Looks like the Biden admin has FINALLY thrown in the towel for July… “debt ceiling!” (yo we might as well call it “USD savings ceiling”) here we come…
Bubba Janet in summer session in Venice could care less…
and there it is folks!
— DC (@AnalystDC) July 8, 2021
weekly 3m bill auctions trimmed by $3B (from $57B to $54B), weekly 6m bill auctions also by $3B (from $54B to $41B), and weekly 42-day bill auctions by $5B (from $40B to $35B)
overall this means $11B per week less in bill issuance (so far announced) 👇 https://t.co/ieRgeUnMdz
(BTW this kid ‘DC’ is a good fintwit follow…)
7 comments:
Powell destroyed my old one. I just put together another based on theory. Then I had to revise it. And I'm not done yet.
The first deceleration in short-term money flows since the March 2020 bottom, given the current trajectory, won’t occur until next month (August).
On the other hand, inflation, dismissing any change in velocity (the demand for money), won’t materially subside.
Parse date; real output; inflation
02/1/2020 ,,,,, 0.05 ,,,,, 0.03
03/1/2020 ,,,,, 0.20 ,,,,, 0.21
04/1/2020 ,,,,, 0.33 ,,,,, 0.40
05/1/2020 ,,,,, 0.40 ,,,,, 0.46
06/1/2020 ,,,,, 0.44 ,,,,, 0.50
07/1/2020 ,,,,, 0.44 ,,,,, 0.53
08/1/2020 ,,,,, 0.45 ,,,,, 0.56
09/1/2020 ,,,,, 0.45 ,,,,, 0.61
10/1/2020 ,,,,, 0.53 ,,,,, 0.68
11/1/2020 ,,,,, 0.77 ,,,,, 0.79
12/1/2020 ,,,,, 0.84 ,,,,, 1.26
01/1/2021 ,,,,, 0.65 ,,,,, 1.31
02/1/2021 ,,,,, 0.66 ,,,,, 1.41
03/1/2021 ,,,,, 0.70 ,,,,, 1.51
04/1/2021 ,,,,, 0.71 ,,,,, 1.60
05/1/2021 ,,,,, 0.78 ,,,,, 1.65
06/1/2021 ,,,,, 0.79 ,,,,, 1.77
07/1/2021 ,,,,, 0.76 ,,,,, 1.81 stocks peak
08/1/2021 ,,,,, 0.55 ,,,,, 1.79
09/1/2021 ,,,,, 0.27 ,,,,, 1.72
The FED’s models are slow to pick up changes in the economy. And their response is even slower. Fortunately there’s not much impact to R-gDp until the 1st qtr. of 2022.
The problem will occur as the Treasury uses up it TGA.
Liabilities and Capital:
Liabilities: Deposits with F.R. Banks, Other Than Reserve Balances: U.S. Treasury, General Account: Week Average (WTREGEN)
2021-06-30: 745.962
Untested, but on theoretically grounds, money flows point to the first upcoming inflection in the markets since last years March bottom. Of course, we don't know the reaction of the monetary authorities to a deceleration in the economy. We don't know if their models are accurate. Typically, they're slow to respond to any changes.
My model is not the only one to predict an upcoming inflection. There is confirmation in other methods. At the risk of being wrong, I still believe this model works. July 21st is the typical seasonal inflection point.
Salmo Trutto
https://seekingalpha.com/user/7143701/comments
I like Mike's videos on the banks. He should do a course on H4 and H8. What important flows you can learn from them.
How to measure the flows that count that are used in transactions not savings. That increase GDP and investment in production.
For example when you Look Look at the H.8 release from September 7, 2018 and it shows (+) large CDs and (-) agencies.
September 7, 2018
H.8; Page 1
Assets
Line item: 1 Bank credit
page 5
Line item: 35 Large time deposits
Memoranda
Line item: 43 U.S. Treasury and agency securities,
The upshot is that the DFIs are shedding safe assets and replacing them with higher yielding earning assets. Is that a correct assumption to make or is there more to it than that ?
When you look at the moneyness pyramid how to measure the most liquid flows that make a real difference to the economy that are used for transactions. Discount the ones that are frozen in time deposits that add nothing to GDP.
Vainglorious Interest Rate Manipulation = Monetary Madness
https://seekingalpha.com/instablog/7143701-salmo-trutta/5178213-vainglorious-interest-rate-manipulation-monetary-madness
1966 Interest Rate Adjustment Act
https://seekingalpha.com/instablog/7143701-salmo-trutta/5265714-1966-interest-rate-adjustment-act
1966 Interest Rate Adjustment Act II
https://seekingalpha.com/instablog/7143701-salmo-trutta/5265717-1966-interest-rate-adjustment-act-ii
What are the myths and truths ?
Is it a good idea to have interest paid on reserves and allow banks to lend the way they do nowadays ?
Does what Mosler suggest actually go far enough ??
Foot what the Fed is doing today is a convoluted Rube Goldberg lash up because identity fraud glorified house frau Pocahontas is too stupid and uneducated to agree to any regulatory adjustments…
Matt, it seems to me the banks run the show.
Have done for a while now.
Whenever you Look at the markets and think what Is the FED thinking. That's the wrong way to think about it.
The way to look at it is what do the banks want. If the banks want deficit reduction they get it. If the banks want rate hikes they get it. If the banks want something privatised they get it. When have the banks never got what they wanted in the end.
So comming out of the virus what is it the banks want and what do they need. They will get. If they don't they will find a way to make it happen.
Why large deficits are bad for banking profits
https://michael-hudson.com/2017/03/why-deficits-hurt-banking-profits/
So the way I see it as the economy returns to normal. If you keep asking yourself what do the banks want there is an 80% chance of that happening. What the government wants is irrelevant and have to stand in line until the banks have been served.
Chris Cook is saying the oil market is going to get interesting when China starts dumping their oil on the markets.
https://mobile.twitter.com/cjenscook/status/1405142207993192453
It peaks around WTI Aug 21 expiry late July, maybe $75 > $80/bbl (depends on $/Yuan rate). Then three month rapid downcycle followed by nine months back up the hill again.
Stinson is saying lumber will hit $ 1000 average.
https://mobile.twitter.com/LumberTrading
Worth following those two when it comes to oil and Lumber.
Republicans tend to be oil presidents and democrats tend to be wall street presidents.
Be interesting to see how that dynamic changes due to climate change.
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