Ending the Euro isn't anti-European or a step back. You can still do joint foreign and defense policy. You can still have free trade and banking union. An end to the Euro means greater transparency, accountability and thus - ultimately - a stronger Europe... robinjbrooks.substack.com/p/why-german...

I'm not a fan of all the bashing of Kevin Warsh. His basic instinct to provide less guidance to markets is right. The bashing comes from people who got the last meeting wrong and are now looking for a scapegoat. All you had to do was look at the tepid CPI... robinjbrooks.substack.com/p/please-sto...

You don't hear a peep any more from the $200 oil crowd even though war with Iran is unresolved. That's a good perspective on market psychology. The fact that they were so wrong - and still haven't learned the right lessons - destroyed lots of credibility... robinjbrooks.substack.com/p/requiem-fo...

The US and Japan are pulling out all the stops on Yen intervention. There's a problem with that, because - if this doesn't work - there's nothing else left to do. Markets will learn the emperor really does have no clothes. $/JPY already inching higher... robinjbrooks.substack.com/p/q-and-a-on...

Japan and the US are kitchen-sinking it on the Yen. So it's notable that the pullback in $/JPY (black) is on par with the rate check in January by the NY Fed (red). That's underwhelming and testament to how much depreciation pressure there is on the Yen... robinjbrooks.substack.com/p/how-effect...

On this Saturday's live stream, I talked about whether the Fed is losing credibility. There's lessons to learn from the 2013 taper tantrum, the last time the Fed rolled back forward guidance. The Fed isn't losing credibility, markets need to up their game... robinjbrooks.substack.com/p/is-the-fed...

This post on how markets are trading the Fed has generated a lot of attention. The bottom line is that - in the absence of forward guidance - markets need to up their game in terms of trading data. They're nowhere near where they need to be right now... robinjbrooks.substack.com/p/please-sto...

FX intervention can work when it's in synch with monetary policy, meaning the BoJ raises rates to support it. That's not what's happening. The scatter shows Yen moves versus Japan's 30-year rate differential. Rate differentials aren't helping the Yen... robinjbrooks.substack.com/p/q-and-a-on...

The US helped Japan intervene on the grounds that the Yen is undervalued. But currencies are non-stationary. The concept of valuation is based on mean reversion, which doesn't hold. You just have to look at Turkish Lira to see that. Yen isn't undervalued... robinjbrooks.substack.com/p/q-and-a-on...

The notion Japan's fiscal policy isn't too loose - so Yen devaluation can't be due to fiscal stress - is misleading. Japan's primary deficit isn't as wide as others (vertical), but its stock of debt is much higher (horizontal). Initial conditions matter... robinjbrooks.substack.com/p/q-and-a-on...

The end of the Euro isn't some fever dream. The rise of the AfD is the German equivalent of the MAGA rise in the US. When countries start to struggle - and Germany is struggling - generosity for other countries ends. My live stream on this from yesterday: robinjbrooks.substack.com/p/why-german...

Growth is surprising positively in Germany and Italy. The latter is likely to grow twice as fast as the IMF forecasts. Meanwhile, growth in the US is increasingly struggling to keep up with lofty expectations. This picture will tend to push EUR/$ higher... robinjbrooks.substack.com/p/recession-...

Here’s the full text of my interview with NY Fed Williams. We talk monetary policy, how he responds to market price signals, the inflation outlook and bubble risks in AI.

FULL TEXT Transcript of Reuters interview with NY Fed President Williams

Reuters spoke with Williams on July 31, two days after the latest policy meeting. A full transcript of the interview follows, lightly edited for context and clarity. To see the related story click her...

reuters.com

I get the lamentations over whatever it is that Warsh is doing, and while Fedspeak has cooled a notch officials are still speaking. Waller hasn’t held back, Williams talked going into FOMC, dissenters hit tape Friday. Bigger issue is self induced sidelined chair and risk FOMC will outvote him.

This morning's live stream on why Germany needs to exit the Euro was the most heavily-attended live stream I've done and included people from Northern and Southern Europe. The ECB is at the root of a lot of what's broken in Europe. That and German guilt... robinjbrooks.substack.com/p/why-german...

On yesterday's live stream, I talked about whether the Fed is losing credibility, which you hear a lot these days. I'm not in that camp. Just look at long-term yields, which rose mostly because of a rise in real yields, not because of breakeven inflation... robinjbrooks.substack.com/p/is-the-fed...

The Yen isn't falling because evil speculators are ganging up on Japan. It's falling because gov't bond yields are way below where they should be. This creates a steady outflow that one-off interventions can't fix. This is why intervention can't work... robinjbrooks.substack.com/p/what-to-ma...

The end of the Euro will mean Germany has to write off its TARGET2 claims. High-debt countries will have big devals and debt write-downs. This will make Europe stronger, not weaker. Everyone will be able to contribute on shocks like Ukraine, unlike now... robinjbrooks.substack.com/p/what-the-e...

On this morning's live stream at 9 am (ET), I'll talk about the Euro. ECB yield caps avoid high-debt countries going into crisis, but this doesn't create fiscal space. That's why Spain (ES) and Italy (IT) can't help out on Ukraine. The Euro can't continue like this. open.substack.com/live-stream/...

Speculative Yen shorts had gotten increasingly stretched in recent weeks, so it's no surprise that intervention has pushed $/JPY below 160. But will it keep $/JPY below 160? No, it won't, just like all previous attempts to do so didn't... robinjbrooks.substack.com/p/what-to-ma...

I'm doing a live stream tomorrow morning at 9 am (ET) on why Germany needs to leave the Euro. The single currency has morphed into a protection instrument for high-debt countries who free-ride on Germany when a shock like Ukraine comes along. That's got to stop... open.substack.com/live-stream/...

Markets will make more mistakes without Fed forward guidance. This week - where a vocal minority thought we'd get a hike - is a case in point. Markets need to up their game and yammer less about Fed credibility. I lay all this out in today's live stream: robinjbrooks.substack.com/p/is-the-fed...

Is the Fed losing credibility?

A recording from Robin J Brooks's live video

robinjbrooks.substack.com

The Yen keeps falling because Japan's shadow yield - what it'd be without BoJ bond buying - is much higher than actual yields. As long as that's true, the Yen will keep falling. Official FX intervention doesn't change this. It can only slow the Yen fall... robinjbrooks.substack.com/p/japans-int...

We know two things about gov't debt: (i) keeping your debt under control insulates you from rising yields - Switzerland shows that; (ii) artificial yield caps mean your currency devalues - Japan shows that. There's no magic bullet. Only debt reduction... robinjbrooks.substack.com/p/a-world-of...

On this morning's live stream at 9 am (ET), I'll talk about markets in a world where there's less Fed forward guidance. Markets need to pay much closer attention to data, which they aren't yet. After all, that's why some thought the Fed would hike this past week... open.substack.com/live-stream/...

The last time the Fed cut forward guidance - the 2013 taper tantrum - the result was higher long-term yields, a steeper curve and lots of talk the Fed was losing credibility. The latter is best ignored. Markets want hand-holding, but they don't deserve it... robinjbrooks.substack.com/p/please-sto...

I'm doing my Saturday morning live stream tomorrow at 9 am (ET) on whether the Fed is losing credibility. Less forward guidance means more volatility in the bond market, but that's not the same as losing credibility. Less hand-holding is a good - not a bad - thing. open.substack.com/live-stream/...

The problem with all the chatter that the Fed is losing credibility is that it doesn't fit the facts. Inflation in June fell to the lowest level in a very long time, both on core CPI (lhs) and core PCE (rhs). Inflation just isn't running out of control... robinjbrooks.substack.com/p/the-dollar...

The Fed was right not to hike this week. There's no sign - as Warsh said in his press conference - that inflation is broadening out. In fact, the opposite is true. My inflation generalization indices fell to their lowest levels in a long time in June... robinjbrooks.substack.com/p/markets-ge...

There's two big trades after this week's Fed: (i) curve steepening on a supposed loss in Fed credibility; (ii) Dollar down on markets pricing out hikes. I'm not a fan of curve steepening and it's already run out of steam. Dollar weakness is the better bet... robinjbrooks.substack.com/p/the-dollar...