Briefings

Archive March 2019

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Week InReview: March 22, 2019

The Fed Has Settled on `It's Complicated' View

(Mar 21) — The FOMC has come and it has gone. Depending on how you use the word, it is impossible not to be simultaneously quite impressed and decidedly unimpressed. They went further than almost anyone expected.

Don't listen to the Monday morning quarterbacks try to tell you that it makes perfect sense. After all, the economy is slowing.

Just look at the Atlanta Fed GDPNow model. And they are doing a solid for the rest of the world. On the other hand, they have made it quite clear that they are the ones converging with the market. Not only in their rate expectations but in the understanding that there is little reason to put a lot of faith in their ability to forecast.

— Trader's Notes, Bloomberg Government

Week InAdvance: March 18, 2019

Tue Mar 19 IAIS meets on financial crime. | Wed Mar 20 FOMC rate decision. March equinox. | Thu Mar 21 EU leaders in Brussels.

Week InReview: March 15, 2019

The super-rich are being scammed on their private jets

Some fraud attempts are almost comical. One jet owner found himself charged 4,000 pounds ($5,300) for 240 sushi boxes apparently served on board his jet while it was empty, according to My Sky, a company whose software helps scrutinize and manage private-jet costs. Another was charged 6,000 euros ($6,800) for plastic cups after the provider mistakenly added two zeros to the invoice. Still another customer’s refueling bill ended up exceeding the capacity of the plane’s fuel tanks by more than two tons.

— Bloomberg Wealth

Week InAdvance: March 11, 2019

Mon Mar 11 Euro finmins in Brussels. | Tue Mar 12 CFTC global regulators meeting. FSI 20th anniversary forum in Basel. | Wed Mar 13 Transparency & financial crime in the House. | Thu Mar 14 Senate hearing on FSOC nonbank designations. | Fri Mar 15 B20 Tokyo summit.

Week InReview: March 8, 2019

‘Look, your worship,’ said Sancho, ‘what we see there are not giants but windmills, and what seem to be their arms are the sails that turned by the wind make the millstone go.’ — 'Don Quixote' by Cervantes

— Tilting at ETF Windmills
ETF.com

Week InAdvance: March 4, 2019

Mon Mar 4 Carnival in Rio. | Tue Mar 5 NPC opens in Beijing. | Wed Mar 6 FSOC meets at Treasury. | Thu Mar 7 CFTC considers uncleared swaps. | Fri Mar 8 International Women's Day.

Week InReview: March 1, 2019

People are worried about bond market liquidity

The standard story of bond market liquidity is:
  1. Big banks used to trade bonds by buying a large slug of bonds from a customer and holding on to them for as long as it took to find another buyer, smoothing out the market but also taking a lot of price risk for themselves.
  2. Since the financial crisis, new regulations (higher capital requirements, rules against proprietary trading, etc.) have made it more difficult for banks to trade bonds on their own books as dealers.
  3. Instead, banks have just matched up buyers and sellers without intermediating risk themselves, which is less convenient for the buyers and sellers. Also if anything goes wrong, the banks will not be there to take on their historic dealer role of smoothing out price moves, and there could be an ugly crash.
  4. People who do not want there to be an ugly crash tend to think this is bad.
  5. Other people think it is fine, though: If bond prices go down and someone has to lose some money, much better for it to be long-term fundamental bond investors with stable funding than for it to be banks. Banks are systemically risky, as we know, because losses at banks caused a massive systemic crisis in 2008.
I’m not saying that this story is true, and you could object to many of the particulars, but it gives you a rough sense of the controversy. In simplest form, the controversy is that post-crisis regulation has made the financial system safer at the cost of making the market worse. That might or might not be a good tradeoff, depending on the magnitude of the two effects — both quite hard to measure! — but it intuitively seems like it could be a real tradeoff.

— Matt Levine's Money Stuff

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