In Nov 2011 I warned that the Chinese economy was headed for a slump. This is an update. In the past quarter, manufacturing data has supported the view that the Chinese economy was decelerating rapidly.

The last 30 years have been defined by falling interest rates across the USD curve. Since Volcker defeated inflation in the early 1980’s short term rates and long bond yields have tracked lower and lower. Inflation has similarly been trapped in the 3% to 5% range as Greenspan was celebrated for creating a Goldilocks economy,

Look for a moment at the deal struck between the US and China in the past decade. China has effectively agreed to hand over a thousand pairs of cotton underwear in exchange for an iPad 6 somewhere down the line.

Mario Draghi has been a genius. And I am sure he realizes that all he has done is bought the politicians more time to sort out the fundamental issues surrounding the Eurozone crisis. In the first 3 year LTRO 489  billion EUR was allotted. In this, the second, 529 billion EUR has been allotted, apparently

The 22 Feb MRO allocation came in at 166 billion EUR, 23 billion EUR more than the 15 Feb MRO of 143 billion EUR. All is not lost for those expecting another outsized allocation for the upcoming 3 year LTRO on 29 Feb. But interpreting a small or large number is not straightforward.