Eurodollar University

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. Eurodollar University's Money & Macro AnalysisCHECK OUT EURODOLLAR UNIVERSITY'S DDA SUBSCRIPTIONGO MUCH DEEPER AND STEP INTO THE BLACKHOLE OF MONEY AND MACRO.NOW MORE THAN EVER. Bloomberg S&P 500 Rally Hits a Wall as Big Banks Sound Alarm: Markets Wraphttps://www.bloomberg.com/news/articles/2024-09-09/stock-market-today-dow-s-p-live-updatesFOMC Transcript Conference Call January 3, 2001https://www.federalreserve.gov/monetarypolicy/files/FOMC20010103ConfCall.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

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. Eurodollar University's Money & Macro AnalysisBloomberg China’s Deflationary Spiral Is Now Entering Dangerous New Stagehttps://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stageWall Street Journal Australian Economy Posts Weakest Growth Since Early 1990shttps://www.wsj.com/economy/australian-economy-posts-weakest-growth-since-early-1990s-a7f5d6b0?tpl=cbChina's NBS Consumer Prices August 2024https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956311.htmlChina's NBS Producer/Factory Gate Prices August 2024https://www.stats.gov.cn/sj/zxfb/202409/t20240909_1956310.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Steve Van Metre, a commentator on financial markets and central banking policies, dives into the Fed's potential interest rate cuts and the surprising possibility of ending Quantitative Tightening. He discusses how recent economic signals may lead to aggressive Fed actions, including a possible return to QE. The conversation also touches on the impact of the Bank Term Funding Program on regional banks and the intricate relationship between Fed decisions, bond markets, and interest rates, revealing the complexities of monetary policy.

Key markets are experiencing significant meltdowns, particularly in the U.S. Treasury and commodities. Crude oil prices are plummeting as OPEC pauses supply hikes, showcasing a troubling economic landscape. The August payroll report uncovers deeper economic challenges, highlighting employment trends that contradict optimistic media narratives. Signals of an impending recession are prevalent, with falling treasury yields indicating a potential downturn that extends beyond temporary market fluctuations.

Robert Bleiberg, an expert in macroeconomic analysis and monetary policy, unpacks the historical fiasco of price controls during the Nixon administration. He argues that government interventions are often misguided, revealing how these measures failed to curb inflation and exacerbated economic issues. Bleiberg highlights past lessons, emphasizing that politicians' quick fixes don't address underlying problems like purchasing power and unemployment. He offers a cautionary tale about the dangers of repeating such mistakes in today’s economic landscape.

Economic turmoil is brewing as Japan faces sharp stock declines and a soaring yen, signaling recession fears. The podcast delves into the fragility of the global economy, highlighting concerning US labor data with rising layoffs. It scrutinizes the risks of relying on carry trades amid these shifts. As oil prices crash, the complexities of forward rates create a chaotic financial landscape, illustrating how Japan's struggles could ripple across markets.

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.Eurodollar University's Money & Macro AnalysisFRB Michael Barr The Importance of Effective Liquidity Risk Managementhttps://www.federalreserve.gov/newsevents/speech/barr20231201a.htmReuters Discount window reform bill introduced as Fed works on its own overhaulhttps://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 Investigationhttps://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1103.pdf?sc_lang=enhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

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. Eurodollar University's Money & Macro AnalysisCNBC Oil prices ease on US gasoline demand worries, economic datahttps://www.cnbc.com/2024/05/29/oil-rises-as-major-producers-expected-to-keep-output-cuts-in-place.htmlThe Globe & Mail Crude Prices Fall on Energy Demand Concerns and Increased Russian Crude Exportshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Steve Van Metre, an expert in economic trends and personal finance, discusses the alarming drop in U.S. consumer savings to just 2.9%. He explains how this decline signals a potential economic downturn and raises concerns about consumer spending and job insecurity. Businesses face challenges in workforce retention and inventory management as consumers become increasingly anxious about their financial futures. Van Metre also addresses the impact of rate cuts on economic stability amidst these troubling trends.

The podcast dives into the puzzling rise in US GDP estimates despite widespread economic struggles. Experts discuss the disconnect between government optimism and the reality faced by consumers and businesses, suggesting troubling signs in the Treasury yield curve. The difference between GDP and Gross Domestic Income is explored, with GDI presenting a more honest assessment of economic health, particularly during downturns. The conversation highlights the stark contrasts between official data and everyday experiences, raising questions about future recessions.