“Impactful Winter Storm” Could Blast Northeast Sunday Through Monday
For most of the week, we’ve been reporting on the chaotic weather situation affecting tens of millions of Americans before and during the Thanksgiving holiday season.
As many readers know, the Thanksgiving holiday week is one of the most traveled times of the year, and this year, it was hellacious for many traveling across Northern California and Oregon as a “bomb cyclone” detonated earlier in the week. By midweek, Central and Midwest states have been slammed by a powerful winter storm, that could end up in the Northeast by Sunday.
The latest developments of winter weather activity are from Arizona, Colorado, and Utah, where more than a foot of snow is expected to fall by late day. The winter storm is expected to move across the upper Midwest by late Friday.
A mix of wintery precipitation could turn into heavy snow for parts of Minnesota, Wisconsin, and Michigan by Friday evening.
“An impactful winter storm will spread a myriad of precipitation types into the Mid-Atlantic and Northeast Sunday into Monday. Snow will be the dominant precipitation type in central New England where 6 or more inches of snow is possible. Closer to the major cities, snow will quickly change to a mix of precipitation Sunday afternoon and perhaps rain Sunday night, before transitioning back to snow possibly on Monday. There remains some uncertainty as to exactly where this storm will track, so the public is urged to frequently monitor forecasts into the weekend,” Vallee said.
New York City and other major Mid-Atlantic metros could see a wintry mix of precipitation on Sunday through Monday.
Vallee tweets that the upcoming winter storm could be one of the first significant snowmakers for the Northeast this year.
Good morning. It’s going to snow Sunday into Monday.
He warned that holiday travelers returning home on Sunday could be greeted with dangerous road conditions along Interstate 95.
This may be a big problem Sunday afternoon if the European model holds true.
With low pressure passing off the S NJ coast, this is a cold look with icing a concern in E PA, NW NJ, and interior S. New England. pic.twitter.com/wq5TYnLxI4
Two months ago, something rather monumental happened, which seems to have been lost to the news-cycle. In a world starved for yield, a company with trailing twelve month free cash flow of $527 million (cash flow from operations – maintenance cap-ex) and net debt of only $593 million could not re-finance debt due in 2022. Sure, the company’s end-markets are currently a little soft and that may have had something to do with it, but even at near-trough cyclical earnings, it has just over a turn of net debt to cash flow.
Why did this happen?
The company in question is Peabody (BTU – USA) and they mine coal. Now, I get it, coal is a dirty word amongst environmentalists, but you don’t get solar panels or wind turbines without structural steel and you don’t get steel without coking coal. US thermal coal may be a dying industry, but more than half of Peabody’s cash flow is now coking coal. Steel is necessary in almost every facet of economic life, yet the financial markets are saying that they will no longer fund a primary building block of economic growth.
ESG stands for “Environmental, Social and Governance.” I can certainly understand why some individuals or groups may object to investing in various industries. It’s their capital and they can choose to allocate it as they see fit. When they are sizable clients, they can force portfolio managers to divest certain businesses and not make new investments in certain sectors. This all seems logical—the client is always right. However, at this point, ESG has been taken to such an extreme that it is bordering on silly.
Keep in mind that the vast majority of portfolio managers under-perform their benchmarks and only attract fund flows through their marketing departments. Why miss out on fee-earning capital because you haven’t adapted an ESG mandate? Coal? Nope. Oil and gas? Won’t touch it. Tobacco? Bad. Those are obvious, but where will they draw the line? Why not ban soda? That’s just diabetes in a can. Is social media next? What about entertainment—that’s sure to offend someone. What if you don’t agree with a country’s politics? Do you write off whole continents? Clearly, there’s a problem here. You could end up with large portions of the global economy on the no-go list. Once again, I respect an individual’s decision to forgo a particular investment for ideological reasons, but as a consequence, whole sectors of the economy are now cut off from capital.
What should the cost of capital be for a seaborne coking coal miner with a clean balance sheet? It should probably be somewhat in-line with other cyclical industrials. What is Peabody’s current cost of capital? Who knows? They literally couldn’t price their debt. Normally, when a company cannot access traditional debt, it goes to non-standard sources. However, most hedge funds are also funded by endowments and pensions—does a fund want to risk redemptions or turn off future investors over a coal investment? Remember, the whole point of most hedge funds is raising capital and charging higher fees—returns be damned. Somewhere and at some price, there will be funding, but that price is going to be prohibitively high—despite Peabody being unusually safe from a leverage standpoint.
When I look at the coal sector, I mostly see businesses run with minimal net debt. This isn’t because they’re scarred from the last cycle. It’s because they cannot access debt. They worry that their revolvers will not get renewed. They worry that banks won’t even let them maintain bank accounts to process payroll. It’s a crazy world out there when you’re in a pariah industry. Yet, where would the world be without coking coal?
While it’s easy to look at this all holistically and say it’s unfair; as an investor, I see these ESG sectors as primed with opportunity. Who is going to build a new coal mine when the cost of capital is insane? Demand for coking coal grows with economic growth. If new supply is constricted while existing mines deplete, coal pricing should remain robust while returns on capital should continue to stay elevated. Meanwhile, using a normalized coal price, the whole sector trades at somewhere between one and four times free cashflow (I’ll let you choose which normalized price to use) and a lot of that cash is getting returned to shareholders as the companies cannot reinvest easily today. Ask yourself this question; what politician is going to grant a new coal mine the needed permits to break ground? Who is going to allow an expansion for coal handling port equipment necessary for export? Will new rail spurs be allowed? There are bottle-necks building up everywhere in coal that are only going to get worse. These will serve to further raise returns for guys with existing production.
I think back to Phillip Morris (MO – USA) in 2000. It was my largest position at the time. I bought in at something like three times cash flow and a 25% dividend yield. It was one of the best performing large-cap stocks for the rest of the decade despite unit volumes comping negative every single year. Why was it such a strong performer? Because there was minimal new competition, so they were able to raise pricing and earn excess returns, while buying back obscene amounts of stock at single-digit multiples on cash flow. I see a repeat with coal. The more hated it is, the cheaper the shares will be during the buyback, creating massive economic value for remaining equity holders.
Phillip Morris return with dividends reinvested
The same can be said for many other sectors with an ESG overhang. Right now, funds are dumping stock so they can qualify as ESG compliant for 2020. It’s a bloodbath out there. It may get worse and it reminds me a lot of the small-cap liquidations at the end of 2018. Back then, it was obvious that you had to put capital to work into the dislocation caused by redemptions. The difference this time is that I’m not sure when you’re supposed to buy. We may be hitting bottom soon, but I’m not sure yet what the catalyst is to make the shares recover.
However, if companies continue to shrink their shares outstanding by double digit percentages annually, it ought to solve itself before too long—just think back to Phillip Morris. I remember back in 2000, outraged investors were forcing funds to dump cancer-sticks from their portfolios. “Big MO” became a MOnster stock because they shrank the float so rapidly at a time when the shares were so damn cheap. Additionally, no one was starting a new tobacco company. Is anyone building a new coal mine today?
I’m watching closely for a bottom in coal over the next few quarters. I think these ESG sectors that are getting cut off from capital are all going to be next decade’s monsters. One of the few universal constants during the past decade, has been unlimited cheap capital destroying margins and returns on capital for most businesses. The same sorts of “intellectuals” that brought you QE and ZIRP also brought you ESG. As far as I’m concerned, ESG stands for Excessive Share-price Growth. ESG will limit new supply and raise everyone’s cost of capital – which is great if you already have an existing producing asset.
In keeping with my new religion of only buying trends with a Global Micro tailwind, I intend to wait until coal prices also bottom and begin to recover. I don’t care how cheap these things are, I want to know that cash flow is increasing quarter-over-quarter. I assume most of the quant computers have an ESG filter now—but there are probably still a few guys looking to make a buck out there and those computers will cluster in businesses at low-single digit multiples with growing cash flow. Once the turn starts, I don’t think it will stop.
Final point; I care deeply about the environment, but my job is to make money for my clients. Besides, try and build me a solar farm without structural steel. I feel like I’m actually doing my part for progress, because no one else on Wall Street is willing to.
Crude Crashes As Saudis Signal Intolerance To OPEC ‘Partners’ Cheating
WTI Crude is plunging this morning amid chatter that OPEC and allied crude producers are averse to deepening output cuts when they convene next week.
Bloomberg reports that, according to people familiar with the kingdom’s thinking, Saudi Arabia probably will indicate it’s no longer willing to compensate for excessive production by other members of the cartel.
Additionally, the Tass news agency reported that Russia’s oil minister said it’d be better to postpone any new supply caps until April.
“The OPEC accord with Russia could be fraying a bit,” said John Kilduff, a partner at Again Capital.
“It undercuts and undermines everyone’s perception of the commitment.”
Despite Friday’s slump, New York-traded futures were on track for the biggest monthly advance since June amid optimism the the U.S. and China are closing in on a trade accord.
France Summons Turkish Ambassador After Erdogan Calls Macron “Brain Dead”
The French government will summon the Turkish ambassador demanding an explanation after Turkey’s delightfully outspoken President Recep Tayyip Erdogan, asked if French President Emmanuel Macron was “brain dead.”
Ahead of a NATO summit next starting on Dec 4 which will be attended by both men, tensions have mounted around Turkey’s role in Syria and within the alliance; they boiled over on Friday Friday when Erdogan said that Emmanuel Macron’s warning that NATO was dying reflects a “sick and shallow” understanding, telling the French president “I’m addressing Mr Macron from Turkey and I will say it at NATO: You should check whether you are brain dead first.”
The quip is in response to Macron’s own recent lament over the “brain death” of NATO because of American unpredictability under President Donald Trump and strained ties with Turkey, and said the allies need “a wake-up call.”
Macron said in an interview three weeks ago there was a lack of strategic coordination between European allies on the one hand and the United States and Turkey, on the other. He has also decried NATO’s inability to react to what he called Turkey’s “crazy” offensive into northern Syria.
Macron’s remarks drew strong reaction from European peers who believe Europe still needs to rely heavily on NATO, but he said on Thursday his remarks had been a useful wake-up call and he would not apologize for saying them.
Meanwhile, Turkey – which has become a critical splinter within NATO and according to some is doing Putin’s bidding – is refusing to back a NATO defense plan for the Baltics and Poland unless it gets more political support for its fight against Kurdish YPG militia in northern Syria. Turkey also criticized Macron for agreeing to talks with a Syrian Kurd politician whom Ankara considers an extremist.
A French presidential official said the Turkish envoy will be summoned to the Foreign Ministry to explain, and that France and other NATO allies are expecting “clear answers” from Turkey about its intentions in Syria.
Stablecoins have the potential to temper the systemic threats posed by the United States dollar’s domination of global foreign currency reserves, according to an opinion piece published by the World Economic Forum (WEF).
The argument was made by the Fusion Foundation’s John Liu and Lapa Capital’s Peter Lyons in an article published on the WEF’s Agenda on Nov. 26
The Fusion Foundation is a non-profit organization focused on developing blockchain infrastructure for decentralized global finance; Lapa Capital is a tech-focused investment firm headquartered in New York.
IMF: USD accounts for 62% of all central bank foreign reserves
Liu and Lyons advocate the wide-ranging potential of stablecoins to underpin a more “sustainable, inclusive, and resilient global system” across trade and investment, banking and payments.
Until today, the authors note, the U.S. dollar continues to account for 62% of all foreign reserves held by central banks, as IMF data for Q1 2019 has demonstrated.
Dollar hegemony perpetuates the systemic threats forcibly evinced in the 2008 financial crisis, when global investors flocked to dollar-denominated safe-haven assets, generating a precipitous global liquidity crunch.
Even overlooking such acute, systemic risks, the authors note that the lock-up of USD reserves in U.S. government bonds worldwide is exacerbating a skewed global economy, keeping U.S. interest rates low and driving the U.S. government’s debt and GDP “to levels not seen since the Second World War.”
“A global scarcity of USD creates major headwinds for US exporters, widening the trade deficit and pressuring economic growth.”
As the authors note, the Bank of England’s governor Mark Carney has argued that a diversified digital currency — one that would be only partially weighted in USD, alongside the euro, the British pound and the yen — could reduce over-reliance on the dollar globally and function as a new international reserve currency.
Blockchain interoperability key to preventing new imbalances
A key emphasis of Liu and Lyons’ article is that stablecoin development must keep blockchain interoperability top of the agenda in order to fulfill this promise of diversifying the sources of global liquidity and helping to balance trade flows.
Failing this, a single stablecoin — whether privately— or central bank-issued — itself risks becoming systemically dominant and simply replicating the dollar’s fiat hegemony with a digital analogue, they note.
The article also looks beyond liquidity and macroeconomic stability issues to underscore stablecoins’ potential to boost financial inclusion in developing economies.
Yesterday, European Central Bank (ECB) board member Benoit Coeure warned that global stablecoins remain untested and could threaten the “autonomy and resilience of European payments systems.”
He noted that the ECB is exploring the question of central bank digital currencies, but remains mindful of their potential impact on financial intermediation.
French MPs Want To Ban Black Friday Because Of “Resource Waste” And “Overconsumption”
Members of the French Parliament are now demanding the government prohibit Black Friday, reported The Independent.
French MPs passed an amendment Monday that could make the annual shopping holiday, widely popularized in the US, illegal, warning that a shopping frenzy causes “resources waste” and “overconsumption.”
The proposal, led by France’s former environment minister Delphine Batho, is expected to be debated next month in the National Assembly, the lower house of parliament.
France’s ecological transition minister, Elisabeth Borne, told Europe 1 radio on Thursday that Black Friday creates “traffic jams, pollution, and gas emissions.”
“We cannot both reduce greenhouse gas emissions and call for a consumer frenzy,” Borne said. “Above all, we must consume better.”
The amendment prohibiting Black Friday has been condemned by France’s e-commerce union.
RetailMeNot estimates that French shoppers are expected to spend $6.5 billion this year between Black Friday and Dec. 1.
Climate change activists from the Extinction Rebellion group’s French chapter have been out in force protesting shoppers.
“Friday, Nov. 29, it’s Block Friday: a day when Extinction Rebellion joins the youth call for the climate,” the climate change group said on Facebook. “Together, we stand to occupy in a festive way or block ‘Temples’ of consumption in more than 20 cities in France.”
Extinction Rebellion also said Black Friday is “a symbol of the most harmful capitalism” and warned that “consumerism will end up / destroy everything if we don’t act before.”
“One word of order: prevent them from making a profit on what does not belong to them: the living,” the post added.
Darryl Meattey says he voted for President Donald Trump in 2016 because he believed Trump would stick up for “the little man”—including small businesses like the one Meatty runs in Troy, New Hampshire.
Now, Trump’s trade war might be driving Meattey out of business.
“I thought he was going to be different, but these tariffs are killing my business,” Meattey, the owner of Surell Accessories, a manufacturer of cold weather apparel including gloves, hats, and scarves, wrote this week in an op-ed for the Concord Monitor. Tariffs on imported goods from China have amounted to a $500,000 tax increase on his businesses, Meattey writes, and have caused sales to decline by about 10 percent.
Despite the president’s rhetoric, American businesses and consumers are bearing the brunt of the trade war with China—as a variety of studies have shown. For them, the next few weeks could be critical. Trump’s promised “phase one” trade deal with China, announced in mid-October, has yet to materialize in any detail. Unless a deal is actually struck, the Trump administration could follow through with the threat to impose another round of new tariffs—covering everything not already subject to other tariffs—on December 15.
China is seeking a commitment from Trump to roll back tariffs as part of the “phase one” deal, and the White House has reportedly been unwilling to make that promise. Raising tariffs yet again would seem to make a deal even less likely in the short term.
“I’m not sure we’re going to get a deal done by December 15,” Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, told CNBC last week. He said both sides need to be willing to accept compromises: China should not expect the U.S. to suspend all tariffs as part of a “phase one” deal, while the Trump administration should be willing to suspend the planned December tariffs and roll back some others.
If that doesn’t happen, it will mean more pain for American retailers. The set of tariffs going into effect on December 15 will hit a wide range of consumer goods—everything from children’s toys to laptops, gaming consoles, and other home electronics. The Trump administration originally planned to impose those tariffs in September but postponed their effective date to avoid hitting retailers and consumers during the holiday shopping season. The decision to postpone is an admission that Americans are indeed paying for the tariffs, and an indication of how potentially damaging the so-called “List 4B” tariffs could be to the economy.
The December 15 round of tariffs will be “costly and ineffective,” predicts Mary Lovely, a senior researcher at the Peterson Institute for International Economics, a trade policy center. They’ll be ineffective because most of the electronic products subject to the new tariffs are shipped from Chinese factories owned by multi-national corporations—meaning that any reduction in purchases caused by the tariffs won’t do much to pressure China into making concessions.
“Any burden they bear reduces earning for U.S.-based companies or those of our allies and will do little to motivate Chinese reforms,” Lovely writes.
Think about iPhones, which are assembled in China and will be subject to the new tariffs: Forcing Americans to pay higher prices for new smartphones might whack Apple’s bottom line, but likely won’t do much to hurt China. Apple can choose to eat the cost of the tariffs when it retails those iPhones, or it can jack up prices and pass the cost onto consumers—but neither of those outcomes will do much of anything to shift manufacturing jobs out of China. It’s financially untenable for Apple to make iPhones in the U.S., so the company will keep importing phones (and other gadgets) from China and the added tariffs costs will simply become part of the price tag.
In short: Trump’s tariffs have been pretty ineffective so far, but the next round will be a particularly bad self-inflicted wound.
All the more reason to hope the two sides can reach a deal before the December 15th deadline. But even if a deal isn’t reached, Trump should unilaterally withdraw the List 4B tariffs to spare American consumers and businesses.
“We need a final deal that gets rid of all the tariffs,” Meattey wrote. “I agree with the president that it’s time to make China play by the same rules as everyone else. But these tariffs are not the answer.”
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A new poll conducted by Rasmussen has discovered that 42% of Americans aged 18 to 39 would happily vote for a socialist presidential candidate.
“Forty-one percent (41%) of Democrats say they would vote for a presidential candidate who identifies himself or herself as a socialist, but only 19% of GOP voters and 16% of unaffiliateds agree,” Rasmussen notes.
Americans in that younger age group are also twice as likely to prefer socialism to capitalism, according to the findings.
The finding that almost a fifth of Republicans would support a socialist presidential candidate comes a day after President Trump again vowed that the US would never become a socialist country under his watch:
Happy Thanksgiving! Take this day to be thankful for friends and family and don’t forget the first Thanksgiving only happened when the pilgrims rejected socialism.
The findings in the latest poll are not isolated, given that two previous surveys this year have uncovered similar sentiments.
In March, a Harris poll revealed that almost 50 percent of young Americans would like to live under a socialist government.
The Same poll also found that two thirds of all Americans believe the government should provide universal healthcare, with over half again saying that it should provide tuition-free college.
A further Gallup poll from May found that 47% of all Americans would vote for a socialist presidential candidate. The poll noted that among Democrats, the support for socialism is even higher, with 70% declaring it would be better for America.
Young Americans might feel differently if Starbucks disappeared and their iPhones quickly run out of batteries with no electricity to charge them. Bread lines also aren’t so cool.
Senator Rand Paul issued a Thanksgiving message Thursday, with a telling reminder that the first Thanksgiving “only happened when the pilgrims rejected socialism.”
Happy Thanksgiving! Take this day to be thankful for friends and family and don’t forget the first Thanksgiving only happened when the pilgrims rejected socialism.
Darryl Meattey says he voted for President Donald Trump in 2016 because he believed Trump would stick up for “the little man”—including small businesses like the one Meatty runs in Troy, New Hampshire.
Now, Trump’s trade war might be driving Meattey out of business.
“I thought he was going to be different, but these tariffs are killing my business,” Meattey, the owner of Surell Accessories, a manufacturer of cold weather apparel including gloves, hats, and scarves, wrote this week in an op-ed for the Concord Monitor. Tariffs on imported goods from China have amounted to a $500,000 tax increase on his businesses, Meattey writes, and have caused sales to decline by about 10 percent.
Despite the president’s rhetoric, American businesses and consumers are bearing the brunt of the trade war with China—as a variety of studies have shown. For them, the next few weeks could be critical. Trump’s promised “phase one” trade deal with China, announced in mid-October, has yet to materialize in any detail. Unless a deal is actually struck, the Trump administration could follow through with the threat to impose another round of new tariffs—covering everything not already subject to other tariffs—on December 15.
China is seeking a commitment from Trump to roll back tariffs as part of the “phase one” deal, and the White House has reportedly been unwilling to make that promise. Raising tariffs yet again would seem to make a deal even less likely in the short term.
“I’m not sure we’re going to get a deal done by December 15,” Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, told CNBC last week. He said both sides need to be willing to accept compromises: China should not expect the U.S. to suspend all tariffs as part of a “phase one” deal, while the Trump administration should be willing to suspend the planned December tariffs and roll back some others.
If that doesn’t happen, it will mean more pain for American retailers. The set of tariffs going into effect on December 15 will hit a wide range of consumer goods—everything from children’s toys to laptops, gaming consoles, and other home electronics. The Trump administration originally planned to impose those tariffs in September but postponed their effective date to avoid hitting retailers and consumers during the holiday shopping season. The decision to postpone is an admission that Americans are indeed paying for the tariffs, and an indication of how potentially damaging the so-called “List 4B” tariffs could be to the economy.
The December 15 round of tariffs will be “costly and ineffective,” predicts Mary Lovely, a senior researcher at the Peterson Institute for International Economics, a trade policy center. They’ll be ineffective because most of the electronic products subject to the new tariffs are shipped from Chinese factories owned by multi-national corporations—meaning that any reduction in purchases caused by the tariffs won’t do much to pressure China into making concessions.
“Any burden they bear reduces earning for U.S.-based companies or those of our allies and will do little to motivate Chinese reforms,” Lovely writes.
Think about iPhones, which are assembled in China and will be subject to the new tariffs: Forcing Americans to pay higher prices for new smartphones might whack Apple’s bottom line, but likely won’t do much to hurt China. Apple can choose to eat the cost of the tariffs when it retails those iPhones, or it can jack up prices and pass the cost onto consumers—but neither of those outcomes will do much of anything to shift manufacturing jobs out of China. It’s financially untenable for Apple to make iPhones in the U.S., so the company will keep importing phones (and other gadgets) from China and the added tariffs costs will simply become part of the price tag.
In short: Trump’s tariffs have been pretty ineffective so far, but the next round will be a particularly bad self-inflicted wound.
All the more reason to hope the two sides can reach a deal before the December 15th deadline. But even if a deal isn’t reached, Trump should unilaterally withdraw the List 4B tariffs to spare American consumers and businesses.
“We need a final deal that gets rid of all the tariffs,” Meattey wrote. “I agree with the president that it’s time to make China play by the same rules as everyone else. But these tariffs are not the answer.”
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Central Bankers Panic Over Exuberant Financial Market “Fragility”, Warn Risks Are “Underestimated”
You know it’s bad when… even the central bankers are warning that the monster they’ve created is out of control.
As stocks have exploded higher in the face of declining earnings…
Source: Bloomberg
And collapsing macro-economic data…
Source: Bloomberg
Policy makers from the world’s central banks are suddenly raising cautionary flags at the potentially unsafe investing environment stoked by their efforts to flood economies with ultra-cheap money.
“While vulnerabilities related to low interest rates have the potential to grow, thus calling for caution and continued monitoring, so far, the financial system appears resilient” — Federal Reserve, Nov. 15.
“Very low interest rates, coupled with the large number of investors which have gradually increased the duration of their fixed income portfolios, could exacerbate potential losses if an abrupt repricing were to materialize” — ECB, Nov. 20.
“This type of environment can lead to an increase in risk‐taking, to assets being overvalued and to indebtedness increasing in an unsustainable manner” — Riksbank, Nov. 20.
“Many investors are focused on the search for yield and could be tempted to take on greater risk” — Bundesbank, Nov. 21.
Most notably, Bloomberg reports that the spate of recent financial stability assessments began Nov. 15 with the Fed, which warned that low rates could encourage riskier behavior such as eroding lending standards.
A prolonged period of low rates could also “spur reach-for-yield behavior, thereby increasing the vulnerability of the financial sector to subsequent shocks,” it said.
However, as Bloomberg notes, despite central banks’ qualms about side effects, there’s little sign that they’ll do any more than issue warnings.
“The Fed since September, the ECB as well, the BOJ, even the central bank of China is starting to provide some more easing,” Kevin Thozet, an investment strategist at Carmignac Gestion, told Bloomberg TV on Wednesday.
That’s contributed to “a bull market of everything in 2019.”
Still, with a decoupling between stocks (soaring) and everything else (even global liquidity most recently)…
Source: Bloomberg
…Standard Chartered Plc, CEO Bill Winters, warns that the Fed’s recent difficulty in calming the repo market is instructive.
“We haven’t really had a test of the market, post-the financial crisis,” Winters said.
“I’m concerned that there’s a little bit more fragility in there than we’re aware.”
