April 15. “A mile wide and an inch deep”?
April 15. Jeff Gundlach was on CNBC yesterday and mentioned that when the first QE ended bond yields fell by 160 bps. He added (I paraphrase) “to be fair, at least part of that move was related to the European banking problems.” Interestingly as we contemplate the end to QE2, Greece and Portugal made new high yields yesterday and Moody’s just downgraded Ireland. I recall analysts blithely dismissing the early subprime problems as a “mile wide and an inch deep”, but of course they turned out to be truly global, and fingers of instability continue to reach out and touch every market. Even yesterday Larry Summers had this to say (HuffPost) “I am in less of a hurry to condemn the [financial] innovation as the cause of the crisis than many,” Summers said, because “most financial crises [in the past] do not seem to have their roots in new-fangled financial institutions.” Instead, he said, it’s probably better to blame the housing bubble. Really? Financial innovation is what allowed the housing bubble to blow up!
–Heavy seller of EDU1 9962^ yesterday, over 20k from 16.5 to 15.5, appears new, at least on put side.
–News today includes: CPI expected +0.5 with Core +0.2. TIC data. Industrial Production +0.6 with Capacity 77.3.
–In comparison with US inflation, India’s wholesale price inflation quickened to 8.98% and China’s CPI was 5.4% (widely thought to be understated). Fed’s balance sheet grew to a whopping $2.65T. Our chief export is (no, not chrome) but rather, inflation!
