ADAM TOOZE

Mutual funds own 1/6 of US corporate bonds. They perform maturity transformation by offering daily redemption despite holding assets that are quite illiquid, particularly in a run. Fed forced to step in. Point of emphasis in new Fed FSR. federalreserve.gov/publications/f… https://t.co/DZLniMJaRN

Limits on dealer balance sheet capacity were a key factor in March 2020 turmoil. JP Morgan likes to say that this is result of post-GFC regulations, making it seem like an absolute and externally imposed limit. In this footnote, Fed politely pushes back. federalreserve.gov/publications/f… https://t.co/iXOrxbA49t

In March 2020 "The reduction in high-speed market-making activity appears to have contributed to the spread of pandemic-related stresses to even the most liquid segments of financial markets.” Algo-driven Principal Trading Firms slowed down. federalreserve.gov/publications/f… https://t.co/VHLJucBF8E

"evidence that large-scale deleveraging of hedge fund Treasury positions was the primary driver of the turmoil In March 2020 remains weak.” Result of the Fed’s postmortem based on fragmentary evidence. WE NEED MORE DATA ON REPO AND HEDGE FUNDS!!!!!! federalreserve.gov/publications/f… https://t.co/OpAdSzjKYi

Whereas the US mortgage market since 2008 is dominated by prime rated borrowers, credit card debt is 50/50 prime v. near prime/subprime. federalreserve.gov/publications/f… https://t.co/mpeOA0XWPv

“due to a lack of comprehensive data on hedge funds’ Treasury positions, it is unclear what actual volume of Treasury sales by RV hedge funds was in March and how large their role was in amplifying the Treasury market illiquidity.” Fed postmortem federalreserve.gov/publications/f… https://t.co/tjI9TGjCz4

"Small businesses have been substantially more affected by effects of COVID-19, and strains associated with the performance of small business debt may worsen significantly” Fed Financial Stability Report. But it presents no data to drive home the point. federalreserve.gov/publications/f… https://t.co/GdrR9FuOpB

RT @UFWupdates: Mango sap is caustic and burns the skin. There’s a small amount of sap at high pressure near the stem. When the fruit is p…

Commercial real estate remains a source of worry for the Fed. Lending standards that tightened with a bang in the spring have not eased much since. federalreserve.gov/publications/f… https://t.co/7tkCj07vaB

A useful reminder of the relative size of asset markets from Fed’s Nov 2020 Financial Stability Report. Residential real estate is roughly same size as equity market $39-37 trn. Treasury market & commercial real estate roughly same at $20-19trn. federalreserve.gov/publications/f… https://t.co/aPQWN6giLp

External debt service through end of 2021 will require > 100% fx reserves for Zambia (in default), Pakistan (in tough negations with IMF) & Ethiopia (perched on brink civil war). imf.org/en/Publication… https://t.co/DW8DgsIXIn

The conflict that has exploded in Ethiopia threatens the ability of the region to respond to the dramatic Locust attack. It puts the food security of millions of people at risk. theguardian.com/global-develop… https://t.co/DQN1cYNYrr

The shock to energy demand from corona sent prices of EU ETS Co2 emissions allowances down. But since then they have bounced back hard. @IMFNews GFSR. imf.org/en/Publication… This is a major opportunity for EU as I argued here: socialeurope.eu/carbon-pricing… https://t.co/uyPPdcjikh

“US Treasury currently has no org structure to address the climate challenge, and virtually no staff currently working on climate-related matters. Mnuchin eliminated Office of Energy & Environment (E&E) established by Paulson in 2007 to handle climate” climate21.org/documents/C21_… https://t.co/Lh8JHhiQ7i

According to IMF’s new global bank stress-testing model, in an adverse scenario in absence of bank specific mitigation, 14 % of global banks and close to 40% in EM fall below minimum capital adequacy ratios by 2022. imf.org/en/Publication… https://t.co/SUUNwhrY0s

In recent decades, G7 share of global GDP and world trade collapsed. But also striking that since 2014 it has stabilized. From @SimonEvenett @BaldwinRE volume on WTO. voxeu.org/content/revita… https://t.co/hQ45QYmu3m

Behind China, Denmark is the largest Mink farmer in the world – 17 m v. 20 m in China. Thankfully demand is slackening and prices for pelts are falling. ft.com/content/e29bb1… https://t.co/uDA3VaLN3e

Foreign investment in Chinese fixed income is heavily skewed towards central gov bonds of which foreigners hold at least 8.5% in mid 2020 up from just 2.4% in February 2016 v. their share of corporate bonds, which is stuck around c. 0.7%. bloomberg.com/news/features/… https://t.co/waFHf8djGa

The history of wealth taxation in Germany is dominated by the war years. Persecutory taxation by Nazi Germany raised 1 % of GDP from the tiny Jewish minority. Remarkable memo by @DIWECON for @dieLinke @FabioDeMasi linksfraktion.de/fileadmin/user… https://t.co/hMdwda9eOC

@tblrj @ThomasGrjebine @FitchRatings @SoberLook Or, might one say that there may have been a loss of trust, but that is not what is showing up in that data which is driven by valuation effects.

If limit of primary dealer balance sheet capacity was a key factor driving March US Treasury market turmoil, it was a problem that had been building up over time. Broker-dealer holdings had been elevated since 2018! bis.org/publ/arpdf/ar2… v. federalreserve.gov/publications/f… https://t.co/aOnMaYxtCw

Women are far more severely affected by low-paid work than men across the @OECDeconomy economies. Almost 30% of women workers in the US trapped in low-waged work. ft.com/content/21ae50… https://t.co/le5ou08JdA

China’s bond yields look more like those of emerging markets yet investors will probably view them as AE securities -> $230 bn have flowed in the past five years. Another $770 bn could follow in next five years. bloomberg.com/news/features/… https://t.co/BJLcHvEK2J

Really delighted, finally, to be, meeting @ewaldeng – "Canary in the coal mine", "After the Great Complacence" – “in person”. Tune in Wednesday. twitter.com/ewaldeng/statu…

Battling to maintain the pace of innovation, major semiconductor companies are estimated to spend $36.4 bn on R&D in 2020. @maxcherney barrons.com/articles/these… https://t.co/9gMBXr4Qqy

"The hand that gives . . .  Demands by US Treasury that the Federal Reserve return pandemic emergency funds are unwelcome" @RanaForoohar ft.com/content/ed2e1f… On background & ugly parallels to populism in Europe subscribe to chartbook newsletter here: adamtooze.substack.com/p/chartbook-ne… https://t.co/RXV0qcXn5N

In most @OECDeconomy economies, women outnumber men in accommodation and food service jobs. Greece and Sweden are the exception. ft.com/content/21ae50… https://t.co/Ie3LUGBYay

Ant’s IPO if it had gone ahead as planned without Beijing’s intervention would have valued it on a par with JP Morgan! So why was the IPO stopped? This explainer is a few weeks old but still worth reading if you missed it. ft.com/content/3d2f17… https://t.co/5TDDIJeVT2

On the balance between relief and investment, local and central government spending in China, this report by @hzsong for @MacroPoloChina is fascinating. macropolo.org/analysis/q4202… https://t.co/J8702XLJTk

On G20 agenda this weekend was debt relief for poorest countries. Mnuchin, US Treasury Sec, "had already backed the measure, but it was not clear it was on Mr. Trump’s radar". nytimes.com/2020/11/22/us/… Chartbook Newsletter #3 spells why it should have been. adamtooze.substack.com/p/chartbook-ne… https://t.co/QlgPyK8hYJ

In advanced economies roughly three times as many men work as computer programs as women and their “lead" surged in 2020. @valentinaromei ft.com/content/21ae50… https://t.co/UdwlpEgalF

"Joe Biden needs to break the market’s codependency with White House Donald Trump’s approach widened the disconnect between traders and the real economy" @elerianm ft.com/content/558585… https://t.co/7ct3WR6Ub0

RT @SergiLanauIIF: Nigeria's parallel market premium has been widening again. Capital controls helped stabilize reserves but the gap betwee…

RT @TheStalwart: In today's @markets newsletter, I wrote about the total absurdity of the Fed/Treasury episode, and how the entire discussi…

Beijing has set a debt limit on property firms -> deleveraging -> land sales plummeting. Weekly sales down more than 40% in Sep v. July -> will spill over into the construction industry -> future price of steel rebar has fallen by 5% @hzsong macropolo.org/analysis/q4202… https://t.co/QkhvZxA6bP

The world is going to need a lot fo batteries and giving its energy consumption, the Americas will need most. ft.com/content/7c07e4… https://t.co/wA9uppm52W