tyb
morning anon
https://www.secform4.com/insider-trading/828944.htm
"Suddenly Something Is Wrong"
(Dollar shortage or Liquidity "issues")
FF/IOER spread widening signaling potential Dollar funding/liquidity/shortage issues
The move in Fed Funds is leading to a Dollar breakout and renewed EM stress
Is the Fed Fund move that is driving all this just a temporary April 15th tax related issue, or is something more going on with FHLB’s?
Prism’s model selects the structure to position for further Dollar liquidity stress
A funny micro thing happened on March 19th that is now leading to some interesting macro moves:
As you can see, Fed funds moving above IOER has been an anomaly through the hiking cycle as IOER acts as a ceiling to Fed Funds by design. So what is going on? The most common explanation is the April 15th tax deadline. You have seen money market funds sold, bank reserves dwindle which is indicative of folks tapping funds to pay their tax liabilities.
If that is right, I have two questions:
Why didn’t this happen on April 15th any other year – it didn’t
Why did it happen this year
This likely goes back to the theme that we spoke about in late January/early February that this tax season was going to be potentially more painful than previous as taxpayers didn’t withhold enough due to the new tax laws. Therefore, are we getting some sort of forward looking macro signal here with this FF/IOER spread widening? Is it bullish people needed to tap their MMF’s to pay taxes? Is it bullish that banks are willing to pay a higher rate now to secure more reserves?
A lot of questions, and there are some answers. Fed Funds moving higher is technically an act of tightening (note it is still within the Fed’s band so they haven’t lost control – yet). That tightening via higher money market rates has two repercussions I can see
It is the primary cause of the Dollar moving higher and breaking out
It is therefore risk negative as you are getting the duel rate and dollar tightening
With regards to the Dollar, notice that the DXY almost broke down on March 19th, but instead based and turned higher.
Coincidence? I think not. In a world where many central banks are starting to get an increased amount of rate cuts priced into their forward rates (Canada, Australia, Sweden, Japan, et al) and, conversely, US Fed Funds are moving higher; its quite understandable why the Dollar is bid.
April US Fed Fund Future /April Euribor future spread vs. EUR/USD –funding rate spreads foreshadowed this breakdown in the Euro….
With the effective tightening seen in the Fed Fund rate and the Dollar moving higher, it is therefore no wonder stocks, who have been in a world where nothing was wrong, started to turn irritable. Suddenly something is wrong.
Now the money market “experts” at the banks are saying this FF/IOER anomaly should be fixed in a matter of days. So in theory that should mean an easing in the Fed Fund rate, and then the Dollar, and then risk should go back on. In reality, no one really knows if this FF/IOER anomaly will actually be fixed soon or not.
The risk is there is something more going on here other than the April 15th tax deadline theory. It is difficult to find real time data on this, but since 2H 2018, FHLB’s (who are the main providers of Fed Fund liquidity to the market) have sold much less FF’s to the market. You can see below that FHLB FF’s sold (black line) tends to lead Fed Fund futures (red line in yield terms) and the EUR/USD cross (purple line). It’s all connected…
rest at link
https://www.zerohedge.com/news/2019-04-25/suddenly-something-wrong
This is why the dollar is rising in spite of the fundamentals associated with it.
get rid of the incentives to be here and then hopefully they leave.
>and riots in the streets will happen.
Not so sure about that but possible. Laziness is what brought most here.
Police can use wiretapping devices to decrypt and record at prefectural HQs across Japan from June
The National Police Agency revised wiretapping regulations Thursday, enabling investigators from June 1 to listen in on phone conversations while at headquarters of prefectural police departments without the presence of officials from telecommunications carriers.
Under previous rules, investigators had been conducting such operations at telecom carriers’ facilities, but the number of places where it was possible to carry out the task was limited, leading to a long waiting list for police.
The changes to the regulations were made by the NPA in line with a new law, which passed the Diet in 2016 and will go into effect June 1 and expand the scope of crimes that can be investigated using wiretaps.
The legislation is expected to help police more swiftly investigate organized crimes, such as systematic fraud carried out over the phone, but critics argue the police could abuse their new powers and invade personal privacy.
However, they will still need to obtain warrants in order to gain access to the wiretapping devices, which will be kept at NPA outlets and information and communication departments of prefectural police.
Wiretapping instructors — a newly created position to address concerns — will monitor whether investigations are being conducted appropriately, the police said. For each criminal case, an instructor will be assigned from among chief inspectors and higher-ranking officials.
A total of 141 wiretapping devices will have been installed across the country by June 1 and another 47 are due to be added by the end of March next year.
The new device receives encrypted data from carriers before deciphering it. Previously, police investigators could only listen to real-time conversations, but they will now have the ability to record them.
Since the original wiretapping law entered into force in 2000, police have used wiretaps in 145 cases, which led to the arrests of 857 people, according to the Justice Ministry.
https://www.japantimes.co.jp/news/2019/04/25/national/crime-legal/police-can-use-wiretapping-devices-decrypt-record-prefectural-hqs-across-japan-june/
quads confirm
this what it looks like now. Pic taken at the bldg looking back up same hill.
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https://en.wikipedia.org/wiki/BKD%2C_LLP
No valley's..go back to San Ferdo brah