‘It’s A Joke’

‘It’s A Joke’

Never a dull moment. Markets were subjected to more unnecessary drama on Friday, as investors, analysts, and traders tried to sort out the implications and, more importantly, the rationale, behind Steve Mnuchin's decision to compel the Fed to end several of the emergency liquidity facilities that lent support to key markets over the course of the pandemic. Mnuchin and Republicans are hewing to talking points about repurposing the funds. Treasury's decision is "fully aligned with the letter of
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7 thoughts on “‘It’s A Joke’

  1. Next week, we could start seeing the first letters about how much it’s expected equities would fall should we (and it looks ever increasingly so), we enter recession in Q1.

    With this request to transfer the funds back to Treasury, they were testing the waters. They always, always, always test the waters. If people made a stink more often, they would turn to some other mischief and less stuff would be broken.

    We have 60 days left to see if Trump can exact revenge on all 330M citizens by putting into motion a deflationary depression.

    1. Plan for the worst, hope for the best.
      At some point Medical system will be out of equiptment. The headlines by Georgia runoff will have garbage heaps of corpses. Pathetic third world response. Whoppie we have vacines but nobody will be vacinated till we are over 300,000 dead. If Trump wanted to take credit for vacine he could have had us all mask up till it showed up.
      Attorney General of Georgia, Republican delegation from Michigan…Patriots.

  2. The title of this post, “It’s a Joke,” ended up reminding me later in the day, when reading that China issued a sovereign bond with a negative rate, that I read this post earlier in the day.

    What the heck is happening in the world now that China has issued negative yielding sovereign debt? Yeah, in Euros, and only a handful. But, still. I could imagine a world where Ms. Kelton, and others to be sure, would be somewhat skeptical of such a sovereign, who can issue bonds in its own currency, and later inflate them away, if necessary, opting instead to issue in a foreign currency.

    Is this just some trailer to get us to all pay attention to a burgeoning new financial center in Shanghai? What does this mean for the US Treasury market, if anything?

    What a joke that China is able to issue negative yielding sovereign debt and we can’t.

    1. Just think of the US as a subprime borrower and it becomes much easier to understand. The US dollar has been running on fumes, supported by my trade deficits that need to be reinvested. When the US went on its QE buying spree, there was plenty of debt to buy, unlike the EU, for instance. The EU central bank was easily able to push down rates to negative territory, largely because of the lack of supply in the underleveraged EU.
      Much of the buying of US debt was financed by the carry trade and duration-starved insurance and pension plans, under the delusion of a stable dollar with a higher(relatively) yield.
      With increased issuance of Euro-denominated corporate and sovereign debt , eventually euro rates will go up and foreign yield-starved investors
      will sell their US debt when they realize that 1% rates do not cover their currency losses.

  3. It seems that France have their own “I want you to do me a favour” bribery and corruption trial coming up. Let’s hope, in the interests of democracy and transparency, that they are more successful at democracythan the USA (United States of African-dictator-like-behaviour)

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