The AI Investment Boom Trumps Tariff Policy
🤯 The US trade deficit is back above $100 billion a month. ➖ But with some adjustments, this year's deficit is lower than in previous years. The lesson? 🦾 AI-related imports beat Trump's tariffs.
Hold on, Bank of England: The Fed is not so different from you on...
The Bank of England on Thursday released its latest Monetary Policy Report, announcing its decision to lower its policy rate by 25 bps to 4%. The report contains a lot of excellent analysis, including on the recent rise in food prices, the effect of trade war as well as a review of its quantitative tightening policy.
But one thing, a comparatively much less important thing, in the review just stuck in my mind...
Why is the Hong Kong-US interest rate spread so persistent? — Currency peg in...
A spread of over 3.5 percentage points between US and Hong Kong Interest rate persisted for close to two months and so far arbitrage has failed to close the gap, leading to discussion of whether Hong Kong's Linked Exchange System is failing. This article, however, will explore some technical factors behind this interesting interest rate gap.
September FOMC Meeting: The Potential Dissenters
The Federal Reserve is expected to cut its benchmark interest rate by 25 basis points this week. This has been the baseline market assumption since Chairman Jerome Powell's speech at Jackson Hole, in which he proclaimed, “the shifting balance of risks may warrant adjusting our policy stance."
The question is, how many dissenting votes will Powell face in this meeting?
A User’s Guide to Tariff Accrual Compensating Obligations
On the accidental invention of a new fiscal instrument, its structural advantages over existing debt ceiling workarounds, and the question of whether the next...
The Bat Signal Theory of Bessent’s Treasury Buyback Increase
Bessent doubled Treasury bond buybacks as long-term yields hit a 19-year high — a Bat Signal moment, but without the Fed's credibility or firepower behind it.
The Fed’s ‘leaky ceiling’ problem
Why is the Fed's SRF failing? Top Fed officials called the issue a "leaky ceiling" that doomed Quantitative Tightening (QT). Learn how low bank participation and the leaky floor analogy suggest new policy changes.
Should Federal Reserve use scenario analysis to handle trade war uncertainty?
The Fed is currently in a "wait and see" mode in deciding what is the reaction to Trump's trade policy. But is it possible for the Fed to be a bit more proactive than merely saying "we will be able to update you further when we know more details"?
Enters scenario analysis.
CAPE Without Its Hero: Can the Warning Stand on Its Own Without Shiller?
The CAPE ratio has topped 40, yet Robert Shiller, the economist who made it famous, is far less in the news. Can a bubble warning go viral without its hero?
Bank of Canada drops interest rate to 2.5% — also a risk management cut
After holding the policy rate unchanged in the past three meetings, Bank of Canada on Wednesday resumed its rate cut cycle, lowering its target for the overnight rate by 25 basis points to 2.5%.
Behind Warsh’s Fed Alternative Data Sources Dream—Who Pays for What and How?
Warsh wants the Fed to use real-time data from retailers and banks instead of slow government surveys.
But the question is: Who pays for what, and how?
Helicopter Money is here in Hong Kong? Well…
“The money helicopter has arrived,” Claire Jones writes in her FT Alphaville post, citing Hong Kong Finance Secretary’s announcement of a handout of HKD...
‘Unusually low’ Hong Kong interest rate is a policy choice*
A careful study of Hong Kong's currency peg that explain why the current low-interest rate environment can be interpreted as a result of the Hong Kong Monetary Authority's policy choice.
The repo spike is not liquidity crisis; it is a crisis for Fed’s floor...
The floor system needs a cap on top of it. The sooner the Fed realizes it, the better they will be prepared for the coming financial turmoil.
When will Hong Kong’s Interest Rates Align With the US?
If you think the interest rate gap between Hong Kong and US is a market phenomenon, think again. HK Monetary Authority has a much bigger role than you think
AI Investment Boosted US Q2 Growth — But the Import Offset Runs Far Wider...
The AI economic growth in Q2 US GDP is coupled with import offset. But the import offset was actually more board-based than that.
The US Information Sector Payroll Slump May Not Be What You Thought
Everyone blames ChatGPT for information sector job losses. BLS payroll data on the information sector tells a very different story.
Why Canada’s unemployment rate is rising so rapidly?
Canada's labor market has cooled down rapidly this year. Unemployment rate rose to 6.6% in August. The major issue is that the not enough job are created to digest the explosive population growth over the last few years and this integration problem is growing larger every month.
Should the Fed and BoC look through the World Cup employment boost?
The important question, however, is this: shouldn't the Fed and Bank of Canada look through such a one-off, short-term World Cup employment boost?
