Eurodollar University

U.S. hiring has dramatically plummeted, reaching record lows not seen in seven years. This downturn is mirrored by McDonald's experiencing its first drop in sales since 2020, highlighting a broader economic malaise. Workers are reluctant to change jobs, further complicating an already strained labor market. The discussion reveals troubling trends like rising unemployment and stagnant incomes, painting a concerning picture of potential recession ahead.

The podcast dives into the surging repo market, with the Federal Reserve's foreign repo pool hitting unprecedented levels. It highlights how primary dealers are stockpiling collateral, drawing parallels to the March 2020 financial environment. The discussion also touches on the strength of the dollar impacting global currencies, particularly in emerging markets facing recession fears. Additionally, significant shifts in bond markets, including yield declines and banking liquidity challenges, raise red flags about potential financial distress.

Steve Van Metre, an expert on economic challenges facing US consumers, discusses the alarming decline in American savings, which are now at just 3.4%. He highlights how stagnant incomes and rising unemployment are pushing consumers to rely heavily on credit, leading to increasing delinquencies. The conversation delves into the disconnect between manufacturing output and consumer demand, raising concerns about future economic prospects. Van Metre paints a stark picture of financial anxiety and the potential risks of a looming recession.

The podcast dives into the troubling signs of a goods recession, with major companies like Nestlé and Unilever reporting disappointing sales. It highlights the automotive sector's struggles, including rising inventories and declining consumer demand. The discussion extends to the disconnection between expected and actual energy recovery in China versus the U.S. economy. Finally, it emphasizes how rising unemployment creates a vicious cycle that threatens to deepen the recession, impacting consumer spending and overall economic stability.

Most Americans believe the country is in a recession, despite a surprising 2.8% GDP growth in the second quarter. The podcast delves into the contradictions between positive economic reports and public sentiment, highlighting fears of a goods recession. It also discusses underlying issues like increasing unemployment and a shrinking goods sector, emphasizing that surface-level growth may mask deeper economic troubles. Tune in to explore why consumer discontent might pose risks to future stability.

The U.S. Treasury curve is experiencing significant bull moves, reflecting unsettling economic signals. Luxury conglomerate LVMH reports a revenue miss, indicating consumer spending is on the decline, particularly among the affluent. Former Fed members advocate for urgent rate cuts, sparking debates on their timeliness. Meanwhile, central banks, like the Bank of Canada, are also slashing rates, but concerns grow over whether these measures can combat looming recession fears. The luxury market is feeling the pressure as middle-class consumers face economic challenges.

Replay of the livestream Member Q&A 100 epic discussion. George. Jim. Steve. Mike. Eric. Brent. Emil and Jeff back together again. Two hours of back and forth. Including why Home Alone lied to you.There was so much all in one place. Spirited back and forth between all the fellas, a real deep dive in true Eurodollar University style. Arguing about the past. Angling toward the future. Even a few questions from EDU members. We just might have to do this again. Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

China's dollar woes have jumped in recent months, so much that they've come out of the eurodollar shadows enough to impact the onshore banking system in an unexpected way. Foreign holdings of negotiable bank CDs have exploded. We'll discuss what that means and how it relates to China's dollar shortage and the surprise set of rate cuts announced by the PBOC earlier today.Eurodollar University's Money & Macro AnalysisBloomberg Global Funds Pile Up Nearly a Trillion Yuan of China Bank Bondshttps://www.bloomberg.com/news/articles/2024-07-22/global-funds-pile-up-nearly-a-trillion-yuan-of-china-bank-bondsBloomberg China Surprises With Rate Cut After Xi’s Big Meeting Disappointshttps://www.bloomberg.com/news/articles/2024-07-22/pboc-cuts-seven-day-reverse-repo-rate-to-1-7-to-support-economyhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Delving into the current job market woes in the US, the podcast discusses the challenges of job scarcity and high unemployment rates. They explore the implications of rising initial and continued claims on the economy, the struggles of businesses in finding qualified labor, and the complexities of Federal Reserve's interest rate cuts. Additionally, they analyze bank behavior during recessions and question the effectiveness of Fed rate cuts.

All year all anyone has heard is the Fed and its rate cuts. Soft landings imply a little weakness but no worry, Jay Powell will cut rates once maybe twice and everything will be just fine. The only question is, why on earth does anyone believe this? The evidence and history of interest rate targeting - as you'll see - is indeed 100%, as in total failure. Rate cuts (like hikes) are pure superstition. Eurodollar University's Money & Macro AnalysisEURODOLLAR UNIVERSITY'S LIVESTREAM NEXT TUESDAY, 7/23 btw 6 - 8 pm ETEURODOLLAR UNIVERSITY'S ANNIVERSARY SALE:https://www.eurodollar.universityPBS Is the Fed going to cut interest rates? What was once a question of ‘when’ is now less certainhttps://www.pbs.org/newshour/economy/is-the-fed-going-to-cut-interest-rates-what-was-once-a-question-of-when-is-now-less-certainMorningstar We Expect GDP Growth to Weaken Until Fed Starts Cutting Interest Rateshttps://www.morningstar.com/economy/we-expect-gdp-growth-weaken-until-fed-starts-cutting-interest-ratesFOMC Transcript March 1991https://www.federalreserve.gov/monetarypolicy/files/FOMC19910326meeting.pdfRemarks by Chairman Alan GreenspanRules vs. discretionary monetary policyAt the 15th Anniversary Conference of the Center for Economic Policy Research at Stanford University, Stanford, CaliforniaSeptember 5, 1997https://www.federalreserve.gov/boarddocs/speeches/1997/19970905.htmhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU