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Jeffrey P. Snider

@JeffSnider_EDU • 138,742 subscribers

Host Eurodollar University channel. Monetary science reborn. Putting central banks where they belong.

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The jobs numbers don't add up. The establishment survey says leisure and hospitality added 70,000 jobs in May. The household survey, down 300,000 positions since January. Full-time jobs, down half a million over the last two months. These two numbers cannot both be true. And when you have to pick one, you take the household survey. Every single time. Businesses staffed up hoping demand would follow. It didn't. Hotels offering discounts. Parks seeing softer attendance than expected. The income data flagged this months ago. There simply wasn't enough of it. The picture the headline number paints and the picture on the ground are not the same picture.

The jobs numbers don't add up. The establishment survey says leisure and hospitality added 70,000 jobs in May. The household survey, down 300,000 positions since January. Full-time jobs, down half a million over the last two months. These two numbers cannot both be true. And when you have to pick one, you take the household survey. Every single time. Businesses staffed up hoping demand would follow. It didn't. Hotels offering discounts. Parks seeing softer attendance than expected. The income data flagged this months ago. There simply wasn't enough of it. The picture the headline number paints and the picture on the ground are not the same picture.

Jeffrey P. Snider

19,279 次观看 • 2 天前

The next phase of the global trade war will not be fought in Washington. It will be fought in Brussels. China cannot sell enough at home. Years of overcapacity, suppressed consumption, and an economy built for export have left Beijing with one lever: push goods outward. Europe cannot absorb the overflow. Its own industries are fragile, its workers are voting, and its policymakers are finally out of patience. Now add this: America has already closed its door. Every container turned away from US ports is one more looking for a berth in Hamburg, Rotterdam, Antwerp. So the pressure on Brussels does not ease when Washington escalates. It doubles. And here is what makes this collision different from a normal trade dispute. Normal disputes can be settled. Quotas, agreements, a handshake in Geneva. This one cannot, because the forces driving it are not policy choices. They are structural necessities. China sees exports as survival. Europe increasingly sees Chinese imports as a threat to its survival. When both sides believe they are defending themselves, escalation has no natural ceiling. The language will be technical: anti-dumping probes, countervailing duties, local content requirements, strategic sector reviews. But underneath all of it is a much simpler reality. Two major economies have run out of options, and they are now on a collision course.

The next phase of the global trade war will not be fought in Washington. It will be fought in Brussels. China cannot sell enough at home. Years of overcapacity, suppressed consumption, and an economy built for export have left Beijing with one lever: push goods outward. Europe cannot absorb the overflow. Its own industries are fragile, its workers are voting, and its policymakers are finally out of patience. Now add this: America has already closed its door. Every container turned away from US ports is one more looking for a berth in Hamburg, Rotterdam, Antwerp. So the pressure on Brussels does not ease when Washington escalates. It doubles. And here is what makes this collision different from a normal trade dispute. Normal disputes can be settled. Quotas, agreements, a handshake in Geneva. This one cannot, because the forces driving it are not policy choices. They are structural necessities. China sees exports as survival. Europe increasingly sees Chinese imports as a threat to its survival. When both sides believe they are defending themselves, escalation has no natural ceiling. The language will be technical: anti-dumping probes, countervailing duties, local content requirements, strategic sector reviews. But underneath all of it is a much simpler reality. Two major economies have run out of options, and they are now on a collision course.

Jeffrey P. Snider

23,536 次观看 • 2 天前

China is not dumping cheap goods into a thriving global economy. It is dumping them into a Europe that is already on its knees. France contracted. German industry is in deep depression. Household spending is absent. Energy costs remain a serious threat. Banks are buying government bonds at crisis-like speeds because they are more worried about recession than inflation. That is the receiving end of China's export surge. Here is the structure of the problem. China built massive industrial capacity in the 1990s and 2000s on the assumption that global growth would never stop. When 2008 proved that wrong, the capacity remained. It never went away. Electric vehicles. Batteries. Solar. Steel. Advanced manufacturing. Beijing did not build these industries by accident. They are the national development strategy, the industries of the future, funded cheaply, subsidized quietly, and backed by state banks. From Beijing's perspective, exports are not a choice right now. They are a pressure valve. If China slows exports, factory utilization drops. Producer prices weaken again. Corporate profits fall. Employment risk rises. Local government revenues, already stressed, take another hit. Banks, already fragile, take more damage. Exports are the only remaining release valve. But Europe is not receiving this from a position of strength. It already watched Chinese competition hollow out its solar industry. It does not want to watch the same movie in EVs, batteries, and wind components. Two economic blocs, both under pressure, both with limited options, pointed directly at each other. That is the trade war. Not a negotiation. A collision.

China is not dumping cheap goods into a thriving global economy. It is dumping them into a Europe that is already on its knees. France contracted. German industry is in deep depression. Household spending is absent. Energy costs remain a serious threat. Banks are buying government bonds at crisis-like speeds because they are more worried about recession than inflation. That is the receiving end of China's export surge. Here is the structure of the problem. China built massive industrial capacity in the 1990s and 2000s on the assumption that global growth would never stop. When 2008 proved that wrong, the capacity remained. It never went away. Electric vehicles. Batteries. Solar. Steel. Advanced manufacturing. Beijing did not build these industries by accident. They are the national development strategy, the industries of the future, funded cheaply, subsidized quietly, and backed by state banks. From Beijing's perspective, exports are not a choice right now. They are a pressure valve. If China slows exports, factory utilization drops. Producer prices weaken again. Corporate profits fall. Employment risk rises. Local government revenues, already stressed, take another hit. Banks, already fragile, take more damage. Exports are the only remaining release valve. But Europe is not receiving this from a position of strength. It already watched Chinese competition hollow out its solar industry. It does not want to watch the same movie in EVs, batteries, and wind components. Two economic blocs, both under pressure, both with limited options, pointed directly at each other. That is the trade war. Not a negotiation. A collision.

Jeffrey P. Snider

24,071 次观看 • 3 天前

Most people read the dollar exactly backwards. A rising dollar looks like strength. Strong America, good economy, the Fed doing its job. A falling dollar looks like weakness. Inflation, debasement, the end of dollar dominance. It is the other way around. A rising dollar usually means global funding is tightening. The world is short of dollars and scrambling to find them. That is not strength. That is stress. Think of a hurricane coming and everyone rushing to buy bottled water. The price spikes. That does not mean the water got stronger. It means people are scared and desperate. The dollar works the same way. When it surges against everything at once, it is telling you dollars are getting scarce, not that America is winning. That is why the dollar spikes in crises. The 1997 Asian crisis. 2008. The 2015 emerging market squeeze. March 2020. The 2024 carry trade blow up. The pattern is not random. None of this is really about the Fed or money printing. The dollar's exchange value is mechanical. It runs on the eurodollar system, the offshore dollar funding made of bank balance sheets, collateral, repo, and swaps. The biggest driver is dealer balance sheets. When dealers expand, dollars flow and the world feels calm. When they pull back, dollars get scarce and the dollar climbs. And this is the part everyone gets wrong. When foreign central banks sell US treasuries, the headlines scream that they are dumping America. They are not. They are using their reserves exactly as designed. When their markets are short of dollars, they sell treasuries to supply them. Sell treasuries, the dollar goes up. That is stress, not rejection. Which is why the dollar doom story keeps failing. They said QE would destroy the dollar after 2008. They said the deficits would collapse it. It never happened, because the problem was never too many dollars. It was not enough usable ones in the right places. So when someone tells you a strong dollar means America is strong, be careful. The strongest looking dollar is often the biggest warning sign. And a falling dollar is usually just the storm passing.

Most people read the dollar exactly backwards. A rising dollar looks like strength. Strong America, good economy, the Fed doing its job. A falling dollar looks like weakness. Inflation, debasement, the end of dollar dominance. It is the other way around. A rising dollar usually means global funding is tightening. The world is short of dollars and scrambling to find them. That is not strength. That is stress. Think of a hurricane coming and everyone rushing to buy bottled water. The price spikes. That does not mean the water got stronger. It means people are scared and desperate. The dollar works the same way. When it surges against everything at once, it is telling you dollars are getting scarce, not that America is winning. That is why the dollar spikes in crises. The 1997 Asian crisis. 2008. The 2015 emerging market squeeze. March 2020. The 2024 carry trade blow up. The pattern is not random. None of this is really about the Fed or money printing. The dollar's exchange value is mechanical. It runs on the eurodollar system, the offshore dollar funding made of bank balance sheets, collateral, repo, and swaps. The biggest driver is dealer balance sheets. When dealers expand, dollars flow and the world feels calm. When they pull back, dollars get scarce and the dollar climbs. And this is the part everyone gets wrong. When foreign central banks sell US treasuries, the headlines scream that they are dumping America. They are not. They are using their reserves exactly as designed. When their markets are short of dollars, they sell treasuries to supply them. Sell treasuries, the dollar goes up. That is stress, not rejection. Which is why the dollar doom story keeps failing. They said QE would destroy the dollar after 2008. They said the deficits would collapse it. It never happened, because the problem was never too many dollars. It was not enough usable ones in the right places. So when someone tells you a strong dollar means America is strong, be careful. The strongest looking dollar is often the biggest warning sign. And a falling dollar is usually just the storm passing.

Jeffrey P. Snider

103,002 次观看 • 18 天前

Asia's currencies are not the real story. The real story is the dollar. When currencies fall across an entire region at once, it is not a coincidence. It is a signal. Economies from South Korea to India to Indonesia are scrambling for dollars at the exact moment dollars are getting harder and more expensive to secure. The signs of stress are not subtle. Emergency rate hikes. Joint inspections of major FX banks for the first time in over a decade. Central banks burning through foreign reserves only to watch their currencies slide anyway. These are not routine policy moves. They are acts of desperation. And the danger is the feedback loop: currency weakness becomes financial volatility, financial volatility accelerates capital flight, capital flight tightens credit, and tighter credit deepens recession pressure well beyond Asia. Policymakers can respond. They cannot stop it. If the dollar shock keeps escalating, this does not stay contained.

Asia's currencies are not the real story. The real story is the dollar. When currencies fall across an entire region at once, it is not a coincidence. It is a signal. Economies from South Korea to India to Indonesia are scrambling for dollars at the exact moment dollars are getting harder and more expensive to secure. The signs of stress are not subtle. Emergency rate hikes. Joint inspections of major FX banks for the first time in over a decade. Central banks burning through foreign reserves only to watch their currencies slide anyway. These are not routine policy moves. They are acts of desperation. And the danger is the feedback loop: currency weakness becomes financial volatility, financial volatility accelerates capital flight, capital flight tightens credit, and tighter credit deepens recession pressure well beyond Asia. Policymakers can respond. They cannot stop it. If the dollar shock keeps escalating, this does not stay contained.

Jeffrey P. Snider

22,957 次观看 • 6 天前

Everyone is talking about inflation. The Fed is hawking. The ECB is hawking. Financial media is on repeat. But there is a market specifically designed to price inflation expectations, and it is saying something completely different. TIPS breakeven rates, the market's real-time gauge of inflation protection demand, have been falling. Not rising. Falling. Five-year breakevens slid to around 248 basis points last week, back near where they were before the energy shock began, even as oil stayed elevated and central bankers turned more aggressive. In 2022, when inflation was genuinely broad-based, breakevens pushed toward 325 to 350 basis points. This time, the ceiling was 270, and the market has been retreating from it ever since. The bond market is not pricing sustained, widespread inflation. It is pricing a narrow energy impulse, one the market believes will either resolve quickly or destroy enough demand to contain itself. That is 100% against the Fed's hiking thesis.

Everyone is talking about inflation. The Fed is hawking. The ECB is hawking. Financial media is on repeat. But there is a market specifically designed to price inflation expectations, and it is saying something completely different. TIPS breakeven rates, the market's real-time gauge of inflation protection demand, have been falling. Not rising. Falling. Five-year breakevens slid to around 248 basis points last week, back near where they were before the energy shock began, even as oil stayed elevated and central bankers turned more aggressive. In 2022, when inflation was genuinely broad-based, breakevens pushed toward 325 to 350 basis points. This time, the ceiling was 270, and the market has been retreating from it ever since. The bond market is not pricing sustained, widespread inflation. It is pricing a narrow energy impulse, one the market believes will either resolve quickly or destroy enough demand to contain itself. That is 100% against the Fed's hiking thesis.

Jeffrey P. Snider

18,154 次观看 • 5 天前

Oil sold off the moment the Iran peace deal appeared. That part makes perfect sense. Nobody wants to be long crude into open supply routes and normalizing tanker flows. The fundamental value of oil is closer to 50 a barrel than 150. But here is where it gets interesting. If this were only supply normalizing, the curve would still hold its shape. Inventories are drained. Tankers are disrupted. Refineries are scrambling. As long as demand is firm, the curve should stay in strong backwardation. Backwardation means front-month crude trades above later contracts. It is the market telling you it wants barrels today. It is a sign of tightness. That backwardation is nearly gone. The prompt spread, the first two contracts, has narrowed to under a buck. The three-month spread has dropped to just over 2, after being 30 not long ago. The front is selling off far harder than the back. Some of that is supply normalizing. The good kind. But when the curve gets this close to contango this fast, it points to something more troubling. Contango is what a glut looks like in the futures market. Too much oil for the demand in front of it. The curve is not there yet. But it is moving that way. And that is the warning. You have to be careful about exactly why oil is plunging this far, this fast.

Oil sold off the moment the Iran peace deal appeared. That part makes perfect sense. Nobody wants to be long crude into open supply routes and normalizing tanker flows. The fundamental value of oil is closer to 50 a barrel than 150. But here is where it gets interesting. If this were only supply normalizing, the curve would still hold its shape. Inventories are drained. Tankers are disrupted. Refineries are scrambling. As long as demand is firm, the curve should stay in strong backwardation. Backwardation means front-month crude trades above later contracts. It is the market telling you it wants barrels today. It is a sign of tightness. That backwardation is nearly gone. The prompt spread, the first two contracts, has narrowed to under a buck. The three-month spread has dropped to just over 2, after being 30 not long ago. The front is selling off far harder than the back. Some of that is supply normalizing. The good kind. But when the curve gets this close to contango this fast, it points to something more troubling. Contango is what a glut looks like in the futures market. Too much oil for the demand in front of it. The curve is not there yet. But it is moving that way. And that is the warning. You have to be careful about exactly why oil is plunging this far, this fast.

Jeffrey P. Snider

49,353 次观看 • 16 天前

Keir Starmer won one of the largest parliamentary majorities in modern British history in July 2024. He resigned less than two years later. The landslide was never a love letter to Starmer. It was an eviction notice for the Conservatives. When voters are angry enough to throw one party out, the next one gets a very short clock. Inflation falling from 9% to 3% does not lower prices. It means prices rise more slowly from a base that already jumped and is never coming back. Politicians said inflation was coming down. Voters heard prices were coming down. Only one of those was ever true. The stock market is not the economy. A market can sit at record highs while households fall behind. This is now a global pattern. Britain, France, Germany, Canada, Japan, the US. Different parties, identical story. Republicans now own this economy the way Starmer owned Britain's. The lesson underneath all of it is simple. Voters vote on their own lives, not on the index.

Keir Starmer won one of the largest parliamentary majorities in modern British history in July 2024. He resigned less than two years later. The landslide was never a love letter to Starmer. It was an eviction notice for the Conservatives. When voters are angry enough to throw one party out, the next one gets a very short clock. Inflation falling from 9% to 3% does not lower prices. It means prices rise more slowly from a base that already jumped and is never coming back. Politicians said inflation was coming down. Voters heard prices were coming down. Only one of those was ever true. The stock market is not the economy. A market can sit at record highs while households fall behind. This is now a global pattern. Britain, France, Germany, Canada, Japan, the US. Different parties, identical story. Republicans now own this economy the way Starmer owned Britain's. The lesson underneath all of it is simple. Voters vote on their own lives, not on the index.

Jeffrey P. Snider

21,149 次观看 • 7 天前

Something strange is happening in markets, and almost nobody is watching it. US stocks are surging. Tech is euphoric. Semiconductors are going vertical. The party is back on. Except in Hong Kong. The Hang Seng is falling hard, going the opposite direction. That matters, because Hong Kong is the money gateway into China and across Asia. Money flows through it when people believe in China, when trade is strong, when dollars are easy. So ask the uncomfortable question. What is Hong Kong seeing that everyone else is ignoring? The answer is in China's credit markets. For new credit, bonds have now passed bank loans for the first time. About 30% of the credit stock in May, a record. The official spin is modernization. China moving from property to a high-tech, capital-markets future. It sounds reassuring. It is not. Here is what they leave out. Bank lending creates money. A loan makes a new deposit, new purchasing power, on the spot. Bond issuance does not. Someone buys the bond with savings that already exist. It just moves money around. So bonds can only cushion the fall. They cannot replace the credit that banks are no longer creating. And the banks are pulling back for a reason. A slow-motion credit crisis. As many as 100 million consumers struggling to service their debt. Bad household loans up 21% to a record 2.2 trillion yuan. Nearly 11% of adults behind on payments. Now ask who is issuing all these bonds. Not companies expanding. The government, borrowing to paper over the gap. That is not modernization. Heavy government issuance means the private sector is too scared to borrow, so the state steps in. That is desperation. We have seen this movie. Post-2008 US and Europe. Banks retreated, bonds backstopped, and the economy got the silent depression anyway. That is what Hong Kong is pricing. Not a recovery. Bonds are not the sign China solved its problems. They are the sign the banks can no longer carry them.

Something strange is happening in markets, and almost nobody is watching it. US stocks are surging. Tech is euphoric. Semiconductors are going vertical. The party is back on. Except in Hong Kong. The Hang Seng is falling hard, going the opposite direction. That matters, because Hong Kong is the money gateway into China and across Asia. Money flows through it when people believe in China, when trade is strong, when dollars are easy. So ask the uncomfortable question. What is Hong Kong seeing that everyone else is ignoring? The answer is in China's credit markets. For new credit, bonds have now passed bank loans for the first time. About 30% of the credit stock in May, a record. The official spin is modernization. China moving from property to a high-tech, capital-markets future. It sounds reassuring. It is not. Here is what they leave out. Bank lending creates money. A loan makes a new deposit, new purchasing power, on the spot. Bond issuance does not. Someone buys the bond with savings that already exist. It just moves money around. So bonds can only cushion the fall. They cannot replace the credit that banks are no longer creating. And the banks are pulling back for a reason. A slow-motion credit crisis. As many as 100 million consumers struggling to service their debt. Bad household loans up 21% to a record 2.2 trillion yuan. Nearly 11% of adults behind on payments. Now ask who is issuing all these bonds. Not companies expanding. The government, borrowing to paper over the gap. That is not modernization. Heavy government issuance means the private sector is too scared to borrow, so the state steps in. That is desperation. We have seen this movie. Post-2008 US and Europe. Banks retreated, bonds backstopped, and the economy got the silent depression anyway. That is what Hong Kong is pricing. Not a recovery. Bonds are not the sign China solved its problems. They are the sign the banks can no longer carry them.

Jeffrey P. Snider

29,693 次观看 • 12 天前

Most people think capitalism means Wall Street. Stock tickers, quarterly earnings, asset prices on a screen. That picture is not just incomplete. It is actively misleading. Wall Street is not capitalism. Financial markets are not free markets. And stock traders do not trade capital in any meaningful sense. Capital, properly understood, is productive enterprise. The bakery, the machine shop, the software company that earns revenue by serving customers voluntarily. That is the heart of it. Financial markets can serve that system. At their best, they help businesses raise money, allocate savings, and expand. Money becomes capital. That is the correct direction. The problem is when finance reverses the arrow. When the question stops being how can finance help businesses produce more value, and becomes how can financial players generate returns from financial activity itself. A stock market boom does not mean the real economy is healthy. A rising index does not mean workers are more productive, businesses more competitive, or customers better served. And bailouts are not capitalism either. A system that privatizes gains and socializes losses is not a market system. It is a privilege system. Failure is not a bug in capitalism. It is a feature. Losses carry information. They force adaptation. They clear space for new ideas. The engine of capitalism is competition. The discipline is failure. The reward is innovation and rising living standards for everyone. That is what most people miss.

Most people think capitalism means Wall Street. Stock tickers, quarterly earnings, asset prices on a screen. That picture is not just incomplete. It is actively misleading. Wall Street is not capitalism. Financial markets are not free markets. And stock traders do not trade capital in any meaningful sense. Capital, properly understood, is productive enterprise. The bakery, the machine shop, the software company that earns revenue by serving customers voluntarily. That is the heart of it. Financial markets can serve that system. At their best, they help businesses raise money, allocate savings, and expand. Money becomes capital. That is the correct direction. The problem is when finance reverses the arrow. When the question stops being how can finance help businesses produce more value, and becomes how can financial players generate returns from financial activity itself. A stock market boom does not mean the real economy is healthy. A rising index does not mean workers are more productive, businesses more competitive, or customers better served. And bailouts are not capitalism either. A system that privatizes gains and socializes losses is not a market system. It is a privilege system. Failure is not a bug in capitalism. It is a feature. Losses carry information. They force adaptation. They clear space for new ideas. The engine of capitalism is competition. The discipline is failure. The reward is innovation and rising living standards for everyone. That is what most people miss.

Jeffrey P. Snider

18,954 次观看 • 8 天前

Asia's currency crisis is not about any single currency. It is a dollar shock, and it is escalating. South Korea launched its first joint inspection of major FX banks in fourteen years. Japan burned through tens of billions defending the yen, only to watch it fall back past 160. Indonesia called an emergency, unscheduled rate hike while draining its foreign reserves. India is offering deposit rates well above US Treasury yields just to pull non-resident money back in. These are not routine policy moves. These are signs of desperation. And the danger is the feedback loop. Currency weakness becomes financial volatility. Financial volatility becomes capital flight. Capital flight becomes tighter credit. Tighter credit becomes recession. By the time it looks contained, it rarely is.

Asia's currency crisis is not about any single currency. It is a dollar shock, and it is escalating. South Korea launched its first joint inspection of major FX banks in fourteen years. Japan burned through tens of billions defending the yen, only to watch it fall back past 160. Indonesia called an emergency, unscheduled rate hike while draining its foreign reserves. India is offering deposit rates well above US Treasury yields just to pull non-resident money back in. These are not routine policy moves. These are signs of desperation. And the danger is the feedback loop. Currency weakness becomes financial volatility. Financial volatility becomes capital flight. Capital flight becomes tighter credit. Tighter credit becomes recession. By the time it looks contained, it rarely is.

Jeffrey P. Snider

20,996 次观看 • 9 天前

Four of Asia's central banks are hitting the panic button at the same time. India. Indonesia. South Korea. Japan. They are calling it a currency crisis. It is really a dollar shortage. Almost everything that matters trades in dollars. Oil. Food. Materials. The debt everyone borrowed. When a local currency falls, all of it gets more expensive. That starts a loop. A weaker currency drives more dollar demand. More demand weakens the currency further. Japan drew a line at 160 yen. It sold $76 billion defending it. The yen is back below 160 anyway. India has burned through more than $110 billion in forex tools. Its banks now pay non-residents 7.1% on five-year deposits. A five-year US Treasury pays about 4.3%. They are paying up just to pull dollars in. Indonesia hiked rates to 5.5% in an emergency off-calendar meeting. Its reserves are falling at the longest streak since 2018. South Korea inspected its foreign exchange banks for the first time in 14 years. Its stock market fell 8% Monday, rose 8% Tuesday, fell 5% Wednesday. That is not policy management. That is desperation. The problem is not interest rate differentials. It is the dollar itself. There are not enough dollars to go around. And energy keeps raising the need. Selling reserves and hiking rates can slow a currency for a day. It cannot create new dollars. This does not stay in Asia. The region sits at the center of global trade and finance. When the dollar gets this tight, the stress does not stop at the border. It travels.

Four of Asia's central banks are hitting the panic button at the same time. India. Indonesia. South Korea. Japan. They are calling it a currency crisis. It is really a dollar shortage. Almost everything that matters trades in dollars. Oil. Food. Materials. The debt everyone borrowed. When a local currency falls, all of it gets more expensive. That starts a loop. A weaker currency drives more dollar demand. More demand weakens the currency further. Japan drew a line at 160 yen. It sold $76 billion defending it. The yen is back below 160 anyway. India has burned through more than $110 billion in forex tools. Its banks now pay non-residents 7.1% on five-year deposits. A five-year US Treasury pays about 4.3%. They are paying up just to pull dollars in. Indonesia hiked rates to 5.5% in an emergency off-calendar meeting. Its reserves are falling at the longest streak since 2018. South Korea inspected its foreign exchange banks for the first time in 14 years. Its stock market fell 8% Monday, rose 8% Tuesday, fell 5% Wednesday. That is not policy management. That is desperation. The problem is not interest rate differentials. It is the dollar itself. There are not enough dollars to go around. And energy keeps raising the need. Selling reserves and hiking rates can slow a currency for a day. It cannot create new dollars. This does not stay in Asia. The region sits at the center of global trade and finance. When the dollar gets this tight, the stress does not stop at the border. It travels.

Jeffrey P. Snider

47,327 次观看 • 24 天前

A couple of Citi analysts framed the whole issue perfectly. What if the retail investors fleeing these funds are selling at the very top, and the BDC holder everyone called dumb money is actually the smartest in the room? Their warning was blunt. The calm is deceptive. The next wave of stress will not be gradual. It will be sudden. Non-linear. That is the point. The surface looks fine. Decent NAVs. Confident managers. Underneath, it is a mess. And the mess is spreading. Now the big one. Switzerland's Partners Group. And this is private equity, not private credit. That is the escalation. The contagion is jumping lanes. And it is not just a US problem. It is global. Partners Group just capped withdrawals at its 8.6 billion dollar private equity fund. Redemption requests hit nearly 10% in a single quarter. The cap is 5%. Same move the credit funds are already making. These evergreen funds were sold as flexible private equity. Own private companies, skip the ten-year lockup, redeem when you want. Except you cannot. The assets are not liquid. So when requests are 10% and the limit is 5%, the message is simple. Everyone wants out at once, and the door is too small. This is not Partners Group collapsing. It is the liquidity illusion jumping from credit to equity. And that changes everything. This was never a few investors misreading Blue Owl. It is a full reassessment of private markets. Illiquid assets. Delayed marks. High rates. Dead deals. Locked gates. Investors are looking at all of it and saying the same thing. I want out.

A couple of Citi analysts framed the whole issue perfectly. What if the retail investors fleeing these funds are selling at the very top, and the BDC holder everyone called dumb money is actually the smartest in the room? Their warning was blunt. The calm is deceptive. The next wave of stress will not be gradual. It will be sudden. Non-linear. That is the point. The surface looks fine. Decent NAVs. Confident managers. Underneath, it is a mess. And the mess is spreading. Now the big one. Switzerland's Partners Group. And this is private equity, not private credit. That is the escalation. The contagion is jumping lanes. And it is not just a US problem. It is global. Partners Group just capped withdrawals at its 8.6 billion dollar private equity fund. Redemption requests hit nearly 10% in a single quarter. The cap is 5%. Same move the credit funds are already making. These evergreen funds were sold as flexible private equity. Own private companies, skip the ten-year lockup, redeem when you want. Except you cannot. The assets are not liquid. So when requests are 10% and the limit is 5%, the message is simple. Everyone wants out at once, and the door is too small. This is not Partners Group collapsing. It is the liquidity illusion jumping from credit to equity. And that changes everything. This was never a few investors misreading Blue Owl. It is a full reassessment of private markets. Illiquid assets. Delayed marks. High rates. Dead deals. Locked gates. Investors are looking at all of it and saying the same thing. I want out.

Jeffrey P. Snider

22,209 次观看 • 10 天前

Oil is down, and down big. The headlines make it sound obvious. Iran peace deal, supply normalizing, the war premium coming out. But the rest of the markets are saying something very different. The clean story makes sense. Iran deal appears, crude sells off. The fundamental value of oil is closer to 50 a barrel than 150. But if this were only supply normalizing, the oil curve would stay in backwardation. The market would still want barrels today. It is not. Backwardation is vanishing. The front of the curve is about 80 cents from contango. The three-month spread has collapsed from around 30 to just over 2. Contango is what a glut looks like in the futures market. And the curve is heading there fast. Then the IEA cut its 2026 demand growth forecast by about 700,000 barrels a day. It warned of a major supply overhang in 2027. That is not supply. That is demand breaking. Inflation markets agree. TIPS break-evens are collapsing. The 5-year is down about 40 basis points in a month, back near its weakest levels of the year. That is not a market afraid of inflation. It is a market pricing the oil shock as temporary and demand-destructive. The Treasury curve says the same. The 2-year jumped to about 4.2%. The 10-year barely moved. The 2s10s spread flattened to about 29 basis points. The front end is taking the Fed's hawkish dots seriously. The long end refuses to price growth. That is not an inflation signal. It is a policy-mistake signal. Because the Fed is looking at this exact setup and seeing inflation. Its dots moved up about half a point from March. A majority of the FOMC now thinks it might have to hike for oil. We have seen this movie. Trichet and the ECB hiked into weakness in 2008 and again in 2011, mistaking a commodity shock for real inflation. It was a disaster both times, and the markets told them so in advance. Here is what they keep missing. Oil is a relative price shock, not inflation. For it to become inflation you need it to spread. Wages chasing prices. Businesses with pricing power. Demand strong enough to absorb higher costs. None of that is happening. So falling oil is not automatically bullish. Cheaper oil because supply came back is good. Cheaper oil because the economy is breaking is not. The market is pricing both, and the curve is where the fight shows up. Oil down by itself is good news. Oil down with flattening curves, collapsing break-evens, and demand downgrades is something else entirely.

Oil is down, and down big. The headlines make it sound obvious. Iran peace deal, supply normalizing, the war premium coming out. But the rest of the markets are saying something very different. The clean story makes sense. Iran deal appears, crude sells off. The fundamental value of oil is closer to 50 a barrel than 150. But if this were only supply normalizing, the oil curve would stay in backwardation. The market would still want barrels today. It is not. Backwardation is vanishing. The front of the curve is about 80 cents from contango. The three-month spread has collapsed from around 30 to just over 2. Contango is what a glut looks like in the futures market. And the curve is heading there fast. Then the IEA cut its 2026 demand growth forecast by about 700,000 barrels a day. It warned of a major supply overhang in 2027. That is not supply. That is demand breaking. Inflation markets agree. TIPS break-evens are collapsing. The 5-year is down about 40 basis points in a month, back near its weakest levels of the year. That is not a market afraid of inflation. It is a market pricing the oil shock as temporary and demand-destructive. The Treasury curve says the same. The 2-year jumped to about 4.2%. The 10-year barely moved. The 2s10s spread flattened to about 29 basis points. The front end is taking the Fed's hawkish dots seriously. The long end refuses to price growth. That is not an inflation signal. It is a policy-mistake signal. Because the Fed is looking at this exact setup and seeing inflation. Its dots moved up about half a point from March. A majority of the FOMC now thinks it might have to hike for oil. We have seen this movie. Trichet and the ECB hiked into weakness in 2008 and again in 2011, mistaking a commodity shock for real inflation. It was a disaster both times, and the markets told them so in advance. Here is what they keep missing. Oil is a relative price shock, not inflation. For it to become inflation you need it to spread. Wages chasing prices. Businesses with pricing power. Demand strong enough to absorb higher costs. None of that is happening. So falling oil is not automatically bullish. Cheaper oil because supply came back is good. Cheaper oil because the economy is breaking is not. The market is pricing both, and the curve is where the fight shows up. Oil down by itself is good news. Oil down with flattening curves, collapsing break-evens, and demand downgrades is something else entirely.

Jeffrey P. Snider

31,527 次观看 • 17 天前

South Korea's currency isn't just falling. It's telling you something about the entire global system. The won under pressure means investors are pricing in weaker global trade, tighter dollar funding, higher energy costs, and the unwinding of the AI bubble, all at once. That is not a local story. The stock market confirmed it. An 8% drop Monday. An 8% rally Tuesday. A 5% drop Wednesday. That is not a market digesting news. That is a market trying to price five different crises simultaneously. When authorities start holding emergency meetings and launching the first joint FX bank inspections in fourteen years, they are not managing an exchange rate. They are trying to manage psychology. And the market is testing them anyway.

South Korea's currency isn't just falling. It's telling you something about the entire global system. The won under pressure means investors are pricing in weaker global trade, tighter dollar funding, higher energy costs, and the unwinding of the AI bubble, all at once. That is not a local story. The stock market confirmed it. An 8% drop Monday. An 8% rally Tuesday. A 5% drop Wednesday. That is not a market digesting news. That is a market trying to price five different crises simultaneously. When authorities start holding emergency meetings and launching the first joint FX bank inspections in fourteen years, they are not managing an exchange rate. They are trying to manage psychology. And the market is testing them anyway.

Jeffrey P. Snider

18,160 次观看 • 9 天前

South Korea's currency isn't just falling. It's flashing a warning signal for the entire global financial system. The won is under pressure from every direction at once: energy imports, trade exposure, semiconductor demand, the AI bubble, and dollar liquidity tightening globally. When that many forces converge on one currency, the stress doesn't stay in the foreign exchange market for long. This week alone, the KOSPI dropped 8% on Monday, triggering a trading halt. Then rallied 8% on Tuesday. Then fell another 5% on Wednesday. That is not a market digesting news. That is a market trying to price five different crises at the same time. And South Korean regulators just launched their first joint inspections of foreign exchange banks in fourteen years, warning against destabilizing trades and attempts to pin exchange rates for improper gains. When authorities start managing psychology instead of just policy, it usually means the situation is already beyond what policy alone can contain. A falling currency becomes a stock market rout. A stock market rout becomes a financial stability problem. The chain moves fast.

South Korea's currency isn't just falling. It's flashing a warning signal for the entire global financial system. The won is under pressure from every direction at once: energy imports, trade exposure, semiconductor demand, the AI bubble, and dollar liquidity tightening globally. When that many forces converge on one currency, the stress doesn't stay in the foreign exchange market for long. This week alone, the KOSPI dropped 8% on Monday, triggering a trading halt. Then rallied 8% on Tuesday. Then fell another 5% on Wednesday. That is not a market digesting news. That is a market trying to price five different crises at the same time. And South Korean regulators just launched their first joint inspections of foreign exchange banks in fourteen years, warning against destabilizing trades and attempts to pin exchange rates for improper gains. When authorities start managing psychology instead of just policy, it usually means the situation is already beyond what policy alone can contain. A falling currency becomes a stock market rout. A stock market rout becomes a financial stability problem. The chain moves fast.

Jeffrey P. Snider

13,344 次观看 • 7 天前

China just hit a record. Not record growth. Not confidence. Not consumer spending. A record decline in household borrowing, and they are pulling back at a pace we have never seen. That breaks the entire playbook. Every time China weakened, the fix was the same. More credit. Property support. Infrastructure. Get the banks lending. But what happens when households do not want the credit and stop spending too? Retail sales contracted in May, down 0.6% from a year ago. The first annual decline since the lockdowns. And the details are worse. Auto sales crashed 16%. Appliances and furniture fell hard. Even stripping out cars, retail grew just 1.1%. What held up? Beverages, medicine, clothing, alcohol. The defensive stuff. What people buy when they are scared. Investment is collapsing right alongside it. Fixed asset investment down 4.1%. Property investment down 16.2%. Infrastructure slowed from plus 4.3% to just 0.6%. Even outside real estate, investment went negative. This is the balance sheet trap. When property falls, households repair their finances instead of growing them. Banks will not take the risk. And lower rates do nothing when nobody trusts the asset underneath. Because in China, property is the whole thing. The store of household wealth. The collateral behind the loans. The base of local government revenue. If property does not stabilize, the consumer cannot either. Now the contradiction. Industrial production is still rising, up 4.5%. Auto production is up 8% while auto sales are down 16%. That is not balance. That is supply running way ahead of demand. So where does the excess go? Abroad. China's weakness at home becomes a trade fight everywhere else. More steel, more EVs, more electronics flooding out, and more tariffs coming back. Europe and the US are already moving. That is the feedback loop. Weak consumer, excess production, export pressure, trade barriers, then more pressure right back inside China. And no rate cut fixes this. No bazooka fixes this. The problem is confidence, collateral, income expectations, and broken balance sheets at both the banks and the households. Chinese households are not acting like people in a healthy economy. They are acting like people preparing for worse to come. China is producing, but not consuming. And it is not just Xi who needs that to change. The whole world does.

China just hit a record. Not record growth. Not confidence. Not consumer spending. A record decline in household borrowing, and they are pulling back at a pace we have never seen. That breaks the entire playbook. Every time China weakened, the fix was the same. More credit. Property support. Infrastructure. Get the banks lending. But what happens when households do not want the credit and stop spending too? Retail sales contracted in May, down 0.6% from a year ago. The first annual decline since the lockdowns. And the details are worse. Auto sales crashed 16%. Appliances and furniture fell hard. Even stripping out cars, retail grew just 1.1%. What held up? Beverages, medicine, clothing, alcohol. The defensive stuff. What people buy when they are scared. Investment is collapsing right alongside it. Fixed asset investment down 4.1%. Property investment down 16.2%. Infrastructure slowed from plus 4.3% to just 0.6%. Even outside real estate, investment went negative. This is the balance sheet trap. When property falls, households repair their finances instead of growing them. Banks will not take the risk. And lower rates do nothing when nobody trusts the asset underneath. Because in China, property is the whole thing. The store of household wealth. The collateral behind the loans. The base of local government revenue. If property does not stabilize, the consumer cannot either. Now the contradiction. Industrial production is still rising, up 4.5%. Auto production is up 8% while auto sales are down 16%. That is not balance. That is supply running way ahead of demand. So where does the excess go? Abroad. China's weakness at home becomes a trade fight everywhere else. More steel, more EVs, more electronics flooding out, and more tariffs coming back. Europe and the US are already moving. That is the feedback loop. Weak consumer, excess production, export pressure, trade barriers, then more pressure right back inside China. And no rate cut fixes this. No bazooka fixes this. The problem is confidence, collateral, income expectations, and broken balance sheets at both the banks and the households. Chinese households are not acting like people in a healthy economy. They are acting like people preparing for worse to come. China is producing, but not consuming. And it is not just Xi who needs that to change. The whole world does.

Jeffrey P. Snider

27,430 次观看 • 16 天前

Central bank intervention looks powerful in the headlines. But it does not create new dollar capacity. It does not lower the oil bill. It does not erase the trade deficit. It does not stop companies and banks from needing more dollars tomorrow, next week, next month. The half-life of these interventions shrinks during a real dollar shock, and energy importers make it worse by demanding more dollars every single day. That demand is not speculative. It is physical trade. And when currency weakness becomes disorderly, it rarely stays contained. Import prices rise in local currency terms. Energy, food, industrial materials all get more expensive. The stress spreads across the system. The real risk is not any single country's currency problem. It is contagion.

Central bank intervention looks powerful in the headlines. But it does not create new dollar capacity. It does not lower the oil bill. It does not erase the trade deficit. It does not stop companies and banks from needing more dollars tomorrow, next week, next month. The half-life of these interventions shrinks during a real dollar shock, and energy importers make it worse by demanding more dollars every single day. That demand is not speculative. It is physical trade. And when currency weakness becomes disorderly, it rarely stays contained. Import prices rise in local currency terms. Energy, food, industrial materials all get more expensive. The stress spreads across the system. The real risk is not any single country's currency problem. It is contagion.

Jeffrey P. Snider

14,295 次观看 • 8 天前

"Constipated." That is the word now being used for the private credit market. And it is exactly what this looks like. The private credit story is changing. For months it was framed as a liquidity problem. Investors trying to pull their money out. That is still a huge problem. BlackRock just had a couple of funds suffering big runs. But there is a bigger one. It is no longer just the investors who want out. It is the investors outside who no longer want in. And that is the much bigger story. Because the private credit boom was built on flows. Constant inflows from wealth managers, pensions, insurance companies, and the general public. That is how big it got. The machine has to keep moving. Money comes in. Loans get made. Funds grow. Redemptions get handled. Managers collect their fees. Everyone pretends it is calm because the marks are smooth and the exits are limited. Now the machine is reversing. Reuters reported US direct lending issuance in the three months ending May was down roughly 40% from the first quarter. Issuance to private-equity-backed borrowers dropped nearly 37%. Volume tied to leveraged buyouts fell about 34%. So this is no longer just a redemption story. The exits are clogged. New money is hesitant. Sellers will not cut prices, and buyers will not pay yesterday's valuations. Credit funds are handling redemptions. Leveraged loans are showing strain. And publicly traded BDCs are not rebounding, even as the broader market soars. So the question is no longer whether investors are still withdrawing. They are, and it is accelerating. It is not about the people inside who want out. It is about the people outside who no longer want in. That is the bigger problem. It pushes us deeper into stage two, and the odds of stage three go up from here.

"Constipated." That is the word now being used for the private credit market. And it is exactly what this looks like. The private credit story is changing. For months it was framed as a liquidity problem. Investors trying to pull their money out. That is still a huge problem. BlackRock just had a couple of funds suffering big runs. But there is a bigger one. It is no longer just the investors who want out. It is the investors outside who no longer want in. And that is the much bigger story. Because the private credit boom was built on flows. Constant inflows from wealth managers, pensions, insurance companies, and the general public. That is how big it got. The machine has to keep moving. Money comes in. Loans get made. Funds grow. Redemptions get handled. Managers collect their fees. Everyone pretends it is calm because the marks are smooth and the exits are limited. Now the machine is reversing. Reuters reported US direct lending issuance in the three months ending May was down roughly 40% from the first quarter. Issuance to private-equity-backed borrowers dropped nearly 37%. Volume tied to leveraged buyouts fell about 34%. So this is no longer just a redemption story. The exits are clogged. New money is hesitant. Sellers will not cut prices, and buyers will not pay yesterday's valuations. Credit funds are handling redemptions. Leveraged loans are showing strain. And publicly traded BDCs are not rebounding, even as the broader market soars. So the question is no longer whether investors are still withdrawing. They are, and it is accelerating. It is not about the people inside who want out. It is about the people outside who no longer want in. That is the bigger problem. It pushes us deeper into stage two, and the odds of stage three go up from here.

Jeffrey P. Snider

21,594 次观看 • 16 天前

The Fed's dots are ridiculous. A majority of the FOMC now thinks it might have to raise rates to fight oil inflation. They just met, and a lot of them concluded they need to be like Trichet. The projected fed funds range moved up about half a point from March. A serious hawkish shift, and an absurd one given where oil and TIPS break-evens are. That is why the Treasury curve flattened. The front end is pricing a growing chance they actually hike. The flat curve is saying it will not last. Here is the core mistake. The Fed's models see inflation because oil prices went up. But oil is not inflation. Oil can lift the CPI for a few months, and it has. But a relative price shock is not sustained inflation. For oil to become real inflation, the shock has to spread. You need wages chasing prices. Businesses gaining pricing power. Expectations moving. Demand strong enough to absorb higher costs. None of that is happening. Not in the markets, and not in the CPI details. So look at the board. TIPS are falling. The Treasury curve is flattening. Oil spreads are flattening. The IEA is cutting demand. And the Fed's response is to print more hawkish dots, because some officials still think the main risk is inflation. That is the misdiagnosis. The market can see it. The public cannot, because the financial media only reports what the Fed says and does.

The Fed's dots are ridiculous. A majority of the FOMC now thinks it might have to raise rates to fight oil inflation. They just met, and a lot of them concluded they need to be like Trichet. The projected fed funds range moved up about half a point from March. A serious hawkish shift, and an absurd one given where oil and TIPS break-evens are. That is why the Treasury curve flattened. The front end is pricing a growing chance they actually hike. The flat curve is saying it will not last. Here is the core mistake. The Fed's models see inflation because oil prices went up. But oil is not inflation. Oil can lift the CPI for a few months, and it has. But a relative price shock is not sustained inflation. For oil to become real inflation, the shock has to spread. You need wages chasing prices. Businesses gaining pricing power. Expectations moving. Demand strong enough to absorb higher costs. None of that is happening. Not in the markets, and not in the CPI details. So look at the board. TIPS are falling. The Treasury curve is flattening. Oil spreads are flattening. The IEA is cutting demand. And the Fed's response is to print more hawkish dots, because some officials still think the main risk is inflation. That is the misdiagnosis. The market can see it. The public cannot, because the financial media only reports what the Fed says and does.

Jeffrey P. Snider

18,735 次观看 • 15 天前