Jeffrey P. Snider
@JeffSnider_EDU • 140,785 subscribers
Host Eurodollar University channel. Monetary science reborn. Putting central banks where they belong.
Videos
When a billionaire quietly sells the Lakers, something is being forced. Mark Walter just agreed to sell the team at a record 12.5 billion. He is in talks to offload his Chelsea stake too. That is not a victory lap. That is raising cash. Here is what is underneath it. Two insurers he controls disclosed over 20 billion in loans that should have been flagged as affiliated. They were not. Why does that matter? An insurer is supposed to invest your premiums for you. Not to quietly fund other businesses the owner profits from. Insurance has quietly become a giant funding source for private credit. And when regulators ask where the money went, even trophy assets become cash you are forced to raise.
Jeffrey P. Snider21,229 Aufrufe • vor 4 Tagen
One stat tells you everything about the American consumer right now. It came from a gas station chain. Circle K's gasoline revenue exploded 33 percent in a year. But the volume they sold actually fell 1 percent. Sit with that. People paid a third more money to get slightly less gas. That is not inflation as an abstraction. That is the definition of getting poorer. And it is why employers are not hiring. They see their own customers getting squeezed, so they are not betting on a recovery that is not there.
Jeffrey P. Snider20,454 Aufrufe • vor 6 Tagen
The Bank of Japan finally admits the carry trade is the problem. So they raise rates to fix it. Except the pension funds and insurance companies they need to buy Japanese bonds are refusing. Not because rates are too low. Because the policy environment made investing in Japan too unpredictable in the first place. So the hikes meant to strengthen the yen are pushing the same institutions further away, and the yen weakens anyway. They diagnosed the disease correctly for once. They just cannot write a prescription that matches reality, because the whole framework they are working from does not match reality. That is the pattern. Not just in Japan.
Jeffrey P. Snider209,165 Aufrufe • vor 2 Monaten
If the AI trade breaks, everyone pictures a 2000-style crash. The more likely outcome is quieter, and in some ways worse. Not a crash. A decade of going nowhere. Look at the last bubble, but ignore the obvious tech names. Look at Coca-Cola and Walmart. Rock-solid businesses, no hype. At the peak they traded near 50 times earnings. Here is what happened next. They did not collapse. They churned sideways for ten years or more. Because the price was already so far ahead, earnings had to double, even triple, just to grow back into it. Walmart eventually fell to 15 times earnings without the story ever breaking. That is the real risk in an overpriced stock. Not that it crashes tomorrow, but that it does nothing for a decade while the fundamentals slowly catch up.
Jeffrey P. Snider68,645 Aufrufe • vor 29 Tagen
China built far more than it could ever use. Now the whole world is about to feel it. With no way to absorb it at home, China has spent two years dumping everything it cannot sell onto Europe. And Europe has noticed. Germany is drafting a plan, and a trade war is brewing. If that export valve gets choked off, the pressure has nowhere to go but back inside China. And inside is the real problem. Property is down 10 to 30 percent from the biggest bubble in history, but the banks have barely taken the losses. They are still buried, waiting. That is how a property bust quietly becomes a banking crisis, and this one would not stay contained.
Jeffrey P. Snider54,451 Aufrufe • vor 1 Monat
Everyone keeps saying the Fed is going to hold rates higher for longer. The swap market, one of the biggest markets in the world, is quietly betting the opposite. Ten and thirty year swap spreads are still sitting near the lowest levels in their entire history. That is not noise. That is the market pricing where short term rates actually end up over time. If the swap market believed the Fed's own narrative, spreads would move to reflect higher for longer. They have not. Instead they compressed further as oil prices rose, which is a bet against the Fed's story, not for it. The message underneath all the technical language is simple: rates go lower, and stay lower, for a long time. The forward curve is not buying the headlines.
Jeffrey P. Snider51,075 Aufrufe • vor 1 Monat
Everyone in hard money argues gold versus Bitcoin. They share the same flaw. Both are transparent, predictable, and stable. That part is a real step forward. But both are also inelastic. And history is clear on inelastic money. It always produces some of the worst results. Volatility. Then hoarding. Then deflation. Then depression. That is not a theory. It is what we are living in right now, the consequences of an inelastic system that broke 15 years ago and was never fixed. The social disorder, the political chaos, the constant crisis. Those are not separate problems. They are what prolonged deflationary money does. The answer is not one extreme or the other. It is the happy medium almost nobody argues for. Transparent and stable, but elastic enough to avoid the collapse.
Jeffrey P. Snider88,827 Aufrufe • vor 1 Monat
Everyone is watching crude prices. Wrong number. Crude inventories are only 6% below normal. Fine, seemingly. But gasoline stocks just dropped 5 million barrels in a week. Diesel is 12% below average, even with soft freight demand. This isn't a demand story. US gasoline demand is down 2.2% year over year. It's a supply story. Refineries are running at 95.8% and still can't keep up. That gap between crude and refined product is the crack spread, and it's at record highs. Which means the refinery, not the oil field, is setting your price at the pump.
Jeffrey P. Snider89,549 Aufrufe • vor 2 Monaten
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. Snider104,107 Aufrufe • vor 3 Monaten
China stopped buying oil. Not because it ran out, because it stopped needing it. Crude imports collapsed 41 percent year over year in June. Refinery processing hit its lowest level since March 2020. No lockdown this time. Just a property downturn and a banking system under stress. China was the marginal buyer propping up global oil demand. Without it, exporters discount and reroute cargo just to find buyers. Bearish for crude. But less Chinese refining also means less gasoline, less diesel, less jet fuel reaching the market. Crude is bearish. Fuel can stay tight. Crude moves globally in weeks. Fuel is local and slow. A surplus of crude on a tanker doesn't become gasoline overnight.
Jeffrey P. Snider69,267 Aufrufe • vor 2 Monaten
Everyone points at the M2 chart spiking and says there it is, that is the money printing. That chart is fooling you. M2 has been obsolete since the 1970s. The Fed said so itself. It only measures a small domestic slice of money. The real system is huge, offshore, and invisible. Most dollars are created and moved around outside the US, where M2 cannot see them. How big is that hidden part? Nobody knows. The BIS went digging and found 15 trillion dollars in currency derivatives that work like money and show up in no statistic anywhere. Here is the part that breaks the narrative. M2 actually rose during the 2008 panic, the worst monetary crisis since the Depression. How does money supply go up while the world melts down? The visible slice ticked up while the shadow money you cannot see was being destroyed. So a rising M2 does not prove money is being printed. Sometimes it is the opposite
Jeffrey P. Snider37,341 Aufrufe • vor 1 Monat
Amazon just tried to sell bonds to fund its AI buildout. Strong balance sheet. Investment grade. Access to almost every source of capital on earth. Demand still came in far below normal. Orders peaked near 62 billion, then shrank to about 41 billion after banks cut the spread. That is only 1.6 times the offering, when the average this year has been closer to 4 times. Amazon had to pay up too, an extra 18 to 21 basis points on its longest bonds just to get investors to show up. This is not a story about Amazon being distressed. It is a story about where the same pressure hitting private credit is starting to show up in elite public borrowers. The line everyone draws between these two credit markets is a lot thinner than it looks.
Jeffrey P. Snider48,820 Aufrufe • vor 1 Monat
Everyone thinks the Fed prints endless money. So why does the world keep running short of dollars? Because what the Fed actually creates is not the money the world uses. It creates bank reserves. Those are not real money. They are limited-use tokens that only work inside the interbank system. The dollars that move the world are private bank money, created when commercial banks lend. Ledger entries on JP Morgan, on Deutsche Bank. That is the disconnect. The Fed can flood the system with reserves, but if banks will not lend, no real money reaches the economy. That was the entire 2010s. Everyone saw the reserves and screamed inflation, dollar to zero. The opposite happened, because the banks stayed constrained. So a dollar shortage has almost nothing to do with the Fed. It is about whether banks are willing to move. And right now, they are not.
Jeffrey P. Snider62,371 Aufrufe • vor 2 Monaten
Everyone got gold wrong last year. And then they got it wrong again this year. The story was simple. Gold is screaming higher, so the dollar must be going to zero. A debasement trade. Except that is not what happened. From the day the Iran conflict started to the day the ceasefire was signed, gold fell 24 percent. If gold were really the dollar-collapse trade, that makes no sense. So what was it actually? Gold was doing exactly what a reserve asset is supposed to do. Think of reserves as a country's piggy bank. You buy gold because one day it will rain and you will need dollars fast. When the conflict hit and liquidity got tight, that day arrived. So you look at what you hold. Treasuries down 20 percent, or gold up big. You do not sell at a loss. You sell the winner. Turkey sold. Russia sold. The Gulf states, hit hardest, sold. Right on cue. That is the part the gold bugs miss. Reserves only help you if you are willing to sell them. Gold that you will never part with does nothing in a crisis. Gold did not fail last year. It did its job.
Jeffrey P. Snider50,112 Aufrufe • vor 2 Monaten
Everyone was positioned for oil at 200 a barrel. Inventories were low. The trade made sense. Then the curve flattened. In two weeks. Almost overnight. A flat curve after a supply shock is not supposed to happen. Normal shortage logic says near term prices trade at a premium while the market waits on inventories to refill. Instead the front of the curve collapsed hardest. That is not a supply story. That is the market pricing in demand disappearing faster than constrained supply can even matter. Stack it next to the household employment numbers, the drop in labor force participation, falling real incomes. The oil curve is not an isolated signal. It is confirmation.
Jeffrey P. Snider57,605 Aufrufe • vor 2 Monaten
The mainstream story about the weak yen is a cartoon. Everyone points to hedge funds borrowing cheap yen to buy Treasuries. Simple story. Easy headline. But Japan just spent tens of billions defending the yen directly in FX markets. Got almost nothing for it. Why? Because they were treating a symptom, not the disease. The real carry trade isn't a hedge fund trade. It's Japanese pension funds, insurers, institutional money, all quietly deciding that returns are better outside Japan than inside it. That's not speculation. That's domestic capital voting with its feet. And it explains something the textbooks can't: why BOJ rate hikes don't strengthen the yen. Under this framework, hikes can actually make it weaker. Japan may have finally named the real problem. Naming it and fixing it are two very different things.
Jeffrey P. Snider47,624 Aufrufe • vor 2 Monaten
The most important financial system on earth has nobody in charge of it. Not by accident. By choice. Almost every global transaction runs on dollars created offshore, outside the US. China and the world depend on them. So who is responsible for that system? Nobody. The Fed says its mandate stops at the border. In 2008, when the offshore market broke down in London, Fed officials called it a Bank of England problem. Not ours. Back in the 1960s, officials game-planned who would step in if it broke. Then they decided it did not matter. So no one took the job. 2008 proved that a disaster. More than a decade later, nothing has changed. We still run the world's reserve currency with no one accountable for it.
Jeffrey P. Snider17,339 Aufrufe • vor 27 Tagen
The 30-year yield crossed 5 percent and everyone lost their minds. The panic is misplaced. We saw this exact movie in 2023. The long bond crossed 5, everyone screamed rates were going to 7, 8, 9. Then nothing happened. Three years later it is barely 25 basis points higher. It was never a signal. Just a round number people turned into a story. Yes, we crossed 40 trillion in debt, and yes, that is a real problem. But it is not one the Treasury market is pricing. Here is the tell. If the market feared that debt, the premium to hold a 30-year over a 10-year would blow out fast. Instead it is historically narrow. About 100 basis points, versus 400 in the early 2010s. The bond market is not panicking. People are.
Jeffrey P. Snider22,487 Aufrufe • vor 1 Monat
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. Snider50,006 Aufrufe • vor 3 Monaten
An apartment complex bought four years ago at 90,000 dollars a unit is now on the table at 8,000. That is below what the land alone is worth. The building sits 100 percent vacant. And here is why someone would still buy it. Fixing it runs 20 to 30,000 a unit over two years, putting the all-in basis around 30 to 35,000 a door. The stabilized value in today's market, today's rates, today's rents, is roughly 60. That is the whole trade. The catch is you cannot finance a fully vacant building. You buy it in cash and fund every repair yourself. Look at who is absorbing the loss. The original equity is wiped out completely, and the lender now owns it and is taking a massive haircut. That is the whole lesson. You want to be the one holding resources on the other side of the cycle, not the one forced to sell into it. These are not everywhere. But deal by deal, city by city, they are showing up.
Jeffrey P. Snider31,203 Aufrufe • vor 2 Monaten