Eurodollar University

Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Something big happened in late November, impacting markets all around the world. Responsible for the crash in currencies, the collapse in some interest rates, maybe even some modest upset over in the stock market. We have a number of clues to go off, a few suspects to analyze. Eurodollar University's Money & Macro AnalysisCNBC Trump vows an additional 10% tariff on China, 25% tariffs on Canada and Mexicohttps://www.cnbc.com/2024/11/26/trump-vows-an-additional-10percent-tariff-on-china-25percent-tariffs-on-canada-and-mexico.htmlTruth Social https://truthsocial.com/@realDonaldTrump/posts/113546215408213585https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

There are huge numbers being thrown around the stock market. Normally you can just ignore them since share prices go up almost no matter what. But these imbalances are now too big to simply dismiss and key sectors in the equity market aren't buying them. Eurodollar University's Money & Macro AnalysisWSJ Stocks on Pace for Best Two Years in a Quarter-Centuryhttps://www.wsj.com/finance/stocks/stocks-on-pace-for-best-two-years-in-a-quarter-century-c5b5f9b3NYT Wall St. Sees More Gains Ahead After Another Bumper Year for Stockshttps://www.nytimes.com/2024/12/31/business/stock-market-2025-predictions.htmlMotley Fool Prediction: The Artificial Intelligence (AI) Bubble Will Burst in 2025. Here's Why.https://www.barchart.com/story/news/30123360/prediction-the-artificial-intelligence-ai-bubble-will-burst-in-2025-heres-whyECB Financial Stability Review November 2024https://www.ecb.europa.eu/press/financial-stability-publications/fsr/html/index.en.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

A plunge in Chicago kicks off more concerns over the global car business. Layoffs and plant closures keep coming as automakers are having enormous difficulties first aligning their businesses with the lack of recovery. On top of that, more indications beside Chicago pour in showing falling cyclical demand for cars, too. Eurodollar University's Money & Macro AnalysisReuters Europe's embattled auto sector plans plant closures and layoffshttps://www.reuters.com/business/autos-transportation/europes-embattled-auto-sector-plans-plant-closures-layoffs-2024-12-02/InsideEVs Honda's CEO Struggles To Explain Why Nissan Merger Makes Sensehttps://insideevs.com/news/745625/honda-nissan-merger-struggling-reason/Japan trade https://www.customs.go.jp/toukei/shinbun/trade-st_e/2024/2024115e.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The biggest surprise of 2024 wasn't any election results nor was it the fact central banks worldwide are more desperately accelerating rate cuts as the year draws to close. Or that other governments and officials are resorting to increasing panicky measures to calm markets in their areas. What caught everyone so off guard about '24 was the one outcome that stands behind all of those things. Eurodollar University's Money & Macro AnalysisIMF WEO January 2024https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

After facing a major setback, the Reserve Bank of India has ditched its longshot desperation tactic aimed at 'speculators' betting against the rupee. They aren't the problem, the fundamentals are  - global fundamentals. There is a lot INR has to say about those as it becomes the latest to plunge. Eurodollar University's Money & Macro AnalysisBusiness Standard RBI dials down use of NDFs to fight dollar, balance rupee stabilityhttps://www.business-standard.com/finance/news/rbi-dials-down-use-of-ndfs-to-fight-dollar-balance-rupee-stability-124121800613_1.htmlBusiness Standard RBI asks some lenders to reduce speculative positions against rupeehttps://www.business-standard.com/economy/news/reserve-bank-asks-some-lenders-to-cut-speculative-bets-against-rupee-124112200628_1.htmlBusiness Standard Rupee falls to new low of 85.27 as importers stock up dollar at month endhttps://www.business-standard.com/economy/news/rupee-falls-to-new-low-of-85-27-as-importers-stock-up-dollar-at-month-end-124122600861_1.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

More indications of substantial problems for American workers - they can't find any jobs. But why? Moreover, what will it take to get this major hiring freeze to thaw? It isn't rate cuts or lower rates. Nor does it appear the election has worked, either. Consumers plunged back into fears over jobs and incomes in December.Eurodollar University's Money & Macro AnalysisNBC News From 'Great Resignation' to 'Great Detachment': How the U.S. job market has slowedhttps://www.nbcnews.com/business/economy/hard-to-find-a-job-get-hired-why-november-2024-jobs-report-rcna183102Conference Board US Consumer Confidence Pulled Back in Decemberhttps://www.conference-board.org/topics/consumer-confidencehttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Major shift in the Treasury curve with a critical spread uninverting for the first time in years. Bonds and central banks are on the move, which leaves some of Treasury market going the wrong way. And the only reason is Jay Powell. From swaps to other bonds, even something called term premia, the Fed is in the dark while bonds are lighting up. Eurodollar University's Money & Macro AnalysisFRBNY Term Premia calculationshttps://www.newyorkfed.org/research/data_indicators/term-premia-tabs#/interactiveBloomberg Treasury ‘Term Premium’ Gauge Positive for First Time Since 2021https://www.bloomberg.com/news/articles/2023-09-27/treasury-term-premium-gauge-positive-for-first-time-since-2021https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

LT Chinese bond rates have been falling fast for a while. Over the last two weeks, ST yields have completely collapsed; most of it last week, too. Why? Maybe more important, why now? The mainstream answer to either one is total nonsense and easily debunked from the September bazooka. What does that leave? Possibly an old familiar name. Eurodollar University's Money & Macro AnalysisBloomberg Chinese Regulator Asks Insurers to Report Vanke Debt Holdingshttps://www.bloomberg.com/news/articles/2024-12-18/chinese-regulator-asks-insurers-to-report-vanke-debt-holdingshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

According to the latest conventional 'wisdom' - which changes with each and every CPI report and FOMC dot adjustment - inflation is back and so is the soft landing. The most recent update from the labor market says that's entirely backward. Job findings have utterly plunged right when the jobs market reaches that 'magical' unemployment inflection spot on this critical curve. Eurodollar University's conversation w/Steve Van Metrehttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

There's more to the Brazil story, especially since Brazil's story isn't strictly about Brazil. With markets there spiraling into chaos, the government is down to blaming 'speculators.' If that's the case, then speculation has gone global in a lot of critical ways. From currencies to job findings plunging, even something real like the Baltic Dry which is crashing now, too. Eurodollar University's Money & Macro AnalysisBloomberg Brazil Central Bank Rejects Doubts Over Power of Monetary Policyhttps://www.bloomberg.com/news/articles/2024-12-19/brazil-central-bank-rejects-doubts-over-monetary-policyBloomberg Brazil Traders ‘Sell First, Ask Later’ as Panic Hits Marketshttps://www.bloomberg.com/news/articles/2024-12-17/brazil-traders-sell-first-ask-later-as-panic-sweeps-marketsFT Warren Buffett's record cash pile is starting to make people nervoushttps://financialpost.com/financial-times/warren-buffett-cash-pile-investors-nervousBloomberg Brazil Finance Chief Says Real May Be Under ‘Speculative Attack’https://www.bloomberg.com/news/articles/2024-12-18/brazil-finance-chief-says-real-may-be-under-speculative-attackBloomberg Brazil Spends $17 Billion in Reserves to Lift Cratering Realhttps://www.bloomberg.com/news/articles/2024-12-20/central-bank-burns-17-billion-in-reserves-to-lift-brazil-s-realBloomberg Brazil’s Wealthy Lament Political Dysfunction as Fortunes Tumblehttps://www.bloomberg.com/news/articles/2024-12-20/brazil-s-richest-people-lament-political-dysfunction-as-fortunes-tumblehttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

While everyone is hanging on the Fed and the FOMC's indecision about how many rate cuts next year, there are currency crises - plural - beginning to break out in key places. One of those is Brazil where it has gotten so dangerous the country's central bank is now regularly intervening in FX spot markets. What's really going on here? The black hole is angry.Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Stocks tanked, bond yields soared, the dollar jumped. All because the Fed doesn't know what it's going to do now? Partly, yeah. There's a lot more to the story, however. Given the tortuous road to rate cuts, it wasn't suddenly going to become smooth sailing now that they've started. Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Canada. France. Germany. What do they have in common? Central banks in each are cutting rates. Also, their governments have either collapsed or, Canada, about to. Why? Same reason there are rate cuts. It's not ideology nor really partisanship. It's the economy, stupid. Eurodollar University's Money & Macro AnalysisCNBC Canada finance minister quits after clash with Trudeau, deals blow to governmenthttps://www.cnbc.com/2024/12/16/canada-finance-minister-quits-after-clash-with-trudeau-deals-blow-to-government-.htmlToronto Sun Trudeau says economy is great, Canadians can see truthhttps://torontosun.com/opinion/columnists/trudeau-says-economy-is-great-canadians-can-see-truthBloomberg French Growth Prospects Slow as Political Uncertainty Weighshttps://www.bloomberg.com/news/articles/2024-12-16/france-s-growth-prospects-weaken-as-political-uncertainty-weighsCNBC France’s new prime minister gets a baptism of fire after surprise Moody’s downgradehttps://www.cnbc.com/2024/12/16/frances-new-prime-minister-installed-hours-before-moodys-downgrade.htmlNYT German Government Collapses at a Perilous Time for Europehttps://www.nytimes.com/2024/12/16/world/europe/germany-confidence-vote-scholz-snap-election.htmlhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Interest rates worldwide are hanging at the edge of a cliff. It may not seem like it from the current focus on the Fed and the possible pause in its rate cutting. This doesn't mean other central bank rate cuts, either. Instead, two very critical signals have absolutely plunged just in the past few days. Record lows in both are far more relevant than Jay Powell. Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU