarely closed on an annual basis below nominal GDP growth until the great financial crisis.

 

Germany_10year_GDP Growth

A close above 92 bps on Bund on the weekly and it’s off into the “great wide open.”

Jun12_German_10-year Yield

Stay tuned, Eddie.

 

Posted in Bonds, ECB, German Bund, Germany, Monetary Policy, Uncategorized | Tagged , , , | Leave a comment

The action-movie trailer Trump played to Kim Jong-un

Posted on June 12, 2018 by macromon

If only it were as easy as in the movies…

Reporters were shown a video ahead of Donald Trump’s press conference in Singapore, which the US president said he had played it to Kim Jong-un and his aides toward the end of their talks. It was made by Destiny Productions and was presented in Korean and English in the style of an action movie trailer Subscribe to Guardian News

► http://bit.ly/guardianwiressub

Posted in Geopolitical, Uncategorized | Tagged , , , | Leave a comment

Swan Lake – June 12

Posted on June 12, 2018 by macromon

The Global Macro Monitor defines “macro swan” as any global macroeconomic or financial event with the capacity to spill over into world markets causing risk aversion and lower asset prices.  – GMM

Euro sovereign spreads were stable today.  The Italy 2-year came in further steepening the country’s yield curve.  Euro banks flattish.

EM FX

The relentless pressure on EM fx continues even after their central banks tighten up monetary policy.  The Fed and ECB meetings loom large.

Interest rates continue to rise across the emerging markets.

FX_Reserves

 

SwanLake_Table

Posted in Black Swan Watch, Uncategorized | Tagged , , , , | Leave a comment

Major Holders Of The U.S. Corporate Bond Market

Posted on June 12, 2018 by macromon

Summary Bullets

  • The size of the U.S. corporate bond market, as measured by the Fed’s Flow of Funds, totals $13.1 trillion at the end of Q1 2018
  • It includes $10.2 trillion of domestic issues and $2.8 trillion of foreign issues held by U.S. residents
  • The market has increased from 45.7 percent of GDP at the end of 1999 to 65.4 percent of GDP
  • The total size of the market has grown by 188 percent since the turn of the century as compared to nominal GDP growth of 102 percent
  • Foreigners hold 30 percent of the market, almost double from the end of 1999
  • Life insurance companies are the largest domestic holder of corporate bonds
  • Mutual funds are the second largest domestic investors at 15.4 percent followed by households (including hedge funds), private pension funds, and state & local govt retirement funds
  • The corporate bond market is now 65.4 of U.S. GDP, of which, domestic issuers total 51 percent of GDP

 

Major Holders_Corporate Bond Market_Chart

 

Major Holders_Corporate Bond Market_Table

Posted in Bonds, Credit, Uncategorized | Tagged , | 5 Comments

De-escalation Of Tensions

Posted on June 11, 2018 by macromon

Always a good thing.  Here’s to hoping that the lives of our Korean brothers and sisters both in the north and south will improve dramatically with respect to a lasting peace and standard of living.

Posted in Geopolitical, Uncategorized | Tagged , | Leave a comment