Macro & Market Update

February 17, 2015March 13, 2015 by CantillonCH

More than half a century ago, in his role as an advisor to the men responsible for trying to set Taiwan on the road to prosperity, a redoubtable economist called Sho-Chie Tsiang argued that the monetary authorities should stop suppressing interest rates and directly rationing credit and should move instead toward a more market-oriented system where real rates were sufficiently elevated to encourage productive saving.

His reasoning was that the existing combination of what we might call Z(Real)IRP with ‘macro-prudential’ control was plagued with several significant drawbacks.

A World In Debt

February 11, 2015April 10, 2015 by CantillonCH

In his magisterial 1936 work, ‘A World in Debt‘, Freeman Tilden treated the business of contracting a loan with a heavy serving of well-deserved irony, describing how the debtor gradually mutates from a man thankful, at the instant of receiving the funds, for having found such a wise philanthropist as is his lender to one soon becoming a little anxious that the time for renewal is fast approaching. From there, he turns to the comfort of self-justification, undertaking a little mental debt-to-equity conversion in persuading himself that his soon-to-be disappointed creditor was, after all, in the way of a partner in their joint undertaking and so consciously accepted a share of the associated risks.

How did we end up here?

February 3, 2015April 10, 2015 by CantillonCH

While money can be made in markets on the minutest of scales, sometimes it helps to have a broader sense of perspective. After all, if you can’t locate yourself on a map – without the aid of GPS, children! – you don’t know where you are and if you have no grasp of history, you don’t really know who you are either.

One Leg to Stand on

February 3, 2015April 10, 2015 by CantillonCH

Here’s a question for all the cheering QEuro fans out there. If you came across a country where both real and nominal money supply were growing at rates in the low teens – something its people had not experienced for almost a decade and close to the fastest seen in the last four – would you consider it to be a victim of ‘deflation’? If not, what help do you suppose an expansionary central bank would be to it?

Technical Update

January 28, 2015April 10, 2015 by CantillonCH

Wracked by the actions of the various central banks – which gave us another key reminder that volatility does not equate to risk – yet not wishing to start rethinking their entire thesis, a characteristic loss confidence has started to set in among those who were telling themselves over the Christmas trukey just what geniuses they were. We could have an interesting couple of weeks in store – not helped by the fact that we are about to enter the great Chinese data avoid as the lunar new year approaches.

Whatever it Takes

January 28, 2015February 12, 2016 by CantillonCH

So, finally, the world’s most open conspiracy came to full fruition and Magic Mario actually got to do a little of ‘whatever it takes’ after 2 1/2 long years of bluster. Sweeping aside the objections of what appears to have been most of Northern Europe, the triumph of the Latins was near complete. For all his stubborn resistance, Jens Weidmann proved no Arminius and the airy council rooms of the ECB building in Frankfurt no Teutoburger Wald whose mazy forest tracks and swampy margins proved so deadly to the legions of that earlier Roman legate, Publius Quinctilius Varus.

A Slow Boat in China

January 21, 2015April 10, 2015 by CantillonCH

Still struggling to move from its ‘Three Overlay’ period – essentially the indigestion added by the post-GFC ‘stimulus’ burst to the already unbalanced economic structure – to its vaunted ‘New Normal’ – slower headline growth but growth of much higher quality, to be concentrated not in building steel mills, metal smelters, and dormitory towns just for the sake of it but on high-tech and clean energy and all sorts of other touchy-feely, Googleworld concepts – China nonetheless managed to eke out a face saving final quarter GDP number of 7.4% yoy and an industrial production uptick to 7.9%.

Tell me another!

January 19, 2015April 10, 2015 by CantillonCH

In the wake of the SNB decision last week to remove its infamous 1.20 euro floor rate, the ever ingenious – and no less self-assured – Willem Buiter has been expressing his outrage that any central banker might dare to deviate from a consensus which shares three articles of faith, each engraved by the Deity on the tablets he handed down to His prophets at MIT.

Let’s be Franc about it

January 16, 2015April 10, 2015 by CantillonCH

On Wednesday, we were all utterly not shocked to learn that the Advocate-General of the European Court of Justice, Pedro Cruz Villalón, had decided that he could see no major objections to Mario Draghi’s Fed-wannabe programme of so-called Outright Monetary Transactions – a decision upon the legality of which was earlier referred to that august body by the German Constitutional Court like the hot potato it was.

Though Snr. Cruz Villalón’s decision is not binding – a decision of the full body sometime in the middle of the year is needed for that to occur – it was nevertheless highly suggestive of the way the court might rule and was therefore seized upon by stimulus junkies everywhere as a result.

Technical Overview

January 9, 2015April 10, 2015 by CantillonCH

Though pausing occasionally to correct short-term oversold conditions, crude still seems locked in a one timeframe down market. As we suggested several months ago, the dominant narrative has become one which now finds reasons to project the move ever lower, conveniently forgetting all previous ideas of cost-of-production floors at $90, then $80, then $60 as each has been breached in turn.

True Sinews

Commentary & Analysis by Sean Corrigan of www.cantillon-consulting.ch

Macro & Market Update

A World In Debt

How did we end up here?

One Leg to Stand on

Technical Update

Whatever it Takes

A Slow Boat in China

Tell me another!

Let’s be Franc about it

Technical Overview