The Fed's latest semi-annual report on financial risks contains a couple of important updates. First, we get a sense of where the systemic attempt to deal with the downside to the commercial real estate bubble stands. That also feeds into the most recent updates on US banks and the deteriorating credit environment. Plus, we also take a look at why the Fed's report singled-out the stock market and what that means. Eurodollar University's Money & Macro AnalysisFederal Reserve Financial Stability Report April 2024https://www.federalreserve.gov/publications/files/financial-stability-report-20240419.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

There is a tendency to conflate the behavior of consumer prices with the condition of the economy. With the current mania over recent CPIs in full bloom, fears extend into the real economy. Is it really "too hot?" Recent data from the Federal Reserve itself actually helps separate the facts from the misperceptions. Eurodollar University's conversations w/Steve Van MetreBeige Book April 2024https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20240417.pdfhttps://www.eurodollar.university

The world is starting to get the idea that rate hikes are not all they're cracked up to be. Yet, we're forced to focus endlessly on the Federal Reserve's interest rate policies. Why? The answer is really simple. More importantly, what's really going on in the economy? That answer is also pretty simple, too.Eurodollar University's Money & Macro AnalysisJay Powell Jackson Hole August 2023 Inflation: Progress and the Path Aheadhttps://www.federalreserve.gov/newsevents/speech/powell20230825a.htmFOMC Transcript July 2014https://www.federalreserve.gov/monetarypolicy/files/FOMC20140730meeting.pdfBen Bernanke Jan 2009 The Crisis and the Policy Responsehttps://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htmhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The Fed is all over the place, flip-flopping sometimes within a matter of weeks. They're confident about inflation then they're not. What's the real reason for so much back and forth, the obvious insecurity? It's the story no one really knows and what actually ties the current day with the past Great Inflation. Eurodollar University's Money & Macro AnalysisCSPAN William Proxmirehttps://www.c-span.org/video/?322377-1/political-career-senator-william-proxmirehttps://www.c-span.org/video/?39834-1/government-wastehttps://www.c-span.org/video/?c4704392/sen-william-proxmireHutchinson v Proxmirehttps://www.oyez.org/cases/1978/78-680Federal Reserve Memo Nov 6, 1973 & letter from Arthur Burns to Senator Proxmirehttps://fraser.stlouisfed.org/files/docs/historical/burns/Burns_19731106.pdfNYT Dec 2, 1975 Proxmire Would Curtail Bankshttps://www.nytimes.com/1975/12/02/archives/proxmire-would-curtail-banks.htmlFOMC Transcript July 1981https://www.federalreserve.gov/monetarypolicy/files/FOMC19810707meeting.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springUpdates from the US housing and energy sectors heavily rebuff the idea reflation. There is supposed to be resurgent demand when new data shows the opposite, including a shocking crash in one critical segment. Not only do they contradict reflation, these also expose the CPI. Eurodollar University's Money & Macro AnalysisRent.com The Rent Report April 2024https://www.rent.com/research/average-rent-price-report/https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springUST yields are up somewhat sharply since early April, raising questions as to why that is. High on the public list of suspects is a government bond crisis for obvious Uncle Sam insanity reasons. Others point to possible reflation in higher yields. We do have a solid, historically validated answer for Treasuries, but it's written in German. Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springHigher (slightly) interest rates and a couple rising commodities has brought back the reflation trade. For those to be valid, there would have to be widespread confirmation that a meaningful pickup in demand is brewing. Instead, there are huge holes including the most critical signal of them all. Eurodollar University's Money & Macro AnalysisMining.com  Global copper smelters less active after China’s planned output cutshttps://www.mining.com/web/global-copper-smelters-less-active-after-chinas-planned-output-cuts/https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Is the Great Migration about to get worse? The answer starts in China where just the week the country already reported a sharp fall in consumer prices. CNY is down and so are government bond yields there. The Chinese also said the economy suffered a big drop in exports and then suffered a record low growth rate for lending. Banking woes, trade setbacks, further declines in growth and inflation expectations. The rest of the world is going to feel the effects.Eurodollar University's Money & Macro AnalysisS&P Global Ratingshttps://www.spglobal.com/ratings/en/research/articles/231127-economic-research-economic-outlook-emerging-markets-q1-2024-challenging-global-conditions-will-constrain-gr-12923458Fitch Ratings Fitch Revises Outlook on China to Negative; Affirms at 'A+'https://www.fitchratings.com/research/sovereigns/fitch-revises-outlook-on-china-to-negative-affirms-at-a-09-04-2024https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The economy is doing just fine according to many statistics, but according to most people it is anything but. Those aren't just idle malcontents, either. A fundamental fact of the current state of the world is that it will have to reckon for that economic pain and substantial loss. Many now merely believe that worst is behind is, but what if it is still lying just ahead?Eurodollar University's conversations w/Steve Van MetreFRB Philadelphia Q4 2023 Insights Reporthttps://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bankJP Morgan Chase Q1 2024 earningshttps://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2024/1st-quarter/6678012b-9242-492b-acd0-1473eabade3c.pdfCitigroup Q1 2024 earningshttps://www.citigroup.com/rcs/citigpa/storage/public/Earnings/Q12024/2024prq1.pdfWells Fargo Q1 2024 earningshttps://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/earnings/first-quarter-2024-earnings.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Yesterday's US CPI reignited the fierce debate over a possibly sticky inflation future. China just ended it by reminding the world of its stubborn deflationary present with the third largest monthly CPI drop in the last twenty years. Producer prices also decline which is a solidly disinflationary signal for China and the world regardless of the latest consumer price numbers from elsewhere. Eurodollar University's Money & Macro AnalysisChina's NBS Consumer prices press releasehttps://www.stats.gov.cn/sj/zxfb/202404/t20240411_1954446.htmlChina's NBS Producer prices press releasehttps://www.stats.gov.cn/sj/zxfb/202404/t20240411_1954447.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Another CPI comes in higher than expected. This isn't some harbinger of an impending price spiral, just the regular fluctuations in consumer prices driven largely by oil. It has stirred up inflation fears anyway in large part because it seems as if the CPI and especially the core rate is now stuck at a structurally higher rate. History cautions when making those assumptions.  Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springHawkish policymakers, oil prices, higher for longer all over the media. Why are banks, not just central banks, already cutting rates? Contrary to what you hear in the mainstream, policymakers aren't actually all that hawkish. More importantly, global markets are pricing more assertively for fragility not soft landing.Eurodollar University's Money & Macro AnalysisBloomberg Goldman’s Marcus Frontruns Fed With Rate Cut on Savings Accounthttps://www.bloomberg.com/news/articles/2024-04-04/goldman-s-marcus-frontruns-fed-with-rate-cut-on-savings-accountBloomberg State Street Sees Half-Point Fed Rate Cut as Soon as Junehttps://www.bloomberg.com/news/articles/2024-04-09/state-street-sees-half-point-fed-rate-cut-as-soon-as-juneBloomberg Fed’s Kashkari Floats Possibility of No Rate Cuts This Yearhttps://www.bloomberg.com/news/articles/2024-04-04/fed-s-kashkari-floats-possibility-of-no-rate-cuts-this-yearBloomberg Fed’s Kashkari Sees Two Rate Cuts in 2024, Potentially Just Onehttps://www.bloomberg.com/news/articles/2024-03-06/fed-s-kashkari-sees-two-rate-cuts-in-2024-potentially-just-oneReuters Inverted yield curve no longer reliable recession flag, strategists sayhttps://www.reuters.com/markets/us/inverted-yield-curve-no-longer-reliable-recession-flag-strategists-say-2024-03-12/NFIB March 2024 reporthttps://www.nfib.com/surveys/small-business-economic-trends/https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springWhat if gold and oil are actually trading on the same outcome? Despite popular misconceptions, a non-economic oil shock like the one we're currently experiencing is NOT inflationary. On the contrary, history shows it will almost certainly be disinflationary because of the negative impact it has on the economy. And if that impact is negative enough, that will lead to sharply lower interest rates - the very factor driving gold to all-time highs.Eurodollar University's Money & Macro AnalysisBloomberg  The Gold Market Hunts for Answers Behind Bullion’s Sudden Surgehttps://www.bloomberg.com/news/articles/2024-04-07/the-gold-market-hunts-for-answers-behind-bullion-s-sudden-surge?fromMostRead=trueBernanke, Gertler, Stock Systematic Monetary Policy and the Effects of Oil Price Shockshttps://www.brookings.edu/wp-content/uploads/1997/01/1997a_bpea_bernanke_gertler_watson_sims_friedman.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springOil is up sharply as fears over a wider conflict in the Middle East continue to rise. Quite predictably, this has raised widespread concerns over renewed "inflation." But we just did this six months ago and that example shows what we should expect today and going forward. Eurodollar University's conversation w/Steve Van Metrehttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springYet another blowout payroll number from the government. Even though the BLS's "other" employment estimates managed a sharp rebound on the month, the difference between the two has become intolerable. How do we know which one might be closer to reality? We make a bunch of comparisons to see which way the weight of evidence falls. Also, every month has 28 days.Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springChina's currency trading was wild yesterday, CNY moving just a few pips above the PBOC's daily limit. But then, the country closed down for the rest of this week leaving the whole world hanging as to what might happen next. Will yuan breach the daily band for the first time ever? Might the central bank relent like it usually does? More important than those, what does all this mean? The simplest "equation" in all economics holds the answer. Eurodollar University's Money & Macro AnalysisJapan Times Ex-finance official who warned of Japan's 2022 yen intervention sounds alarmhttps://www.japantimes.co.jp/business/2024/04/03/markets/former-currency-chief-warns-of-yen-intervention/https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springMonday's "strong" ISM manufacturing data sparked a whirlwind of inflation fear(mongering). Today's far more important and weak ISM non-manufacturing data barely took any notice. Why is that? The answer is obvious even though the latter series on services is far more important for the overall economy especially since these estimates for it are highly correlated with so many other critical variables. Eurodollar University's Money & Macro AnalysisBloomberg June Fed Rate-Cut Odds Dip Below 50% After Strong ISM Datahttps://www.bloomberg.com/news/articles/2024-04-01/treasury-yields-extend-climb-after-strong-ism-factory-gaugeshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springTo hear everyone tell it, bond yields are surging. Losses in the marketplace are "piling up" allegedly because hawkish central bankers will be fighting inflation a lot longer than previously hoped since the economy is so insatiably red hot. Except, none of that is true; starting with bond yields. And we can check our work, too, in a way that actually touches the real world.Eurodollar University's Money & Macro AnalysisBloomberg Bond Market Sees Fewer Rate Cuts Than Fed, Deepening Losseshttps://www.bloomberg.com/news/articles/2024-04-02/markets-back-to-seeing-fewer-rate-cuts-than-the-federal-reserveBloomberg Fed’s Daly Says Three Rate Cuts Is Reasonable Baseline for 2024https://www.bloomberg.com/news/articles/2024-04-02/fed-s-daly-says-three-rate-cuts-is-reasonable-baseline-for-2024?srnd=fixed-incomehttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

EURODOLLAR UNIVERSITY'S SPRING SALE STILL GOING FOR A LITTLE WHILE LONGER, DETAILS AT THE LINK BELOWhttps://www.eurodollar.university/sales-page-springGold continues to soar, hitting almost as many record highs as stocks. And that's a problem because unlike stocks gold tends to be a useful indicator and warning sign. There are three theories as to what's behind the golden surge. Here we examine the evidence and consistency of all three. Eurodollar University's Money & Macro AnalysisFRB Chair Jerome Powell Testimony to Senate Banking Committee March 7, 2024https://www.c-span.org/video/?533955-1/federal-reserve-chair-testifies-monetary-policy-economyCommercialEdge March 2024 Office Reporthttps://www.commercialedge.com/blog/national-office-report/https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

It is critical to understand what is happening in China first of all. The country is suffering from a confluence of longer-term structural imbalances butting up against near-term strategies ostensibly aimed at minimizing the fallout. The risks are complex though in broad terms pretty easy to sketch out. They include potential impacts on global liquidity, one of the most misunderstood topics in finance. If are interested in Alf’s Macro Investment Fund, drop him an email for information at this address: fund@themacrocompass.com Alf’s Course: TheMacroCompass.substack.com Other Courses: https://themacrocompass.org/courses/Eurodollar University's conversations w/Alfonso Peccatiellohttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU