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How To Fade CNBC for Fun and Trading Profits 12/16/22

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2 minutes ago, Jorma said:

Noland this week brings up what was part of my thinking when asking if Octobers high in TNX, the rate that is, was a multi year high. That is, a continuing preference for US Treasury's by the rest of the world.  That continued or an increased preference for Treasuries along with what seems like the inevitable resumption of QE is my story of how Treasury yields could be capped. Don't forget a sharp drop in equities. I don't favor such scenarios but what if rates don't rise above the recent highs for a couple of years or even 6 months? For whatever reason.

But never mind the stories. Every time I look at a weekly or monthly TNX or similar product chart, bear naked with no lines or studies I think this thing better turn  up soon.  

 

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Good read about San Francisco

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San Francisco is perhaps the most deserted major downtown in US. Office building are at about 40% of their prepandemic occupancy, while vacancy rate has jumped to 24% from 5% in 2019. Occupancy of the city's offices is 7% below US avg

https://www.nytimes.com/2022/12/17/business/economy/california-san-francisco-empty-downtown.html

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6 hours ago, SiP said:

Good read about San Francisco

6 hours ago, SiP said:
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San Francisco is perhaps the most deserted major downtown in US. Office building are at about 40% of their prepandemic occupancy, while vacancy rate has jumped to 24% from 5% in 2019. Occupancy of the city's offices is 7% below US avg

https://www.nytimes.com/2022/12/17/business/economy/california-san-francisco-empty-downtown.html

That quote makes no sense whatsoever. If they were 95% occupied before the pandemic, and are at 40% of that occupancy, then the current vacancy rate is 62%, not 24%. 

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2 hours ago, SiP said:

Good read about Fed, liquidity etc

tt

Over my head. I tried, but got lost. 

No mention of the root cause of the Treasury bear market. Constant, massive supply, and the Fed's reduction and crippling of demand for the paper. Everything else that she talks about is a result of that. Without the issuance, we have none of the other stuff. So they are effects, not causes, in my view. 

But again, I couldn't follow it all. 

I would add that what are colloquially called reserves, are really deposits of the banks at their bank, the Fed. But they are essentially the banks' cash, which rather than holding it in their vaults, they hold in deposits at the Fed. Note that they are not called "reserves." The line item on the Fed's H41- the Fed's weekly balance sheet, is ,"Other deposits held by depository institutions" 

Those are the banks deposits at the Fed. They can only be created when the Fed buys paper from the banks in Permanent Open Market Operations - POMO. They can only be destroyed when the Fed sells or redeems its paper. That shrinks the banks' deposits at the Fed.

That is creating massive dislocations in the financial markets, because the amount of cash in the system is shrinking.

Now the ECB is piling on. The fact that the world's two largest central banks are shrinking the amount of cash in the financial system in the face of mushrooming demand for cash by the US and other governments, is the root cause. Everything else is tangential. 

Nor are they called "reserves" on the banking system balance sheet. These are shown on the Fed's H8, the weekly commercial bank aggregate balance sheet as simply "cash assets."

The word "Reserves" is a financial and economic term of art, not an accounting term. Banks have no "reserves." The Fed eliminated the reserve requirement years ago. 

What economists and pundits call "reserves" are simply "cash."  Banks hold that cash as both vault cash and deposits at the Fed. Banks do not hold "reserves" at the Fed. They hold deposits at the Fed. In financial analysis and economics, they are referred to as "reserves." But that's not correct in terms of accounting for banking system deposits.  

In the week ended December 7, bank cash assets on the H8 totaled 3.285 trillion. That week, the banks held 3.149 trillion in deposits at the Fed. The rest of their cash assets would have been vault cash and other cash items. 

The stuff about Suzy and Joe is correct, but confusing because it talks about exchanging reserves. There are no reserves. When we write a check, the money goes from our bank, to the payee's bank, and simultaneously from our bank's deposits at the Fed to the payee's bank. The total of bank deposits at the Fed does not change because the check I wrote to you, or vice versa, is just a transfer of cash between two bank accounts at the Fed. 

 

 

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10 hours ago, SiP said:

That‘s the direct result of working remote which began in the early stages of the pandemic. When white collar goes, the scum comes. All those white collar commuters don‘t come to the city anymore, so there is a vacuum now. Sicko would have to built up the policy force massivly and kick the clochards out of town.

Rule number one when you have a business: Never allow clochards to hang around in front of your store.

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22 minutes ago, SiP said:

Doc you have to add your comment under the original tweet. The guy is very famous  and has huge reach.

The only reason I post on Twitter is to market my business. It's a cesspool.  

The sad part of seeing all these old Polish and Ukrainian guys lying in piles of filthy blankets under the commercial arcades here in Nice is that they probably came here to escape whatever warehousing they would have been kept in at home. Most of them are severe alcoholics. 

Throughout my year and a half in Eastern Europe, I never saw homeless people. Are they better cared for, or just hidden away.  

Western societies are more open, and clearly don't care enough to try to solve the problem, but I'd be hard pressed to say that Poland, Croatia, Slovakia, etc are any more caring.  Who knows. 

There are no answers. 

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