Weekly Commentary: Inklings Of Secular Change

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Doug Noland
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Summary

  • Wednesday marked the first Fed rate increase since November 2018. Recall that Powell had assumed the Chairmanship earlier that year (February 5th).
  • The Fed's balance sheet and 7.9% inflation ensure history will not mistake Powell for Volcker incarnate.
  • Markets understandably interpret nimble as code for readily available Fed market liquidity backstop.

Man erasing red COVID-19 virus with paint roller

Klaus Vedfelt/DigitalVision via Getty Images

The S&P500 was about unchanged Wednesday at 2:36 ET, six minutes into Chair Powell's press conference opening statement. "We will need to be nimble in responding to incoming data and the evolving outlook." A market surge over the final 84 minutes of trading saw the S&P500 end the session 2.2% higher. The Goldman Sachs Most Short index spiked 5.6% (finishing the week up a blistering 10.5%).

March 18 - Bloomberg (Jeran Wittenstein): "No earnings? No problem. That was the message from investors this week who stormed back into the shares of faster-growing companies with little in the way of profits after months of chasing value stocks. While major benchmarks rallied, a Goldman Sachs index of unprofitable tech companies was up 18% over the five sessions."

Wednesday marked the first Fed rate increase since November 2018. Recall that Powell had assumed the Chairmanship earlier that year (February 5th). Under Powell, rates were raised 25 bps in June and again in September. Wall Street excoriated him in October for his "rookie mistake" comment, "we're a long way from neutral." There was near marketplace revolt when the Powell Fed hiked rates in the midst of market instability in December 2018.

March 16 - Financial Times (Colby Smith): "Testifying before Congress earlier this month, Jay Powell was asked if the US Federal Reserve was prepared to 'do what it takes' to get inflation back under control - and if necessary, follow in the footsteps of his venerated predecessor, Paul Volcker, who regained price stability 'at all costs'. Calling the late Volcker 'the greatest economic public servant of the era', Powell responded: 'I hope history will record that the answer to your question is yes.' The chair of the central bank on Wednesday sought to drive home that point, framing the first interest rate rise since 2018 as the start of a series of increases and emphasising that the Federal Open Market Committee (OTCPK:FOMC) was 'acutely aware of the need to return the economy to price stability and determined to use our tools to do exactly that'."

The Fed's balance sheet and 7.9% inflation ensure history will not mistake Powell for Volcker incarnate. I had hope for Chair Powell. He was neither an avowed inflationist nor a proponent of QE as Federal Reserve governor. I still believe one of his early objectives as Fed leader was to have the markets begin standing on their own. Powell's fate - all of our fates - was altered on January 4, 2019, when, on a panel discussion with Janet Yellen and Ben Bernanke, he pulled out some prepared comments: "…Policy is very much about risk management." "We will be patient as we watch to see how the economy evolves…" "We will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy…" A Bloomberg headline: "Powell Shows He Cares About Markets."

It was a dramatic "dovish pivot," coming unexpectedly only about two weeks after a rate increase. Markets had been under pressure following the hike, as "risk off" gathered momentum. It would prove the last rate increase for 39 months. The Fed's balance sheet was about $4 TN at the time. But by that summer, the Fed announced a new QE program in the face of increasingly speculative markets and the lowest unemployment in decades. Then in March 2020, with markets in crisis, the Fed unleashed historic liquidity injections that would see the Fed's balance sheet more than double to almost $9.0 TN. Unprecedented monetary inflation stoked late-cycle Bubble excess, including myriad precarious manias.

Markets understandably interpret "nimble" as code for "readily available Fed market liquidity backstop". No one believes Powell can now abandon the "Fed put" he has exercised like no other - surging inflation notwithstanding. For now, markets are okay with a monetary policy contradiction: a determined fight against inflation - with a generous market liquidity backstop.

Having so incredibly mismanaged the monetary backdrop, the Fed was compelled to craft a plan for meaningful monetary tightening. Basically, it's a rate increase for each remaining meeting this year and a few more next year, while commencing measured balance sheet reduction as early as the May meeting. The committee's median "dot plot" projections have rates at 1.9% by the end of the year and 2.8% to conclude 2023. It's a rational and reasonable strategy, commencing what would be the most aggressive tightening cycle since 2005. There are, of course, worries about how this might impact economic growth and employment.

The more pressing risk is what an assertive tightening cycle means for faltering market Bubbles. The spread between two- and 10-year Treasury yields dropped to 21 bps this week, down from 77 bps to begin the year - to the narrowest spread since February 2020. There is essentially no spread between five and 10-year yields.

Understandably, two-year yields (at 1.94%) price in the Fed's near-term tightening plan. Why, though, with inflation surging and the Fed anticipating raising rates to almost 3.0% by the end of next year, do 10-year yields remain at only 2.15%? The market must anticipate an abrupt reversal of inflation dynamics and/or an eventual about-face from the FOMC. My bet would be on the latter.

Markets have every reason to question the sustainability of the Fed's tightening cycle. Larry Summers is calling for a 5% Fed funds rate, but odds of that seem about zero. Fragile Bubble markets will badly malfunction in a backdrop of tightening financial conditions. The Ukraine and global economic wars greatly exacerbate vulnerabilities. Myriad risks burden markets, while the Fed and global central bank community are burdened by even more forceful inflation dynamics.

Powell is no Volcker. Besides, in today's backdrop, even the great statesman Paul Volcker would be hamstrung by a confluence of fragile Market Structures, global inflationary dynamics and acute geopolitical risk. Truth be told, the Fed can plan and talk boldly, but faces limited flexibility.

This week's 6.2% S&P500 rally (Nasdaq100 8.4%, Semiconductors 9.2% and Broker/Dealers 9.1%) helped mollify fears of impending market breakdown. Notably, the VIX rose to almost 34 in early-Tuesday trading. JPMorgan Credit default swap (CDS) prices traded above 85 bps (began the year at 48), the high since crisis period April 2020. Goldman, BofA, Citigroup, and Morgan Stanley CDS all spiked to the highs since 2020. Investment-grade corporate Credit spreads (to Treasuries) surged to the widest level since July 2020. At Monday's close, investment-grade corporate debt (the LQD ETF) had posted a six-session return of negative 6.7% - boosting y-t-d losses to 11.9%. It was reminiscent of market dynamics heading into the pandemic dislocation.

Today's backdrop is more troubling than March 2020. For one, it could be the riskiest geopolitical environment in a couple generations. Historic Bubbles have inflated tremendously in two years. Furthermore, China's historic Bubble is faltering.

March 18 - Bloomberg (Sofia Horta e Costa): "China is changing direction on a number of key policies all at once as President Xi Jinping seeks to stabilize the country's economy and financial markets in a politically crucial year. On Thursday, Xi vowed to minimize the cost of China's longstanding Covid-Zero policy, signaling a shift in priority. His comments came hours after Hong Kong's leader said she would soon unveil a sweeping review of the city's approach toward the virus. Earlier in the week, China's finance ministry said it wasn't expanding its property tax trial any time soon. The same day, the State Council said it would complete its crackdown on Big Tech 'as soon as possible,' and resolve risks around property developers (previously authorities had insisted the crisis among builders such as Evergrande would be left to the market to deal with)."

Beijing hit the panic button. China's real estate developer crisis was spiraling out of control. Country Garden, China's largest developer, saw bond yields spike Wednesday to 31.6%, having doubled in only seven sessions (yields began 2022 at 6.7%). Yields spiked to 120.6% for Evergrande, 120.5% for Kaisa, 124.6% for Lonfor and 98% for Sunac. Developer bonds were virtually collapsing across the board. An index of Chinese high-yield dollar bonds jumped to a record 27.1% yield (began the year at 16.8%). Chinese bank CDS were spiking higher. Industrial Bank of China CDS surged to 88.5 bps, China Construction Bank 84.6 bps, China Development Bank 83.4 bps, and Bank of China 84.5 bps - all highs since crisis period 2020. Ominously, China sovereign CDS surpassed 70 bps (began 2022 at 40) for the first time since the March 2020 spike.

At Wednesday's lows, the Shanghai Composite had sunk 13% in less than eight sessions to the low back to July 2020. Over eight sessions, China's CSI Financials Index collapsed almost 14%. Hong Kong's Hang Seng Index dropped 5.0% Monday and another 5.7% Tuesday, boosting y-t-d losses to 21.0%. The Hang Seng China Financials Index dropped 7.7% in two sessions.

China's about-face on about everything ignited a spectacular short squeeze and market rally.

March 17 - Bloomberg (Abhishek Vishnoi and Jeanny Yu): "Chinese stocks had their biggest two-day advance since 1998 as Beijing's strong push to stabilize financial markets and stimulate the economy lured buyers back after a relentless selloff. The Hang Seng China Enterprises Index rallied 7.5%... That followed an almost 13% jump in the previous session for the gauge of Chinese firms listed in Hong Kong."

After collapsing as much as 31% in three sessions, the Nasdaq Golden Dragon China Index rallied as much as 54% and ended the week up 26.4%. Equities were wild, but rather tame compared to the commodities.

March 14 - Bloomberg (Jack Farchy, Alfred Cang and Mark Burton): "It was 5:42 a.m. on March 8 in London when the nickel market broke. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. On this day, however, metal traders across the city were glued to a screen… Nickel prices usually move a few hundred dollars per ton in a day. For most of the past decade, they'd traded between $10,000 and $20,000. Yet the day before, the market had started to unravel, with prices rising by a stunning 66% to $48,078. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring $30,000 in a matter of minutes. Just after 6 a.m., the price of nickel passed $100,000 a ton."

While not as crazy as nickel, WTI Crude traded at almost $110 early Monday, sank to $93.70 in Tuesday trading, before rallying as much as 13% off lows to end the week down $4.63, or 4.2%, at $104.70. Aluminum dropped 8% and then rallied 5.5%. Copper dropped 5% from Monday's highs, and then rallied 4.7%. Silver slumped 5.6%, rallied 4.4%, then declined Friday to end the week down 3.5%. Palladium sank as much as 17% in wild Monday trading, before ending the week down 11%. Platinum was down as much as 10% at Tuesday's lows, before ending the week with a loss of 5%. Gold opened the week at $1,989, traded down to $1,895 in Wednesday trading, before closing Friday at $1,922 (down 3.4% for the week).

The Treasury five-year "breakeven" rate of market inflation expectations jumped to a record 3.68% in early Friday trading, only to reverse lower to end the week at 3.59%. For perspective, this rate was below 1% when the Fed responded to the March 2020 market dislocation. Crude prices ended February 2020 at $45. CPI was up 2.3% y-o-y in February 2020.

Whether it's the Fed, Beijing, the ECB or other officials from around the globe, policymakers now face extraordinary financial, economic and geopolitical risks in an inflationary backdrop not experienced in decades. The thesis holds that a secular shift to a new regime is now unfolding.

Going back three decades to the reign of Alan Greenspan, the Fed held sway over system stability. The Greenspan Fed accommodated a transformational shift to market-based finance. The Fed could then control financial conditions, Credit Availability, asset inflation, perceived wealth creation, investment, and economic growth with measures that evolved from Greenspan's cryptic utterances, to aggressive rate slashing, to Bernanke's Trillion to Powell's $5 TN.

No matter what the crisis - early nineties bank impairment, 1994 bond bust, LTCM, the bursting tech Bubble, 9/11, the mortgage finance Bubble collapse to the pandemic - the solution was one version or another of increasingly reckless monetary inflation.

And for three decades, the bond market enjoyed one of history's great bull markets. Ten-year Treasury yields traded above 9% in early 1990. In the face of runaway Credit growth, transitory spikes in crude prices and inflation rates, and unprecedented monetary stimulus, bond yields trended lower - all the way down to 0.53% in July 2020.

For thirty years, the Fed operated with minimal concern for bond market instability or inflation. This prolonged and historic cycle is drawing to a close. The cycle of repeated reflationary measures and only bigger and more unwieldy Bubbles has come to a head. As global Bubbles falter, it would require yet another round of massive monetary inflation to again hold collapse at bay. But with powerful inflationary forces unleashed - certainly including supply-challenged commodities markets - there is the distinct risk of inflation becoming completely unhinged. This risk places the bond market in peril.

Derivative markets have begun to adjust to the troubling new backdrop. Central bankers can supply additional liquidity, but they can't mint more crude, nickel, wheat, or commodities generally. At least in commodities, central bankers are incapable of ensuring liquid and continuous markets. And as energy, food and commodities prices surge higher, central bankers are kidding themselves if they actually believe they can control the general inflationary backdrop.

I wish the Fed today possessed the "tools" to manage inflation. Ten-year yields at 2.14% will not do the trick. At this point, the Fed would have to dramatically tighten financial conditions to reset inflation expectations. But such a move would collapse fragile Bubbles.

March 18 - Bloomberg (Lu Wang): "Wall Street traders are enduring fresh equity-market fireworks Friday after another week of global turbulence… Roughly $3.5 trillion of single-stock and index-level options were estimated to expire Friday, according to Goldman Sachs… At the same time, more near-the-money options were expected to mature than at any time since 2019… The S&P 500 climbed almost 6% over previous three sessions in the best rally since 2020…"

It's worth repeating: "Roughly $3.5 trillion of single-stock and index-level options were estimated to expire Friday." It was yet another rally into expiration, where the reversal of hedges fueled panic-buying and melt-up dynamics. Imagine, however, the scenario where derivatives dealers - on the wrong side of Trillions (notional) of put options and other bearish hedges - are forced to aggressively hedge their rapidly increasing exposures (by selling securities) into cascading markets.

This is an accident in the making. In the event of a major "risk off" market dynamic, literally Trillions of market exposures will be offloaded to the derivatives markets, where the dealer community will be left with the task of trying to hedge market protection they have provided (i.e. listed put options sold or over-the-counter derivatives written).

Granted, this dynamic is not unfamiliar in the marketplace. What has changed is the scope of both speculative excess and derivatives trading, along with an inflation backdrop unlike anything experienced during the entire era of contemporary derivatives trading (going back to late-eighties "portfolio insurance"). As recently as two years ago, the Fed responded to "de-risking/deleveraging" and resulting market dislocation with unprecedented liquidity injections. Such a monetary response today would risk further commodities market speculation and dislocation, while stoking a perilous inflationary spike.

Markets are an erratic mess: commodities, equities, bonds, currencies and, certainly, derivatives. The game has fundamentally changed. Whether it is nickel, crude, wheat or commodities more generally, producers will now approach hedging programs more cautiously (fearful of getting caught in squeezes and margin calls). Especially after the War and unfolding "economic iron curtain," supply constraints create a high-risk backdrop for getting caught in short squeezes and market dislocations.

To be sure, the derivatives dealer community active in commodities can no longer assume liquid and continuous markets. It would today be misguided to operate with the expectation of being able to readily ("dynamically") hedge derivative exposures in the markets. Wild price volatility and illiquidity dictate that those still willing to sell protection in these markets will demand highly elevated prices.

Market dynamics suggest a fundamental secular change in commodities derivative markets, with fewer players, less liquidity and significantly higher risk premiums. This points to powerful inflationary biases throughout the commodities universe. Moreover, central banks risk throwing gas on an inflationary fire when they respond to financial market illiquidity with additional QE/monetary inflation.

A key question is whether this secular shift in commodities markets portends a secular cycle downturn for financial assets? I believe it does. Financial markets - stocks, bonds, derivatives - confront risks not faced in decades. Inflation is high, while risks are tilted strongly to the upside. Meanwhile, the combination of surging inflation and unprecedented indebtedness creates the highest risk in generations for a disorderly spike in market yields.

Importantly, there's also the key issue of the Fed's (and global central banks') market liquidity backstop. Markets cannot today rest assured that "whatever it takes" still applies. At the minimum, the necessary focus on inflation risk will dictate that the Fed's response to "de-risking/deleveraging" and resulting market illiquidity will be more tentative and limited in scope than in the past.

The backdrop points to a sea change in the risk/reward profile of financial assets generally. Geopolitical risks are today of extreme nature and will likely remain highly elevated. Liquidity risks have fundamentally shifted. Wildly speculative markets confront a less certain and likely diminished central bank liquidity backstop. Importantly, writing market protection has become a much riskier proposition, a reality that will manifest into higher priced derivatives and market protection. And a shift away from readily available inexpensive market "insurance" will translate into less leveraging and risk-taking. Going forward, de-risking will require more selling of securities holdings, rather than simply buying cheap hedges.

It was a week of extraordinary contradictions. Constructive comments on negotiations from both the Ukrainian and Russian sides. The Wednesday Financial Times article, "Ukraine and Russia Explore Neutrality Plan in Peace Talks:" "Ukraine and Russia have made significant progress on a tentative peace plan…" By late in the week, the Ukrainian side said talks could last at least "several weeks," while Putin stated Kyiv was "putting forward more and more unrealistic proposals." If anything, the bombing and destruction became only more intense and brutal.

The U.S. and China appeared on a collision course, although the Biden/Xi meeting offered reason for cautious optimism. Chinese markets were at the brink, before a Beijing-induced rally elicited cries of "the bottom's in!" Here at home, another spectacular short squeeze suspended crisis dynamics. The bottom line: the world has commenced an alarming period of uncertainty and instability. And the more comfortable markets become in disregarding geopolitical risk, the more leash the Fed will have to tighten policy. A well-known market pundit said the Fed was in "fantasyland." The same can be said for the markets.

For the Week:

The S&P500 surged 6.2% (down 6.4% y-t-d), and the Dow jumped 5.5% (down 4.4%). The Utilities increased 0.5% (down 2.6%). The Banks rallied 6.0% (down 1.7%), and the Broker/Dealers spiked 9.1% (down 1.7%). The Transports surged 8.3% (unchanged). The S&P 400 Midcaps jumped 5.3% (down 4.8%), and the small cap Russell 2000 rallied 5.4% (down 7.1%). The Nasdaq100 surged 8.4% (down 11.6%). The Semiconductors jumped 9.2% (down 13.0%). The Biotechs rose 5.8% (down 7.8%). With bullion dropping $67, the HUI gold index declined 2.7% (up 17.5%).

Three-month Treasury bill rates ended the week at 0.36%. Two-year government yields jumped 19 bps to 1.94% (up 121bps y-t-d). Five-year T-note yields surged 20 bps to 2.15% (up 88bps). Ten-year Treasury yields rose 16 bps to 2.15% (up 64bps). Long bond yields increased seven bps to 2.42% (up 52bps). Benchmark Fannie Mae MBS yields jumped 16 bps to 3.24% (up 117bps).

Greek 10-year yields rose six bps to 2.63% (up 131bps y-t-d). Ten-year Portuguese yields gained eight bps to 1.18% (up 72bps). Italian 10-year yields added four bps to 1.89% (up 72bps). Spain's 10-year yields gained eight bps to 1.32% (up 72bps). German bund yields jumped 12 bps to 0.37% (up 55bps). French yields rose 11 bps to 0.83% (up 63bps). The French to German 10-year bond spread narrowed one to 46 bps. U.K. 10-year gilt yields added a basis point to 1.50% (up 53bps). U.K.'s FTSE equities index rallied 3.5% (up 0.3% y-t-d).

Japan's Nikkei Equities Index rallied 6.6% (down 6.8% y-t-d). Japanese 10-year "JGB" yields increased two bps to 0.21% (up 14bps y-t-d). France's CAC40 recovered 5.8% (down 7.4%). The German DAX equities index rallied 5.8% (down 9.3%). Spain's IBEX 35 equities index rose 3.4% (down 3.4%). Italy's FTSE MIB index jumped 5.1% (down 11.4%). EM equities were mostly higher. Brazil's Bovespa index jumped 3.2% (up 10.0%), and Mexico's Bolsa surged 4.1% (up 4.1%). South Korea's Kospi index recovered 1.7% (down 9.1%). India's Sensex equities index rose 4.2% (down 0.7%). China's Shanghai Exchange fell 1.8% (down 10.7%). Turkey's Borsa Istanbul National 100 index surged 4.4% (up 15.4%). Russia's MICEX equities index did not trade (down 34.8%).

Investment-grade bond funds saw outflows of $3.134 billion, and junk bond funds posted negative flows of $1.650 billion (from Lipper).

Federal Reserve Credit last week jumped $25.4bn to a record $8.895 TN. Over the past 131 weeks, Fed Credit expanded $5.169 TN, or 139%. Fed Credit inflated $6.085 Trillion, or 216%, over the past 488 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt last week increased $2.1bn to $3.435 TN. "Custody holdings" were down $141bn, or 3.9%, y-o-y.

Total money market fund assets fell $16.9bn to $4.559 TN. Total money funds increased $173bn y-o-y, or 3.9%.

Total Commercial Paper dropped $21.3bn to $1.018 TN. CP was down $98bn, or 8.8%, over the past year.

Freddie Mac 30-year fixed mortgage rates surged 31 bps to a near three-year high 4.16% (up 107bps y-o-y). Fifteen-year rates jumped 30 bps to 3.39% (up 99bps). Five-year hybrid ARM rates rose 22 bps to 3.19% (up 40bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up 15 bps to 4.50% (up 122bps) - the high since December 2018.

Currency Watch:

For the week, the U.S. Dollar Index declined 0.9% to 98.23 (up 2.7% y-t-d). For the week on the upside, the Swedish krona increased 3.6%, the Norwegian krone 3.0%, the Mexican peso 2.7%, the South Korean won 1.9%, the Australian dollar 1.7%, the New Zealand dollar 1.5%, the euro 1.3%, the Canadian dollar 1.1%, the British pound 1.1%, the Brazilian real 1.0%, the South African rand 0.5%, the Singapore dollar 0.5% and the Swiss franc 0.3%. On the downside, the Japanese yen declined 1.6%. The Chinese renminbi declined 0.34% versus the dollar (down 0.08% y-t-d).

Commodities Watch:

The Bloomberg Commodities Index declined 2.4% (up 24.4% y-t-d). Spot Gold fell 3.4% to $1,922 (up 5.1%). Silver dropped 3.5% to $24.96 (up 7.1%). WTI crude slumped $4.63 to $104.70 (up 41%). Gasoline dipped 2.2% (up 45%), while Natural Gas jumped 2.9% (up 30%). Copper rose 2.5% (up 6%). Wheat sank 3.9% (up 38%), and Corn dropped 2.7% (up 25%). Bitcoin rallied $2,845, or 7.3%, this week to $41,785 (down 10%).

Russia/Ukraine Watch:

March 17 - Financial Times (James Politi): "The US secretary of state has poured cold water on hopes of a diplomatic settlement to the war in Ukraine, saying there were no signs Vladimir Putin was 'prepared to stop' Russia's invasion of its neighbour. Antony Blinken played down expectations the warring countries would be able to come to an agreement that would see Russia withdraw its forces from Ukraine as he vowed Washington would investigate 'war crimes' carried out by the Russian military. 'From where I sit, diplomacy obviously requires both sides engaging in good faith to de-escalate,' Blinken said…"

March 16 - U.S. News & World Report (Paul D. Shinkman): "President Vladimir Putin put forward a comprehensive, if disjointed, defense of Russia's bloody assault on Ukraine three weeks after it began in an apparent recognition of growing international outrage at the brutality of the campaign… Putin asserted Russia has no interest in occupying the former Soviet state and the seat of Russians' ethnic history. He claimed that Ukraine could pose a nuclear threat to Russia and that it has been ruled by a neo-Nazi regime. He repeated debunked theories that Pentagon-funded biolabs in Ukraine may unleash pathogens on Russian citizens. And he cited discredited accusations that Kyiv has backed a genocidal campaign against ethnic Russians in the eastern region known as Donbas where Russia has supported an ongoing separatist conflict for eight years. 'We simply weren't left with any options to peacefully solve the problems arising through no fault of ours,' Putin said…"

March 17 - Bloomberg (Tony Capaccio): "President Vladimir Putin can be expected to brandish threats to use nuclear weapons against the West if stiff Ukrainian resistance to Russia's invasion continues, draining conventional manpower and equipment, according to a new assessment by the Pentagon's Defense Intelligence Agency. 'Protracted occupation of parts of Ukrainian territory threatens to sap Russian military manpower and reduce their modernized weapons arsenal, while consequent economic sanctions will probably throw Russia into prolonged economic depression and diplomatic isolation,' Lieutenant General Scott Berrier, director of the Defense Intelligence Agency, said…"

March 15 - NPR: "An extraordinary event unfolded on Russian television late Monday: Mid-newscast on main state TV outlet Channel One, a woman rushed in behind the anchor and unfurled a handwritten poster. 'No War,' read the sign. 'Don't believe propaganda. They're lying to you here.' The cameras quickly cut away, and the protester - Channel One employee Marina Ovsyannikova - was later detained. Amid the Kremlin's campaign to 'demilitarize and denazify' Ukraine, the scene was a rare off-message moment in an otherwise heavily scripted effort to shape Russians' perceptions of events on the ground."

March 18 - Associated Press: "Facing stiff resistance in Ukraine and crippling economic sanctions at home, Russian President Vladimir Putin is using language that recalls the rhetoric from Josef Stalin's show trials of the 1930s. Putin's ominous speech on Wednesday likened opponents to 'gnats' who try to weaken the country at the behest of the West - crude remarks that set the stage for sweeping repressions against those who dare to speak out against the war... 'The Russian people will always be able to distinguish true patriots from scum and traitors and will simply spit them out like a gnat that accidentally flew into their mouths - spit them out on the pavement,' Putin said... 'I am convinced that such a natural and necessary self-purification of society will only strengthen our country, our solidarity, cohesion and readiness to respond to any challenges.' The coarse language carried ominous parallels for those familiar with Soviet history. During show trials of Stalin's Great Terror, authorities disparaged the declared 'enemies of the people' as 'reptiles' or 'mad dogs.' His voice strained by anger, Putin charged that Russians who oppose the war in Ukraine were a 'fifth column' obsequiously serving Western interests and ready to 'sell their own mother.'"

March 16 - Bloomberg: "Vladimir Putin warned he would cleanse Russia of the 'scum and traitors' he accuses of working covertly for the U.S. and its allies. Facing economic meltdown three weeks into his invasion of Ukraine, the Russian leader lashed out at domestic critics in a televised video conference with dark undertones where he accused the West of wanting to destroy Russia. 'Any people, and particularly the Russian people, will always be able to tell apart the patriots from the scum and traitors and spit them out like a midge that accidentally flew into their mouths,' Putin said. He went further: 'I am convinced that this natural and necessary self-cleansing of society will only strengthen our country, our solidarity, cohesion and readiness to meet any challenge.' The outburst came two days after a producer at Russia's state-run Channel One interrupted the news with a rare public protest against the war in Ukraine. Marina Ovsyannikova briefly held up a sign behind the news anchor saying: 'They're lying to you.'"

Economic War/Iron Curtain Watch:

March 14 - Financial Times (Gideon Rachman): "Just before Russia invaded Ukraine, Vladimir Putin met Xi Jinping in Beijing. Shortly afterwards, the two countries announced a 'no limits' partnership. Whether there are truly no limits to the China-Russia partnership may become clear in the coming days, following reports that Moscow has asked Beijing for military aid. If Xi grants that request, China would in effect be entering a proxy war with the US and Nato nations that are backing Ukraine. That decision could spell the end for the globalised economic system that has fuelled China's extraordinary rise over the past 40 years. Russia and China share a deep hostility to America's global power. But they have approached their rivalry with the US in very different ways. China can afford to play a 'long game', relying on its economic might to change the global balance of power. But Russia, in a weaker economic position, has gambled on brute force in Ukraine."

March 14 - Reuters (Natalia Zinets and Max Hunder): "Ukrainian Foreign Minister Dmytro Kuleba said… sanctions pressure should be increased on Russia and called for a global boycott of international companies that have kept their operations open in Russia. In a briefing on the war between Russia and Ukraine, Kuleba also called for international ports to bar passage to Russian ships and cargo. 'International businesses must leave Russia, both for moral and practical reasons,' Kuleba said."

March 14 - Wall Street Journal (Jennifer Maloney, Emily Glazer and Heather Haddon): "Russian prosecutors have issued warnings to Western companies in Russia, threatening to arrest corporate leaders there who criticize the government or to seize assets of companies that withdraw from the country… Prosecutors delivered the warnings in the past week to companies including Coca-Cola Co. , McDonald's Corp. , Procter & Gamble Co. , International Business Machines Corp. and KFC owner Yum Brands… The calls, letters and visits included threats to sue the companies and seize assets including trademarks, the people said. Russian President Vladimir Putin last week expressed support for a law to nationalize assets of foreign companies that leave his country over its invasion of Ukraine."

March 16 - Bloomberg: "Russian inflation eased slightly from a multi-decade high, but there are signs that food staples and imported goods are growing increasingly scarce after international sanctions over the invasion of Ukraine. Consumer prices rose 2.09% in the seven days ending March. 11, down from 2.22% a week earlier… Annual inflation accelerated to 12.54%... Russia may be headed for 'Soviet-like inflation' that manifests itself not in higher costs but through a deficit of goods, according to Alexander Abramov, a specialist on financial markets at RANEPA, a state-run university in Moscow. 'The main risk now is the emergence of a shortage of basic imported everyday goods, as well as durable goods,' he said. 'Many are no longer available in stores, and prices in online stores have risen sharply.'"

March 13 - Financial Times (Emiko Terazono, Roman Olearchyk, Daniel Dombey, Andy Bounds and Jude Webber): "Consumers around the world will feel the 'enormous impact' of Russia's war on Ukraine through sharply higher food prices and significant disruption to agricultural supply chains, according to industry executives... John Rich, executive chair of Ukraine's leading food supplier MHP, said he feared for the vital spring planting season, which is critical not only for domestic supplies in Ukraine but also the huge quantities of grains and vegetable oil that the country exports around the globe. 'This conflict has had an enormous impact on Ukraine and Russia's ability to supply the world,' Rich said."

March 14 - Reuters: "Russia… passed a law allowing the country's airlines to place airplanes leased from foreign companies on the country's aircraft register - a manoeuvre likely to stoke Western fears of a mass default involving hundreds of jetliners. The bill, signed by Russian President Vladimir Putin, has rattled global leasing firms days before a March 28 deadline to repossess aircraft worth $10 billion as a result of Western sanctions imposed following Russia's invasion of Ukraine."

March 13 - Financial Times (Joe Rennison): "The value of bonds backed by aircraft that are trapped in Russia has tumbled this month, as leasing companies struggle to repossess planes rented to Russian airlines. US and European sanctions imposed following Russia's invasion of Ukraine prohibit the leasing of aircraft to Russian airlines and existing contracts must be terminated by the end of March. The sanctions have presented a logistical challenge to recover the aircraft that are still in Russia, with Moscow so far signalling its unwillingness to allow the planes to leave the country. Before the sanctions were imposed, non-Russian lessors had 515 planes in Russia with a combined market value of close to $10bn… That figure has since dropped to about 450 to 460…"

March 16 - Financial Times (Ian Smith and Stephen Morris): "Stranded planes, battered ships, bombed-out buildings and unrecoverable debts created by Russia's invasion of Ukraine have left the global insurance industry braced for soaring payouts and protracted legal disputes. The war in Ukraine could cost insurers billions of dollars in claims, with the aviation insurance sector alone facing potentially the biggest loss event in its history due to the hundreds of planes grounded in Russia. With tougher western sanctions shutting Russia's aviation and space sectors out of insurance and reinsurance markets, the expectation is that risks will only grow."

March 16 - Wall Street Journal (Stu Woo, Georgi Kantchev and Evan Gershkovich): "In 1990, about 30,000 Russians braved the January frost to line up in Moscow's Pushkin Square. The payoff for the hourslong wait was the first taste of burgers and fries from the country's inaugural McDonald's restaurant. In the years that followed, Western businesses flocked to Russia, seeking to profit from the country's lurch from communism to capitalism. They introduced American fast food, cars and fashion to a generation accustomed to Soviet-era shortages, and in many cases built sizable businesses. Starbucks, iPhones and IKEA became a part of daily life for middle-class Russians in Moscow and St. Petersburg. Russia's invasion of Ukraine has brought that symbiotic relationship to a crashing halt."

March 15 - Associated Press (Summer Said and Stephen Kalin): "Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan…, a move that would dent the U.S. dollar's dominance of the global petroleum market and mark another shift by the world's top crude exporter toward Asia. The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said. The Saudis are angry over the U.S.'s lack of support for their intervention in the Yemen civil war, and over the Biden administration's attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year."

March 14 - Reuters (Aftab Ahmed, Manoj Kumar and Krishna N. Das): "India may take up a Russian offer to buy crude oil and other commodities at a discount, two Indian officials said, in a sign that Delhi wants to keep its key trading partner on board despite Western attempts to isolate Moscow through sanctions. U.S. officials have said in recent weeks they would like India to distance itself from Russia as much as possible, while recognising its heavy reliance on Moscow for everything from arms and ammunitions to missiles and fighter jets."

March 16 - Financial Times (Chloe Cornish): "India's central bank is in initial consultations on a rupee-rouble trade arrangement with Moscow that would enable exports to Russia to continue after western sanctions restricted international payment mechanisms. The talks, which would allow India to continue to buy Russian energy exports and other goods, risks angering Washington and its allies as they seek to punish Moscow for its war on Ukraine."

March 17 - Reuters (Alistair Smout): "Britain is very disappointed with India's stance on Russia's invasion of Ukraine, trade minister Anne-Marie Trevelyan said… ahead of the conclusion of a second round of trade talks. India has avoided condemning Russian actions since it invaded Ukraine three weeks ago, to the frustration of allies including the United States, and abstained from voting at the United Nations calling out Russia's aggression."

U.S./Russia Watch:

March 17 - Reuters (Guy Faulconbridge): "Russia warned the United States… that Moscow had the might to put the world's pre-eminent superpower in its place and accused the West of stoking a wild Russophobic plot to tear Russia apart. Dmitry Medvedev, who served as president from 2008 to 2012 and is now deputy secretary of Russia's Security Council, said the United States had stoked 'disgusting' Russophobia in an attempt to force Russia to its knees. 'It will not work - Russia has the might to put all of our brash enemies in their place,' Medvedev said."

March 18 - Reuters (Guy Faulconbridge): "Russia has lost any illusions about ever relying on the West and Moscow will never accept a world order dominated by the United States, which is acting like a sheriff seeking to call all the shots in a saloon bar, Foreign Minister Sergei Lavrov said… 'If there was any illusion that we could one day rely on our Western partners, this illusion is no longer there,' Lavrov told Russian state-funded RT… 'What the Americans want is a unipolar world which would not be like a global village but like an American village - or maybe like a saloon where you know the strongest calls the shots…' He added that many countries such as China, India and Brazil did not want to be ordered around by 'Uncle Sam' acting like a sheriff. 'We will now have to rely only on ourselves and on our allies who stay with us… We are not closing the door on the West - they are doing so.'"

March 12 - Financial Times (Max Seddon in Riga, Roman Olearchyk in Lviv and Victor Mallet): "Russia has warned that it will fire on western armaments shipments to Kyiv, raising the risk of a direct military confrontation between Moscow and Nato during the war in Ukraine. Deputy foreign minister Sergei Ryabkov said… 'pumping up [Ukraine] with weapons from a whole range of countries' was 'not just a dangerous move - it's something that turns these convoys into legitimate military targets', according to the Interfax news agency."

March 16 - Financial Times (James Politi and Lauren Fedor in Washington and Felicia Schwartz): "Joe Biden approved the delivery of new US weapons systems to Kyiv, including sophisticated armed drones, after Volodymyr Zelensky, Ukraine's leader, made an impassioned plea to Congress… Biden's announcement of further help for Ukraine's military, which the Pentagon valued at $1bn, fell short of Zelensky's request for the US and Nato to embrace a no-fly zone or directly supply fighter jets to the country. But the aid package is a significant escalation by Washington and marks the first time the US has sent armed drones to the Ukrainian military since the Russian invasion last month. Ukrainian forces have used Turkish-made drones with great effectiveness to hobble the Russian advance."

March 16 - Reuters (Jeff Mason and Chris Gallagher): "U.S. President Joe Biden… said the United States was offering an additional $800 million in security assistance to Ukraine to combat Russia's invasion, with the new package including drones and anti-aircraft systems. 'It includes 800 anti-aircraft systems to make sure that the Ukrainian military can continue to stop the planes and helicopters that have been attacking their people,' Biden said."

March 17 - Reuters: "Russia's foreign ministry said… that giving Ukraine air defence systems, as requested by Ukraine's president in the U.S. Congress a day earlier, would be a destabilising factor that would not bring peace to the country… 'Such deliveries ... would be a destabilising factor which will definitely not bring peace to Ukraine,' foreign ministry spokeswoman Maria Zakharova told a news briefing."

China/Russia/U.S. Watch:

March 18 - Reuters (Yimou Lee): "A Chinese aircraft carrier sailed through the sensitive Taiwan Strait on Friday, Taiwan's Defence Ministry said, just hours before the Chinese and U.S. presidents were due to talk."

March 14 - Financial Times (Demetri Sevastopulo): "The US has told allies that China signalled its willingness to provide military assistance after Russia requested equipment including surface-to-air missiles to support its invasion of Ukraine, according to officials familiar with American diplomatic cables on the exchange. Two officials familiar… said Washington had told allies that Russia had asked China for five types of equipment, including the surface-to-air missiles. The other categories were drones, intelligence-related equipment, armoured vehicles, and vehicles used for logistics and support."

March 14 - Washington Post (Olivier Knox, Caroline Anders): "The United States sent two significant public messages to China Sunday about Ukraine. First: We know Russia has asked you for weapons since it invaded its smaller neighbor nearly three weeks ago. Second: Don't even think about it. The two communications came as President Biden's national security adviser, Jake Sullivan, led a delegation of State Department and National Security Council officials to Rome today for talks with Yang Jiechi, China's top foreign policy official. 'We are communicating directly, privately to Beijing that there will absolutely be consequences for large-scale sanctions evasion efforts or support to Russia to backfill them,' Sullivan told CNN. 'We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country anywhere in the world.' Sullivan was equally blunt on NBC, saying the United States had made clear to China 'that if they think that they can basically bail Russia out, they can give Russia a workaround to the sanctions that we've imposed, they should have another thing coming because we will ensure that neither China nor anyone else can compensate Russia for these losses.'"

March 14 - Reuters (Antonio Denti, Michael Martina and Andrea Shalal): "U.S. national security adviser Jake Sullivan… raised concerns about China's alignment with Russia in a seven-hour meeting with Chinese diplomat Yang Jiechi as Washington warned of the isolation and penalties Beijing will face if it helps Moscow in its invasion of Ukraine. The meeting took place in Rome as Washington told allies in NATO and several Asian countries that China had signaled its willingness to provide military and economic aid to Russia to support its war, two U.S. officials said. The U.S. message, sent in a diplomatic cable, also noted China was expected to deny those plans, said one of the officials, speaking on condition of anonymity. 'It's real, it's consequential, and it's really alarming,' the second U.S. official said…"

March 13 - Reuters (Mark Trevelyan): "Russia said… it was counting on China to help it withstand the blow to its economy from Western sanctions over the war in Ukraine, but the United States warned Beijing not to provide that lifeline. Russian Finance Minister Anton Siluanov said sanctions had deprived Moscow of access to $300 billion of its $640 billion in gold and foreign exchange reserves, and added that there was pressure on Beijing to shut off more. 'We have part of our gold and foreign exchange reserves in the Chinese currency, in yuan. And we see what pressure is being exerted by Western countries on China in order to limit mutual trade with China. Of course, there is pressure to limit access to those reserves… But I think that our partnership with China will still allow us to maintain the cooperation that we have achieved, and not only maintain, but also increase it in an environment where Western markets are closing.'"

Europe/Russia Watch:

March 18 - Reuters (Andreas Rinke): "German Economy Minister Robert Habeck called… for Russian President Vladimir Putin's power to be reduced and ultimately destroyed. 'We should do everything we can to reduce Putin's power and, in the end, to destroy it,' Habeck, who is also German vice chancellor, told ARD television."

Market Instability Watch:

March 14 - Reuters (Sydney Maki, Eliza Ronalds-Hannon and Selcuk Gokoluk): "Russia's economy is fraying, its currency has collapsed, and its debt is junk. Next up is a potential default that could cost investors billions and shut the country out of most funding markets… The government says that all debt will be serviced, though it will happen in rubles as long as sanctions - imposed because of the war - don't allow dollar settlements. Failure to pay, or paying in local currency instead of dollars, would start the clock ticking on a potential wave of defaults on about $150 billion in foreign-currency debt owed by both the government and Russian companies including Gazprom, Lukoil and Sberbank."

March 16 - Associated Press: "Ratings agencies say Russia is on the verge of defaulting on government bonds following its invasion of Ukraine, with billions of dollars owed to foreigners. That prospect recalls memories of a 1998 default by Moscow that helped fuel financial disruption worldwide. Ratings agency Fitch said Wednesday that 'a default or a default-like process has begun' because Russia missed a March 2 payment to foreign investors, such as funds that invest in emerging market bonds. That set off a 30-day grace period before the country would officially default."

March 16 - CNBC (Sam Meredith): "Russian Finance Minister Anton Siluanov said… it is up to the U.S. to decide whether crucial interest payments on two dollar-denominated eurobonds go through, ratcheting up fears of Moscow's first foreign currency debt default in over a century. 'The possibility or impossibility of fulfilling our obligations in foreign currency does not depend on us, we have the money, we paid the payment, now the ball is on the side, first of all, of the American authorities,' Siluanov said… 'The Russian Federation has the necessary money in foreign currency accounts, it is possible to pay in ruble settlements.'"

March 15 - Reuters (Davide Barbuscia): "Wild swings in asset prices following Russia's invasion of Ukraine are prompting some investors to pare risk in their portfolios, fearing that the type of volatility seen in commodities in recent weeks could hit other markets. At issue is liquidity - or the ease at which investors can buy or sell an asset without affecting its price. While episodes of low liquidity have contributed to sharp gyrations across markets over the last decade, signs of stress have become more plentiful in the last few weeks, exacerbated by everything from sanctions against Russia to expected central bank tightening."

March 15 - Bloomberg (Michael MacKenzie): "When practically everything is being sold off there's almost nowhere to hide for investors, even those following one of the most conservative approaches out there. The classic 60/40 portfolio -- a strategy named for the share allocated to equities and high-grade debt, respectively -- is down more than 10% this year, leaving it on pace for the worst drubbing since the financial crisis of 2008. Unlike then, though, it's not just growth that's a worry. Assets are being hurt by the risk that a stagnant economic expansion will be coupled with persistent inflation, a combination that could cause poor returns -- or even losses -- to extend for some time to come."

March 14 - Bloomberg (Jack Farchy, Alfred Cang and Isis Almeida): "Banks led by JPMorgan… are in advanced talks for a loan facility to backstop Xiang Guangda's short position in nickel, in an attempt to restore stability to the market after an unprecedented squeeze… Under the deal being discussed, the roughly 10 banks that were Xiang's counterparts for his nickel bet would extend enough credit to cover his mark-to-market losses, according to people familiar with the matter. Crucially, they would also provide a loan facility to allow Xiang to meet future margin calls should the nickel price increase further."

March 15 - Financial Times (Hudson Lockett and Edward White): "International investors are seeking to hedge against the possibility of military conflict between China and Taiwan, as Russia's invasion of Ukraine drives a reassessment of risk in one of the world's most dangerous geopolitical flashpoints. While a Chinese assault on Taiwan is still considered a 'tail risk' among investors, the rising concerns about an attack are underscored by a Goldman Sachs index tracking tensions across the Taiwan Strait, which recently hit a record high. Tim Moe, chief Asia equities strategist at Goldman, said that following the invasion of Ukraine 'informed consensus is putting a higher level of concern on cross-strait tensions - it's not a foolish thing to think about'."

March 17 - Bloomberg (Isabelle Lee): "Even on a day packed with extreme moves, this one stood out: A leveraged exchange-traded fund tied to China plunged 63% in Wednesday's dramatic session… The Direxion Daily FTSE China Bear 3X Shares ETF, which aims to deliver three-times the inverse of the performance of the FTSE China 50 Index…, plunged amid a broad rally for shares tied to the Asian nation."

Derivatives Watch:

March 16 - Bloomberg (Mark Burton and Jack Farchy): "Nickel prices tumbled by the maximum allowed as the market reopened in a messy sequence of false starts, with a glitch halting electronic trading for several hours and only a handful of contracts changing hands. For the London Metal Exchange, already facing the wrath of investors for its decision to cancel $3.9 billion in trades last week, it was another embarrassing setback. The turmoil in nickel has plunged the metals industry into chaos, after a huge short squeeze focused on Chinese tycoon Xiang Guangda drove the price up by an unprecedented 250% in little more than 24 hours last week. In private, exhausted traders and brokers -- many of whom have been working around the clock for several weeks -- expressed their exasperation with the exchange."

March 15 - Reuters (Shubhendu Deshmukh, Akanksha Khushi and Akriti Sharma): "Global commodities trader Trafigura Group has been holding talks with private equity groups to secure additional financing as soaring prices trigger margin calls across the commodities industry… Trafigura faced margin calls in the billions of dollars last week, the report said, citing people familiar with the matter."

March 16 - Financial Times (Neil Hume and Antoine Gara): "Trafigura has held discussions with Blackstone about an investment of up to $3bn, as the privately owned commodity trader seeks to broaden its sources of funding. The talks between Trafigura and the world's largest alternative asset manager come as commodity prices have soared following Russia's invasion of Ukraine, increasing pressures on the industry."

Inflation Watch:

March 14 - Wall Street Journal (Michael S. Derby): "Households' expectations of the near-term future path of inflation surged back to record levels in February, amid growing worries that it will become harder to borrow money over coming months, according to… the Federal Reserve Bank of New York. The bank said that respondents to its monthly survey see inflation hitting 6% a year from now, up from 5.8% in January… 'The increase was widespread across age, education, and income groups, but largest for the respondents without a high-school diploma,' the bank said."

March 15 - CNBC (Jeff Cox): "Another surge in energy prices pushed wholesale goods prices to their biggest one-month jump on record in February… Final demand prices for goods jumped 2.4% for the month, the largest move ever in data going back to December 2009… That pushed the headline producer price index up 0.8% on the month… On a year-over-year basis, headline PPI rose 10%, the same as January and tied for the biggest 12-month move ever."

March 15 - CNBC (Diana Olick): "Demand for single-family rental homes is soaring, pushing prices to record highs… Single-family rents gained a record 12.6% year over year in January, according to… CoreLogic. That compares to an increase of 3.9% in January 2021. Every major market saw increases, but cities in the Sun Belt saw truly stunning numbers. For example, single-family rents soared 38.6% in Miami… Orlando, Fla., and Phoenix were next in line, with gains of 19.9% and 18.9%... The Washington, D.C., area saw the lowest annual growth in rent prices - but they were still up 5.6%. 'Single-family-rent growth extended its record-breaking price growth streak to 10 consecutive months in January,' said Molly Boesel, principal economist at CoreLogic."

March 14 - Bloomberg (James Poole and Megan Durisin): "Futures for soybean meal -- a key component of animal feed -- climbed to a seven-year high as top shipper Argentina suspended export registrations, another sign of countries curbing trade to protect domestic food markets… Governments from Asia to Europe and the Americas are taking steps to safeguard local crop supplies as the war in Ukraine tightens global markets already strained by harvest setbacks and a recovery in demand. Hungary and Indonesia are among nations that have imposed trade curbs on farm products ranging from grains to cooking oil."

March 17 - Bloomberg (Elizabeth Elkin and Allison Smith): "Highly pathogenic avian influenza is back in the U.S., forcing farmers to cull flocks and pushing up egg prices at a time of rampant food inflation. The deadly virus has been hitting poultry operations along the East Coast and Midwest, including top producer Iowa, where a farm was recently forced to cull nearly a million birds. The lost production is starting to push up egg prices right before Easter, a time of peak demand…"

Biden Administration Watch:

March 17 - Reuters (Trevor Hunnicutt, Andrea Shalal, Michael Martina, Steve Holland, David Brunnstrom, Alexandra Alper, Humeyra Pamuk and Phil Stewart): "The Biden administration made a carefully orchestrated gamble this week, issuing a series of public and private threats to Beijing that it will face consequences if it supports Russia's invasion of Ukraine. The strategy was capped by a tense, seven-hour meeting in Rome on Monday between… national security adviser, Jake Sullivan, and China's top diplomat Yang Jiechi… One result of the Rome meeting was announced on Thursday - Chinese President Xi Jinping will speak with Biden on Friday about 'managing the competition between our two countries as well as Russia's war against Ukraine,' the White House said. It is not likely to be an easy conversation. Beijing was combative in the Rome talks, people briefed on the interactions say. One U.S.-based person briefed on the meeting described Chinese officials' response as 'tough' and 'offensive.' Another said simply that the talks did not go well."

March 16 - Reuters (Jan Wolfe): "U.S. federal prosecutors… accused Chinese government agents of trying to spy on and intimidate dissidents living in the United States including a congressional candidate… 'These cases expose attempts by the government of the People's Republic of China to suppress dissenting voices within the United States and demonstrate how the PRC attempts to stalk, intimidate and silence those who oppose them,' Assistant Attorney General Matthew Olsen told a news conference."

Federal Reserve Watch:

March 17 - Wall Street Journal (Nick Timiraos): "Federal Reserve officials voted… to lift interest rates and penciled in six more increases by year's end, the most aggressive pace in more than 15 years, in an escalating effort to slow inflation that is running at its highest levels in four decades. The Fed will raise its benchmark federal-funds rate by a quarter percentage point to a range between 0.25% and 0.5%, the first rate increase since 2018. Officials signaled they expect to lift the rate to nearly 2% by the end of this year… Their median projections show the rate rising to around 2.75% by the end of 2023, which would be the highest since 2008."

March 14 - New York Times (Jeanna Smialek): "To Jerome H. Powell, the chair of the Federal Reserve, Paul Volcker is more than a predecessor. He is one of his professional heroes. 'I knew Paul Volcker,' Mr. Powell said… 'I think he was one of the great public servants of the era - the greatest economic public servant of the era.' Now, if rapid inflation proves more stubborn than policymakers expect, Mr. Powell could find himself in a situation in which he must follow Mr. Volcker's lead. The towering former Fed chair is best remembered for waging an aggressive - and painful - assault on the swift price increases that plagued America in the early 1980s. Mr. Volcker's Fed rolled out policies that pushed a key short-term interest rate to nearly 20% and sent unemployment soaring to nearly 11% in 1981."

March 18 - CNBC (Jeff Cox): "Federal Reserve Governor Christopher Waller told CNBC… the central bank may need to enact one or more 50-bps interest rate hikes this year to tame inflation. Though he voted this week for just a 25-bps move due to uncertainty from the Russian invasion of Ukraine, Waller said he thinks the Fed may need to be more aggressive soon. 'I really favor front-loading our rate hikes, that we need to do more withdrawal of accommodation now if we want to have an impact on inflation later this year and next year… So in that sense, the way to front-load it is to pull some rate hikes forward, which would imply 50 bps at one or multiple meetings in the near future.' In addition to the rate hikes, Waller said he thinks the Fed needs to start reducing its bond holdings soon."

March 15 - Associated Press (Zeke Miller and Christopher Rugaber): "Sarah Bloom Raskin withdrew her nomination Tuesday to a position on the Federal Reserve's Board of Governors after a key Democrat had joined with all Senate Republicans to oppose her confirmation. West Virginia Sen. Joe Manchin announced Monday that he opposed Raskin's confirmation, and all Republicans in the evenly-split 50-50 Senate had indicated that they planned to block her nomination for the position of the Fed's top banking regulator."

U.S. Bubble Watch:

March 17 - Bloomberg (Emma Kinery): "New U.S. home construction rebounded in February to the strongest pace since 2006… Residential starts increased 6.8% last month to a 1.77 million annualized rate… Applications to build, a proxy for future construction, eased to an annualized 1.86 million units, though remained elevated… The data point to a pickup in construction activity after weather and omicron-related worker absences tempered building in January. Still, builders are struggling to meet buyer demand in the face of snarled supply chains, high commodities prices and an ongoing struggle to attract skilled labor."

March 17 - Wall Street Journal (Nicole Friedman): "In this booming housing market, many homeowners earned more last year from home appreciation than from their jobs. Zillow Group Inc.'s home value index, which estimates the value of the typical U.S. home, rose 19.6% in 2021 to $321,634, an increase of $52,667 from 2020. That figure was slightly higher than what the median U.S. full-time worker earned, which was about $50,000 last year before taxes, according to Census Bureau data... That marked the first time that the annual nationwide dollar growth for the typical home value exceeded the inflation-adjusted median pretax income…, which goes back to 2000."

March 16 - Associated Press (Anne D'Innocenzio): "After beginning the year in a buying mood, Americans slowed their spending in February on gadgets, home furnishings and other discretionary items as higher prices for food, gasoline, and shelter are taking a bigger bite out of their wallet. Retail sales increased 0.3% after registering a revised 4.9% jump from December to January… January's increase was the biggest jump in spending since last March, when American households received a final federal stimulus check of $1,400."

March 17 - Bloomberg (Jo Constantz): "Mortgage rates in the U.S. soared, surpassing 4% for the first time in almost three years. The average for a 30-year loan was 4.16%, up from 3.85% last week and the highest since April 2019, Freddie Mac said... Rates haven't been above 4% since May of that same year."

March 15 - Wall Street Journal (Hardika Singh): "Companies are unveiling plans to repurchase their own shares at a record pace, lending support to the battered stock market. Firms in the S&P 500 have outlined buyback plans valued at $238 billion through the first two months of 2022, according to data from Goldman Sachs…, a high for this point in the year."

Fixed-Income Bubble Watch:

March 15 - Bloomberg (Jeannine Amodeo): "U.S. leveraged loans came under renewed pressure on Tuesday as secondary prices fell as much as 1%... Some borrowers meanwhile, including car rental firm Avis Budget Group Inc., are being forced to offer bigger discounts on new loan sales to lure investors that are shying away from riskier assets. The drop in loan prices today follows seven straight sessions of declines in the S&P LSTA Leveraged Loan Price Index - its longest losing streak since July 2021 -- to fresh January lows of 96.34."

March 16 - Bloomberg (Adam Tempkin, Carmen Arroyo, and Charles E Williams): "Tesla Inc. delayed a more than $1 billion offering of bonds backed by leases on its electric vehicles, the third issuer in the past week to halt a sale amid market turbulence, according to people with knowledge of the matter… Surging inflation and worries over the economic fallout from Russia's war in Ukraine have sent short-term interest rate benchmarks sharply higher in recent weeks. That's prompting issuers to pause their financing plans until markets have calmed."

March 18 - Bloomberg (Claire Ruckin): "Investors in leveraged loans exposed to Russia are facing steep losses as they struggle to sell in the secondary market. Several leveraged loans have lost about 15% of their value since Russia's invasion of Ukraine…"

Economic Dislocation Watch:

March 15 - Wall Street Journal (Carol Ryan): "Even during the pandemic, the world's food system churned out its usual 11 billion tons of food a year. That consistency is unlikely to survive the war in Ukraine. International food markets will probably face shortages due to the conflict. Russia and Ukraine together supply almost one-third of the world's wheat, a quarter of its barley and nearly three-quarters of its sunflower oil… Commercial activity in Ukraine's ports has stopped since Russia's invasion began on Feb. 24, and it will be hard for farmers to harvest their crops later this summer and export grains if fighting cuts them off from the land. Agricultural producers may also face shortages of fuel, which is needed for military use."

March 16 - Associated Press (Kelvin Chan): "BMW and Volkswagen warned this week that Russia's invasion of Ukraine is causing shortages of some vital components, forcing them to reduce vehicle production in Europe. The two German carmakers said the war is having a 'negative' effect on auto supply chains, which have already been battered by shortages of semiconductors. BMW said… bottlenecks at its suppliers in Ukraine have forced the automaker to adjust or interrupt production at a number of factories… 'Ukraine is, of course, home to many suppliers, hence we too will have to face production interruptions and supply disruptions for important components,' Maximilian Schoeberl, BMW's director of corporate affairs, said…"

March 15 - Reuters (Brenda Goh and Josh Horwitz): "Manufacturers of everything from flash drives to glass for Apple iPhone screens are warning of shipment delays as they comply with Chinese controls to curb the spread of COVID-19, further straining global supply chains. Authorities across China are trying to try stem the spread of the country's worst COVID-19 outbreak in two years, putting millions of people in lockdown, curbing transport and shutting factories. Some of the toughest measures have been applied in the key manufacturing hubs of Shenzhen, Dongguan and Changchun, as well as the Chinese financial centre of Shanghai, which is home to the world's busiest container port. Fabien Gaussorgues, who provides contract manufacturing services from a factory in Dongguan, said he was struggling to procure parts needed for electric scooters, warehouse robots and electric toys because of the shutdowns."

March 15 - New York Times (Keith Bradsher): "Trucks are being delayed by the testing of drivers. Container rates are rising as ships wait for many hours at ports. Products are piling up in warehouses. As Chinese officials scramble to contain the country's worst outbreak of Covid-19 since early 2020, they are imposing lockdowns and restrictions that are adding chaos to global supply chains. The measures in China, home to about one-third of global manufacturing, are disrupting the production of finished goods like Toyota and Volkswagen cars and Apple's iPhones, as well as components such as circuit boards and computer cables. Cases rose on Tuesday to more than 5,000 new infections nationwide."

China Watch:

March 15 - Wall Street Journal (Lingling Wei): "Last year, President Xi Jinping seemed all but invincible. Now, his push to steer China away from capitalism and the West has thrown the Chinese economy into uncertainty and exposed faint cracks in his hold on power. Chinese policy makers became alarmed at the end of last year by how sharply growth had slowed after Mr. Xi tightened controls on private businesses, from tech giants to property developers. Meanwhile, China's stringent Covid lockdowns, part of Mr. Xi's approach to handling the crisis, have ramped up again as Covid cases surge, hurting both consumer spending and factory output. Add to that a pact with Russia in early February, just weeks ahead of its invasion of Ukraine, that has widened a gulf between China and the West and underlined how high the costs could be for China of implementing Mr. Xi's agenda at home and in foreign policy."

March 14 - Bloomberg: "China placed the 17.5 million residents of Shenzhen into lockdown for at least a week and forbade people from leaving Jilin, the first time the government has sealed off an entire province since the area surrounding Wuhan was isolated in early 2020. The Shenzhen lockdown, which came after new virus cases doubled nationwide to almost 3,400, will be accompanied by three rounds of city-wide mass testing."

March 16 - Reuters (Ryan Woo, Roxanne Liu and David Stanway): "China's public health governance is expected to come under acute pressure in coming weeks as the biggest wave of COVID-19 cases since the 2020 Wuhan outbreak stretches medical resources, tests the country's ability to contain infections and strains the economy. In the past 10 weeks, China has reported more new local symptomatic cases - more than 14,000 - than in all of 2021 amid the rapid spread of the Omicron variant, fuelling fears of hard lockdowns of cities and economic instability."

March 16 - Financial Times (Tom Mitchell, Ryan McMorrow and William Langley): "China's top economic official intervened on Wednesday to reassure investors, saying Beijing would take measures to support the economy and financial markets after a sharp sell-off that has accelerated in the wake of Russia's invasion of Ukraine. Liu He, a vice-premier and President Xi Jinping's closest economic adviser, said the government would take measures to 'boost the economy in the first quarter', as well as introduce 'policies that are favourable to the market'. He did not elaborate on what specific measures would be taken. Liu made the comments after convening a special meeting of the State Council's Financial Stability and Development Committee, which he chairs…"

March 17 - Bloomberg: "A series of official pledges and written commitments to stability may provide short-term relief to China's beleaguered equity markets, but it may take more than just words to instill confidence and drive a sustained turnaround. On Wednesday, Chinese officials vowed to stabilize financial markets, promising to ease a regulatory crackdown, support property and technology companies and stimulate the economy. The series of statements spurred a jaw-dropping 22% rebound in the Hang Seng Tech Index, with a gauge of China shares listed in Hong Kong soaring by the most since the financial crisis. U.S.-listed Chinese stocks also soared the most since at least 2001."

March 16 - Bloomberg: "A series of official pledges and written commitments to stability may provide short-term relief to China's beleaguered equity markets, but it may take more than just words to instill confidence and drive a sustained turnaround. On Wednesday, Chinese officials vowed to stabilize financial markets, promising to ease a regulatory crackdown, support property and technology companies and stimulate the economy. The series of statements spurred a jaw-dropping 22% rebound in the Hang Seng Tech Index, with a gauge of China shares listed in Hong Kong soaring by the most since the financial crisis. Words of encouragement, however, won't be enough for seasoned investors seeking clarity over what authorities may do to achieve their goals."

March 16 - Bloomberg: "China made a strong push to stabilize battered financial markets, promising to ease a regulatory crackdown, support property and technology companies and stimulate the economy. The government should 'actively introduce policies that benefit markets,' according to a meeting of China's top financial policy committee led by Vice Premier Liu He, the country's top economic official. That vow to take investors interests into account comes after a sell-off in domestic shares due to fears over growth risks and tough regulation of real estate and internet companies."

March 16 - Bloomberg: "Stocks across Hong Kong and China staged a stunning rebound after China's state council vowed to keep its stock market stable amid a historic rout that erased $1.5 trillion in value over the past two sessions. The Hang Seng China Enterprises Index, which tracks mainland companies listed in Hong Kong, jumped 13% on Wednesday, its biggest gain since the global financial crisis. A gauge of Chinese tech firms soared by a record with Alibaba Group Holding Ltd. and Tencent Holdings Ltd. gaining more than 23%."

March 15 - Bloomberg: "A selloff across Chinese stocks deepened on Tuesday, with concerns about the nation's ties to Russia and persistent regulatory pressure sending a key index to the lowest level since 2008. The Hang Seng China Enterprises Index, which tracks Chinese shares traded in Hong Kong, sank 6.6%, following a plunge in the previous session that was the biggest since the global financial crisis. Tech giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. led the decline. The benchmark Hang Seng Index slumped 5.7%, its biggest decline since July 2015."

March 15 - Bloomberg (Ken McCallum): "Chinese developer shares dropped the most since the global financial crisis on Tuesday as a rout in the nation's equity market hit the troubled real-estate sector especially hard. A Bloomberg Intelligence equity gauge of the nation's builders sank 9.7%, the sharpest one-day decline since October 2008. Developer bonds also tumbled further, with high-yield dollar notes on pace for a 15th consecutive drop… On Monday, yields topped 27% for the first time."

March 17 - Bloomberg (Rebecca Choong Wilkins): "Investors in China's $870 billion of offshore bonds are facing up to the realities of being last in line as borrowers struggle to pay during an unprecedented wave of distress that's sent defaults to a record. Already behind their onshore peers in the pecking order, hurdles faced by dollar-note holders in their efforts to claw back money are growing. They include backroom deals that give priority to undisclosed private lenders, unfavorable extensions and payment delays -- all underscoring poor governance at debtors and the diminished power of creditors."

March 18 - Bloomberg (Wei Zhou): "This week's 'supportive' statements of China's property sector won't defuse default risks for developers 'because it will take time for policies to take effect and improve market sentiment,' says Moody's. The move is a credit positive for rated builders and the six regulatory bodies' joint efforts will gradually slow this year's sales declines in trying "to make mortgages more available and stabilize homebuyers' confidence," analysts including Cedric Lai wrote…"

March 16 - Bloomberg: "China's home prices fell at a faster pace in February, as easing measures failed to prevent the property industry downturn from worsening. New home prices in 70 cities… declined 0.13% last month from January when they dropped 0.04%, National Bureau of Statistics figures showed... Values in the secondary market dropped 0.28%, the same pace as January."

March 18 - Bloomberg: "China's local authorities saw their income from land sales contract almost 30% in the first two months of the year, showing how the continued housing slump is directly hurting government finances. Revenue in Jan.-Feb. from selling the rights to use state-owned land fell 29.5% from a year ago to 792.2 billion yuan ($124bn)… That's the biggest slump for the period since at least 2015 when comparable data begins. Land is a significant source of income for China's cash-strapped local authorities."

March 17 - Bloomberg (Charlotte Yang): "Chinese mutual funds pledged to invest in their own products after Vice Premier Liu He's call to stabilize Chinese stock markets."

March 14 - CNBC (Evelyn Cheng): "China reported… better-than-expected growth in retail sales, fixed asset investment and industrial production to start the year. The data releases combine the two months of January and February as is the Chinese statistics bureau custom to avoid distortions from the Lunar New Year holiday… Retail sales grew by 6.7% year-on-year, topping expectations… for growth of 3% from a year ago."

March 16 - Bloomberg: "What used to be a gold mine for Chinese property developers has become a burden as the industry's credit crunch intensifies. Urban redevelopment projects, which turn run-down areas into new properties in big cities, were sought after by developers like Logan Group Co. and Times China Holdings Ltd. in recent years for their prime locations and hefty margins. Now such works are being scrutinized by investors and credit rating companies for their tendency to house hidden debts through the use of joint ventures and shadow financing. They are also taking longer to complete -- sometimes more than a decade -- sucking up cash and making it difficult for distressed developers to generate sales in time to soothe angry creditors."

March 17 - Bloomberg: "At least two reports by well-known economists questioning China's surprisingly strong economic data were deleted from the Chinese social media site Wechat in the last day, indicating the government's sensitivity about the economy. A post by JD.com Inc. Chief Economist Shen Jianguang arguing that there are multiple contradictions behind the strong data was taken down… The error massage said the article 'violates regulations' and was taken down due to 'relevant complaints,' without giving further explanation."

Central Banker Watch:

March 17 - Reuters (Andy Bruce and David Milliken): "The Bank of England raised interest rates… for a third meeting running…, but softened its language on the need for further increases from here. Eight out of nine members of the Monetary Policy Committee (MPC) voted to raise Bank Rate to 0.75% from 0.5%..."

March 17 - Bloomberg (Alexander Weber): "European Central Bank President Christine Lagarde stressed policy makers' ability to alter course if needed as Russia's war in Ukraine risks setting in motion 'new inflationary trends' that may take some time to emerge. Lagarde told a conference… the ECB is 'mindful' of the risks ahead, and is ready to revisit its plans if incoming economic data requires. 'We are increasingly confident that inflation dynamics over the medium term will not return to the pattern we saw before the pandemic,' she said. 'But we need to manage a shock that, in the short term, pushes inflation above our target and reduces growth.'"

March 17 - Bloomberg (Cagan Koc and April Roach): "European Central Bank Governing Council Member Klaas Knot said he doesn't rule out two interest-rate increases in 2022 should forecasts for already surging consumer prices shift higher still. While stressing it doesn't make sense to be 'overly precise,' the Dutch central bank chief said a first rise in borrowing costs in more than a decade remains possible in the coming months -- despite the economic uncertainty caused by the war in Ukraine."

March 16 - Reuters (Marcela Ayres): "Brazil's central bank… raised interest rates by 100 bps and signaled another increase of the same size in May as it extended an aggressive tightening cycle to curb the effects of supply shocks from the war in Ukraine. The bank's rate-setting committee… voted unanimously to raise its benchmark interest rate to 11.75%... Policymakers raised rates by 150 bps…"

March 17 - Bloomberg (Chien-Hua Wan and Samson Ellis): "Taiwan's central bank surprised markets by raising its benchmark interest rate by the most since 2007…, saying the move is needed to contain rising inflation. The decision to raise borrowing costs 25 bps to 1.375% was Taiwan's first rate hike since 2011…"

Global Bubble Watch:

March 16 - Bloomberg (Jillian Deutsch, Debby Wu and Jenny Leonard): "Magdeburg in former East Germany is famous for its towering gothic cathedral, and not a lot else. It's now about to play a key role in U.S. and European efforts to tilt the global balance of power. Intel Corp. unveiled plans on March 15 to build a giant, 17 billion-euro ($18.7bn) factory making cutting-edge semiconductors in the city, adding to new plants in Arizona and Ohio the company announced over the past six months. They are part of Chief Executive Officer Pat Gelsinger's plan to wrest control of production from Asia and tackle the global shortage of chips… 'The situation reinforces why we're doing this project, and the need for globally resilient and balanced supply chain,' Gelsinger said…"

Europe Watch:

March 15 - Reuters (Hannah Benjamin and Priscila Azevedo Rocha): "Europe's market for new bonds has suffered the sharpest collapse in first-quarter sales on record as credit markets fall out of favor. Market-wide volume slumped to less than 46.2 billion euros ($50.8bn) so far this month, trailing an average monthly tally of more than 170 billion euros for the first two months of the year… That's the sharpest drop-off in March sales since at least 2014, when the data first started being tracked."

March 12 - Associated Press (Colleen Barry): "Italian paper mills that make everything from pizza boxes to furniture packaging ground to a halt as Russia's war in Ukraine has sent natural gas prices skyrocketing. And it's not just paper. Italian steel mills, likewise, turned off electric furnaces last week. And fishermen, facing huge spikes in oil prices, stayed in port, mending nets instead of casting them. Nowhere more than in Italy, the European Union's third-largest economy, is dependence on Russian energy taking a higher toll on industry. Some 40% of electricity is generated from natural gas that largely comes from Russia, compared with roughly one-quarter in Germany, another major importer and the continent's largest economy."

Covid Watch:

March 14 - CNBC (Krystal Hur): "Low levels of natural immunity are complicating China's efforts to limit spread during its recent surge in cases of the new Covid omicron BA.2 subvariant, Dr. Scott Gottlieb told CNBC… 'China has a population that's very vulnerable to this new variant. This is a much more contagious variant, it's going to be harder to control, and they don't have a population that has natural immunity,' the former Food and Drug Administration commissioner said… 'They haven't deployed vaccines that are very effective against this particular variant, this omicron variant, and so they're very vulnerable to spread right now. They didn't use the time that they bought themselves to really put in place measures that would prevent omicron from spreading,' said Gottlieb…"

March 16 - Financial Times (Kathrin Hille, Primrose Riordan, Ryan McMorrow and Andrew Edgecliffe-Johnson): "China's latest attempt to suppress an outbreak of Covid-19 with lockdowns in several cities has disrupted global supply chains, which is likely to lead to lower growth and profitability across the technology industry. Apple supplier Foxconn said… its revenue could contract by up to 3% this year and it might struggle to raise its operating profit margin as component costs rise and the pandemic persists. '2022 is a very challenging year,' Liu Young-way, Foxconn chair, told investors…, adding that the continued spread of the coronavirus imposed 'very big uncertainty'."

March 16 - Reuters (Jennifer Rigby and Manas Mishra): "Figures showing a global rise in COVID-19 cases could herald a much bigger problem as some countries also report a drop in testing rates, the WHO said…, warning nations to remain vigilant against the virus. After more than a month of decline, COVID cases started to increase around the world last week, the WHO said, with lockdowns in Asia and China's Jilin province battling to contain an outbreak. A combination of factors was causing the increases, including the highly transmissible Omicron variant and its cousin the BA.2 sub-variant, and the lifting of public health and social measures, the WHO said."

March 14 - Bloomberg (Drew Armstrong and Andre Tartar): "A wastewater network that monitors for Covid-19 trends is warning that cases are once again rising in many parts of the U.S., according to an analysis of Centers for Disease Control and Prevention data…. More than a third of the CDC's wastewater sample sites across the U.S. showed rising Covid-19 trends in the period ending March 1 to March 10, though reported cases have stayed near a recent low. The number of sites with rising signals of Covid-19 cases is nearly twice what it was during the Feb. 1 to Feb. 10 period…"

Social, Political, Environmental, Cybersecurity Instability Watch:

March 13 - Bloomberg (Elizabeth Elkin, Allison Smith and Sybilla Gross): "The global food system is under threat as Russia's invasion of Ukraine puts one of the world's major breadbaskets in jeopardy… The Ukraine war threatens staple crops from Europe's key grain-growing regions, which means escalating food prices that have already been plaguing consumers around the world could get worse, raising the threat of a full-blown hunger crisis. The United Nations warned that already record global food costs could surge another 22%... Grains are the staples that feed the world, with wheat, corn and rice accounting for more than 40% of all calories consumed. Higher shipping costs, energy inflation, extreme weather and labor shortages have made it harder to produce food. And supply is shrinking: grain stockpiles are poised for a fifth straight annual decline…"

March 17 - Bloomberg (Brian K. Sullivan): "The multiyear mega-drought that's drained western U.S. reservoirs, parched croplands across California's fertile valleys and raised the risk of wildfires shows no signs of easing, forecasters say. The region faces another spring and summer of dwindling water resources and rising temperatures, according to an outlook released Thursday by the National Oceanic and Atmospheric Administration. From April to June, chances remain high that little rain or snow will fall from Northern California and Oregon across a wide swath of the Rocky Mountain states to Texas and the U.S. Gulf Coast, according to NOAA's Climate Prediction Center. At the same time, warmer-than-normal temperatures will permeate most of the contiguous U.S. except for parts of the Pacific Northwest."

Leveraged Speculation Watch:

March 18 - Bloomberg (Miles Weiss): "Chase Coleman's Tiger Global Management made more than 300 venture-capital investments last year, including more than one a day in the fourth quarter, as assets at its VC arm tripled to about $65 billion. Booming equity markets and high-flying Chinese tech stocks -- many of which cratered this year -- were major contributors to that breakneck growth. But it was also fueled by a tool that venture firms tend to avoid: debt. In particular, Tiger relied on a form of borrowing called net-asset-value financing, in which its existing stakes in closely held tech companies serve as the main collateral. With total outstanding NAV loans rising to about $4 billion last year, the firm's long-time lender, JPMorgan… brought in more banks to help shoulder the increased demand…"

March 15 - Bloomberg (Bei Hu): "Stock-picking hedge funds focused on Asia and China are heading for the steepest monthly losses in two years, according to Goldman Sachs Group Inc. Funds betting on rising and falling stocks in China lost almost 14% this month through Monday, while their peers focused on Asian stocks were 9.8% in the red, the bank's prime brokers said in a note on client performance. Both numbers are the worst 10-day return since the March 2020 rout, it added."

Geopolitical Watch:

March 15 - Reuters (Ben Blanchard): "China's government… lambasted Taiwan's humanitarian aid for Ukraine and sanctions on Russia as 'taking advantage of other's difficulties' after the island announced it was sending more funds donated by the public for refugees. The war in Ukraine has garnered broad sympathy in Taiwan, with many seeing parallels between Russia's invasion and the military threat posed by China, which views the democratically governed island as its own territory."

March 14 - Reuters (Ben Blanchard): "Taiwan's air force scrambled again on Monday to warn away 13 Chinese aircraft that entered its air defence zone, Taiwan's defence ministry said, in the latest uptick in tensions across the Taiwan Strait… Taiwan is currently in a heighten state of alert due to fears China could use Russia's invasion of Ukraine to make a similar military move on the island, though Taipei's government has not reported any unusual Chinese movements."

March 16 - Reuters (Josh Smith): "North Korea's decision to use the international airport near its capital city as a site for test-firing large missiles is 'absolutely bonkers' and may be a way for leader Kim Jong Un to keep a close eye on his most prized weapons, analysts said. Debris fell in or near Pyongyang after a failed test-fire from the airport on Wednesday…"

March 13 - Reuters (Costas Pitas): "The United States condemned… an Iranian attack on Iraq's northern city of Erbil and backs Baghdad and governments across the region in the face of threats from Tehran, U.S. National Security Advisor Jake Sullivan said. 'We will support the Government of Iraq in holding Iran accountable, and we will support our partners throughout the Middle East in confronting similar threats from Iran,' he said…"

March 13 - Reuters (Amina Ismail and John Davison): "Iran attacked Iraq's northern city of Erbil on Sunday with a dozen ballistic missiles in an unprecedented assault on the capital of the autonomous Iraqi Kurdish region that appeared to target the United States and its allies. The missiles came down in areas near a new U.S. consulate building…"

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Doug Noland profile picture
1.9K Followers
I'm at about 30 years persevering as a “professional bear.” My lucky break came in late-1989, when I was hired by Gordon Ringoen to be the trader for his short-biased hedge fund in San Francisco. Working as a short-side trader, analyst and portfolio manager during the great nineties bull market – for one of the most brilliant individuals I’ve met – was an exciting, demanding and, in the end, a grueling and absolutely invaluable learning experience. Later in the nineties, I had stints at Fleckenstein Capital and East Shore Partners. In January 1999, I began my 16 year run with PrudentBear (that concluded at the end of 2014), working as strategist and portfolio manager with David Tice in Dallas until the bear funds were sold in December 2008. In the early-nineties, I became an impassioned reader of The Richebacher Letter. The great Dr. Richebacher opened my eyes to Austrian economics and solidified my lifetime passion for economics and macro analysis. I had the good fortune to assist Dr. Richebacher with his publication from 1996 through 2001. Prior to my work in investments, I worked as a treasury analyst at Toyota’s U.S. headquarters. It was working at Toyota during the Japanese Bubble period and the 1987 stock market crash where I first recognized my love for macro analysis. Fresh out of college I worked as a Price Waterhouse CPA. I graduated summa cum laude from the University of Oregon (Accounting and Finance majors, 1984) and later received an MBA from Indiana University (1989). By late in the nineties, I was convinced that momentous developments were unfolding in finance, the markets and policymaking that were going unrecognized by conventional analysis and the media. I was inspired to start my blog, which became the Credit Bubble Bulletin, by the desire to shed light on these developments. I believe there is great value in contemporaneous analysis, and I’ll point to Benjamin Anderson’s brilliant writings in the “Chase Economic Bulletin” during the Roaring Twenties and Great Depression era. Ben Bernanke has referred to understanding the forces leading up to the Great Depression as the “Holy Grail of Economics.” I believe “The Grail” will instead be discovered through knowledge and understanding of the current extraordinary global Bubble period.
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