The Wall Street Journal – China’s Share of Reserves in U.S. Dollar Dives China has made a sharp shift away from purchases of U.S. securities, slashing the dollar’s share of the country’s foreign reserves in what may signal a change in strategy for managing the massive cash pile, Dow Jones calculations indicate. The portion of… Continue reading Chinese Exposure To U.S. Assets
The Economist – Europe’s central bank and the euro crisis: Draghi strikes back II AT LAST the waiting has ended. Over the past few weeks the markets have been obsessing over just how much liquidity banks would tap from the European Central Bank (ECB) in the second of its extraordinary three-year LTROs (long-term refinancing operations).… Continue reading LTRO
The Economist – The ECB’s LTRO and the Fed’s testimony: How to read a central bank When a central bank expands its balance sheet, is it bullish or bearish? It depends. In today’s world where liquidity traps prevail, the reason why the balance sheet expands is as important as how much. Two data points today… Continue reading Central Bank Balance Sheets
Bloomberg.com – Bernanke Crystal Ball Says, No Bubble Yet, Ask Later Following his semi-annual testimony to Congress today, Federal Reserve Chairman Ben Bernanke was asked whether holding interest rates near zero through 2014 created the risk of another asset bubble. “That’s something we have to pay close attention to,” Bernanke told the House Financial Services… Continue reading Bernanke
The Financial Times – Richard Bernstein: Why the ‘risk-on’ rally will not last During credit bubbles, overcapacity builds on bank balance sheets. When credit bubbles deflate, bloated bank balance sheets are no longer a productive use of assets, and they inevitably contract. The only uncertainties are the means and the speed of balance sheet contraction.… Continue reading Risk-On vs. Risk-Off
Bloomberg.com – Caroline Baum: Rising Crude Prices Tap Into a Barrel of Nonsense There is nothing, and I mean nothing, like rising crude-oil prices to make sensible people go all wobbly in the head. Economists fail to differentiate between cause and effect. They confuse a supply shock with a shift in demand and see the… Continue reading Playing The Crude Oil Blame Game
Bloomberg.com – How Debt-Ridden Housing Holds Back U.S. Recovery So from a macroeconomic perspective, in a world without mortgages, falling house prices would have negligible aggregate effects. Some households would be richer and some would be poorer. But there is no reason to believe that there would be a large aggregate “housing-wealth effect.” So why… Continue reading Housing’s Effect On The Economy
<Click on chart for larger image> Zero Hedge (Blog) – Gold and Silver Plunge – Called “Intervention”, “Window Dressing”, “Temporary Smash”, “Paper Fiasco” There was blood in the gold and silver trading pits yesterday as leveraged longs got their heads handed to them on a plate. The massacre was attributed to a host of different… Continue reading Gold Takes A Dive
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Charts of the Week Topics Covered This Week Include: Consumer Confidence, The Most Useless Economic Statistic Consumer Confidence, The Most Useless Economic Statistic – 2 Will Inflation Become A Problem? The Debt Ceiling Gas Prices The Strategic Petroleum Reserve And Oil Price U.S. Bank Lending Rises Bank Lending -2 Money Market Funds’ Exposure To Europe… Continue reading Charts of the Week
<Click on chart for larger image> Bloomberg.com – U.S. Consumer Sentiment Climbs Toward ’08 Levels Consumer-confidence measures are climbing out of the depths reached during the last recession as employers step up hiring and stocks rally, signaling Americans may be poised to increase spending. The Conference Board’s gauge in February increased to the highest level… Continue reading Consumer Confidence, The World’s Most Useless Economic Statistic
Bloomberg.com – Euro-Area Banks Tap ECB for Record Amount of Three-Year Cash Euro-area banks tapped the European Central Bank for a record amount of three-year cash in an operation that may boost bond and equity markets. The Frankfurt-based ECB said today it will lend 800 financial institutions 529.5 billion euros ($712.2 billion) for 1,092 days.… Continue reading LTRO…EU Banks Like Cheap Money