Jeffrey P. Snider
@JeffSnider_EDU • 138,228 subscribers
Host Eurodollar University channel. Monetary science reborn. Putting central banks where they belong.
Videos
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. Snider45,106 views • 2 days ago
China is trying to export its way through a domestic balance sheet problem. Europe is trying to stop its industrial base from being hollowed out. Both are acting out of necessity. Not strategy. That is the trade war. China built too much industrial capacity. The world never grew the way it expected. Now it is left with factories that produce far more than anyone can absorb. From Beijing's perspective this is not a mistake. It is a national development strategy. Dominate the industries of the future. Hold on to the industries of the past. From Europe's perspective it is an existential threat. Chinese producers get subsidies, state backed banking, and sell at prices European companies cannot match. The result is not lower consumer prices. The result is industrial destruction. Europe already watched this happen in solar panels. And China has no choice but to keep going. If exports slow, factories idle, profits fall, employment suffers, banks break. Exports are the only release valve left. China's solution is Europe's problem. Neither can afford to blink.
Jeffrey P. Snider24,262 views • 3 days ago
Europe is preparing its public for something it has avoided for years. A real trade war with China. Not complaints. Not carefully worded statements. An honest-to-goodness trade war. Brussels has already held closed-door meetings. The "Made in Europe" framework has launched. Officials are publicly saying the relationship is no longer sustainable. Privately they are accepting the obvious: if Europe moves, China retaliates. This is not about protectionism. It is about survival. Europe's industries are under pressure. The old assumption that cheap Chinese goods were always a benefit is breaking down. China is not exporting because it is strong. China is exporting because it is broken. Households not spending. Property still falling. Credit collapsing. Investment crashing. China's factories produce more than its economy can absorb. So the excess goes outward. The world becomes the release valve. China faces an impossible choice. Cut production and crush the domestic economy further. Or keep exporting and push the pain onto everyone else. There is no third option. Europe is the first major economy to say it will not keep absorbing it. Trade wars are about to go global.
Jeffrey P. Snider21,627 views • 4 days ago
China's economy just confirmed what the data has been warning for months. Retail sales. Worst month since the lockdowns. Fixed asset investment crashing. Housing prices falling for the 12th straight month. Ugly in every direction. But here's what nobody's talking about. Two months ago, China quietly revised retail sales numbers. The alarming downturn — gone. Just like that. Those revisions just got reversed. The downturn is back. April made it worse. The question isn't how bad is China's economy. The question is who were those revisions for. The timing was convenient. They appeared right as Party officials were projecting confidence at the National People's Congress. Defending growth targets that already looked unrealistic. Now the real data is catching up. Property bust still busting. Banking crisis picking up speed. Households won't borrow. Corporations won't act. China was fragile before the energy shock even started. The data just confirmed it.
Jeffrey P. Snider35,615 views • 21 days ago
Here's why the Chinese are buying seemingly all the gold 🪙on Earth: China is a mess but has run biggest trade surplus ever imagined which is keeping CNY "stronger." Chinese are putting a lot that surplus into gold realizing what happens to yuan (and more) if (when) trade surplus normalizes. If not for the $1+ TRILLION surplus China has amassed this year, CNY would be plunging in the same boat as JPY/INR/KRW. So, thinking ahead, as the rest of the world starts pushing back against China (see: Mexico, France) the Chinese know their massive trade surplus is temporary and once it normalizes to something more sustainable the yuan will drop sharply. Thus, China (companies, banks and individuals, not govt) can't get enough gold looking ahead for the inevitable currency reversion to its fundamentals, especially given how bad the banking system is and the accelerating crash in macro (investment & consumer spending). So, there's India’s economy practically thriving compared to China's yet the rupee is plunging because the country needs to finance its massive and growing trade deficit when the Euro$ increasingly doesn’t want to. At the same time, China is a total mess (banks + econ) and getting worse but has the biggest trade surplus humanity has ever seen. And still the Chinese put a lot of it into gold realizing the precarious shape they're in.
Jeffrey P. Snider47,279 views • 5 months ago
IBM's CEO said there is "no way" AI investments will ever be able to pay off; #s simply don't work. The thing is, most people either know it or at least suspect it's true. Then there's the fact AI products are mostly garbage, plagued by "hallucinations." Add to that Oracle's bad week, Nvidia's sudden struggles and Broadcom's unpleasant miss. We all know AI is in a bubble, but no one knows when it pops. The questions now being asked of the space by serious people are signs that the trend is getting increasingly shaky. Bigger problem is how much of the current weak economy is dependent on AI - both investments in data centers and related plus the one remaining bastion of consumer spending, the stock-fueled wealthy. An AI bust has far more reaching implications than strictly the NASDAQ.
Jeffrey P. Snider47,151 views • 6 months ago
Japan's yen is defying all the textbooks. BoJ is raising rates, JGB yields are soaring, yet JPY keeps FALLING forcing officials in Tokyo to threaten intervention. Authorities think their currencies are wrong therefore the need to intervene, but what's really happening is central bankers and Economists are wrong about currencies which is why their interventions fail. Sad thing is, it's not difficult to figure out why JPY is falling in spite of the rate hikes and higher yields. You just have to stop listening to the mainstream conventional "wisdom" on currencies. And money. And finance. Economy, too. Basically everything.
Jeffrey P. Snider43,352 views • 5 months ago
Gold hit $4k and it has *zero* to do with inflation and *nothing* about the govt shutdown. This one is an open and shut case. Set aside for a second how historically gold is a terrible inflation hedge, just look at how gold has behaved the past few years. 1. Gold was sideways and LOWER during the worst CPI "inflation" since the 70s. Why? Because that was a period of reflation, the only point since the lockdowns when it looked like a recovery was plausible. Once forgot-how-to-grow showed up, consumer price changes disappeared and only then did gold start to rise. 2. Just this year, gold was soaring to record highs during **deflation** leading up to April. Once the bout of deflation ended, gold went sideways. It was the same time "tariff inflation" mania was at its highest but more so the economy appeared like it just might escape trade wars with minimal impact. Once it became clear during the summer that wasn't going to be the case, then gold goes vertical. 3. Copper to gold! Bullion is the denominator in a inflation/deflation signal that isn't just flashing deflation, it's a record low deflation! Open and shut case if ever there was one, nothing whatsoever to do with inflation or govt shutdown. But that's not even close to the whole story, the real story: This is all exactly why Eurodollar University is holding a webinar on Tuesday October 14, at 6pm ET. To help you begin to unlearn the garbage that Economics has taught you and the financial media keeps repeating day after day after day.
Jeffrey P. Snider51,684 views • 8 months ago
Both Macy's and Delta Airlines are perfect examples of what's happening in the consumer economy. Delta is struggling while Macy's is closing stores and warehouse facilities, laying off 1000s. Each one admits there is no spending from the vast majority of consumers, any growth or potential is coming ONLY from the upper incomes. Middle and lower-incomes are being killed by lack of income and now lack of jobs (payrolls are shrinking and that's confirmed by every source). This has enormous implications - including how the stock market does not represent reality.
Jeffrey P. Snider28,922 views • 4 months ago
McDonalds US CEO says the entire fast food industry is fighting for 🚨contracting traffic🚨 which is just more code for recession demand conditions. Wendy's is closing several hundred more locations because of the sudden "oversupply" of cheap hamburgers and chicken nuggets. That's how ridiculous the term is, yet it's used everywhere from China's economy to the oil market. There is no oversupply, only under-demand. Wendy's is merely doing what economics (small "e", not that garbage PhDs practice) demands when demand has fallen below supply: cutting back supply. Cutting back supply means reducing the number of workers which, if you haven't noticed, is happening all over the place not just in restaurants or fast food. Just look at ADP, either one.
Jeffrey P. Snider36,897 views • 7 months ago
The market has spoken: the Fed IS going to cut rates next week. That's also the bad news. For all the noise from various Fed creatures talking up tariff inflation, in the end what actually matters is the real economics of the labor market. There are too many warning signs coming from all over the place. Even the Fed's Beige Book for November was filled with references to worries over layoffs - and almost none about inflation. IOW, KC's Schmid (rate cut dissenter) has even LESS to stand on now than he did when he was all over the mainstream financial media last month. The Fed is cutting next week. Done deal. What follows after that....
Jeffrey P. Snider29,719 views • 6 months ago
The Bank of Japan says it is raising rates, or at least is threatening to raise them to hold back consumers from spending so that their robust demand doesn’t create more inflation. But consumers are themselves holding back because they know their incomes are nowhere near enough to make up for past, present, and any future price changes that are supply and currency matters, not actual inflation. Thus, household spending, already in the dumps, gets worse especially now after the tariff distortions have passed into global payback. In reality, BoJ is targeting the yen but doing so hoping increasingly favorable interest rates inside of Japan will strengthening JPY. Only, JPY is completely ignoring interest rates.
Jeffrey P. Snider28,147 views • 6 months ago
The next time you hear someone use the term "fiat currency" and mean it unironically, just ignore them. They have no clue what they're talking about. We haven't used fiat currency in any meaningful way in a hundred years, longer. There is no fractional reserve lending. If you don't even know what money is, how can you claim that you're replacing it? But in order to justify why #BTC keeps going up in price (not usage, just price), they've concocted this fairy tale that the dollar is "being debased" because otherwise they'd have to admit it's only going up because it's a NASDAQ stock. BTC isn't money, it's a tradeable portfolio asset just like Nvidia. Nothing more. And there's nothing wrong with that. BTC and the Euro$ are completely different worlds. BTC doesn't compete with "the dollar", it competes with AI bubble stocks - and therefore trades a lot like them, if you haven't noticed. This is one of those times when the truth is impossible to ignore - "dollar debasement" is being debased not the Euro$. AGAIN.
Jeffrey P. Snider31,638 views • 7 months ago
Chinese consumer spending is now falling. Never happened before outside of lockdowns. This isn't a month or two, the contraction is seven months and counting. Stimulus didn't work. Instead, Chinese consumers are - like Americans - very worried about jobs and incomes. All the data says they SHOULD be. Meanwhile, as China's slide into outright recession is confirmed from all the data, no one except maybe Trump administration appears to appreciate what that means - and I don't mean just economics.
Jeffrey P. Snider22,921 views • 4 months ago
France’s President called it a matter of life and death for European industry. The head of the European Commission said it has reached “an inflection point.” The Chinese have been trying to export their way out of what is now a major downturn. The truth is, neither side has much choice: the Chinese **have** to do it and the Europeans **have** to start resisting it. What China just reported in banking and the economy shows they’re out of options even if it means sinking relations with an entire continent.
Jeffrey P. Snider26,996 views • 6 months ago
Getting a little anxious out there in risk-land... Big moves across the risk markets this week. Bitcoin and crypto hammered. Repo back on the menu. WTI full contango (briefly). Plus, top officials at the New York Fed soft confirming the start of the next not-QE QE. What does it all mean?
Jeffrey P. Snider28,685 views • 7 months ago
Once you understand what Trump's really doing with this GSE "QE" (buying MBS via Fannie/Freddie rather than Fed) you see why they'd bother floating something like this. It is NOT about interest rates even though that's what it is supposed to sound like. After all, Fed learned the hard way what actually happens with QE buying - and it wasn't stimulus. However, to this day, people THINK that's what it was. So...
Jeffrey P. Snider20,850 views • 5 months ago
Silver's squeeze is being driven by gold which in turn is being driven by the dollar. No, not "debasement" or "inflation." Eurodollar deflation. People make the critical mistake believing gold is a substitute for the dollar when it's not even in the same arena. Precious metals instead compete with stocks and other risky financial assets as the safe haven alternative to them. Ledger money separated medium of exchange from store of value 150 years ago (not that you've heard anything about it, but you live it every day each time you use your credit card - medium - and check your 401k - store). Gold is not a medium, but it is superior form of value. Gold's behavior therefore has nothing to do with "the dollar" except when eurodollar conditions drive the exchange value and signal conditions relative to stores of value alternatives. This is why gold has behaved like it has and why all the gold "experts" get it wrong. When the dollar is rising, that's a deflation signal which means increasing chance conditions will be bad for risky stores of value. Gold shines. And that is exactly how it has traded recently, too, from late last year through April, the middle of the year when gold backed off because risk-taking was back at the forefront, and now with flat Beveridge everywhere and credit cockroaches showing up every other minute gold is utterly flying. That deflation would be really bad for risky assets that gold competes with. IT IS NOT DEBASEMENT OR ANYTHING LIKE IT. All the evidence is here: Everything you get from the mainstream is either wrong or backward. Oftentimes on purpose. Misdirection and misinformation is actually the trade of "central banks." Start unlearning the garbage and start learning the truth which has been hiding in plain sight all this time.
Jeffrey P. Snider26,897 views • 8 months ago