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. Eurodollar University's Money & Macro Analysis https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU
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. Eurodollar University's Money & Macro Analysis https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU
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 Co...
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. Eurodollar University's Money & Macro Analysis 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 Gove...
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....
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.reut...
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. Eurodollar University's conversations w/Steve Van Metre https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU...
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 ...
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. Eurodollar University's Money & Macro Analysis It doesn’t matter what experts say — 3 in 5 believe America is in a recession https://studyfinds.org/3-in-5-america-...
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. Eurodollar University's Money &...
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. Eurodollar University's Money &am...
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. Eurodollar University's Money & Macro Analysis Bloomberg Global Funds Pile Up Nearly a Trillion Yuan of China Bank Bonds h...
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 EURODOLLAR UNIVERSITY'S LIVESTREAM NEXT TUESDAY, 7/23 ...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSITY'S LIVESTREAM NEXT TUESDA...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSITY'S LIVESTREAM NEXT TUESDAY, 7/23 btw 6 - 8 pm ET EURODOLLAR UNIVERSITY'S...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSITY'S LIVESTREAM NEXT TUESDAY, 7/23 btw 6 - 8 pm ET EURODOLLAR UNIVE...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSIT...
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. Eurodollar Unive...
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 CHECK OUT OUR ANNIVERSARY SALE PRICES AT: https://www.eurodollar.unive...
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/FOMC20100428me...
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. Eurodollar University's Money & Macro Analysis BLS June 2024 CPI https://www.b...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSITY ANNIVERSARY SALE PAGE https://w...
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. Eurodollar University's Money & Macro Analysis EURODOLLAR UNIVERSITY ANNIVERSARY SALE PAGE https://www.eurodollar.university/anniversary-sale Fed Chair ...
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. Eurodollar University's Money & Macro Analysis Pew Research Center Economic ratings across 34 countries are...
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 Slowdow...
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-es...
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 Pre...
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. EURODOLLAR UNIVERSITY'S ANNIVERSARY SALE - DETAILS AT https://eurodollar.university Eurodollar University's Money & Macro Analysis Bloomberg Powel...
If you want to watch the full interview check it out at https://www.eurodollar.university 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. Eurodollar University's Money & Macro Analysis https://www.eurodollar.university Twitter: https://twitter.com/JeffSnider_EDU...
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. Eurodollar University's Money & Macro Analysis Bloomberg Economists Raise China Growth Forecasts as Exports Improve https://www.bloomberg.com/news/arti...
