SiP Posted May 27, 2023 Report Share Posted May 27, 2023 11 hours ago, Jorma said: The bullishness is justified on the details of the Deal. There will be what amounts to stupendous cuts in non discretionary spending going forward, which is only13% of the total budget. especially considering inflation, The kicker is they will be automatic, in other words no votes on those items every year come budget time. It essentially incentivizes inflation in an odd way. Jorma, what do you mean by non discretionary spending cuts? You mean cuts of mandatory spending like medicare? https://en.m.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget Link to comment Share on other sites More sharing options...
DrStool Posted May 27, 2023 Author Report Share Posted May 27, 2023 I have a friend here. Been here before. The castle is spectacular. The quiet is a nice break from the noise and bustle of Warsaw. Now waiting for the train to Gdansk. One of my favorite towns in Europe. You can follow my photo journal of my travels here: https://www.instagram.com/200daysineurope/ 1 Link to comment Share on other sites More sharing options...
Jimbo Posted May 27, 2023 Report Share Posted May 27, 2023 THE OTHER REASON THE BANKS CANT BE RECAPITALISED....YET As I said before...who is going the recap the banks while their business (the deposits) waltzes out the door every day to cover the buget defecit. The second reason is financial repression. Long rates should be a lot higher. The Treasury is repessing them at the cost of high short term rates. This should correctly be called "Inversion Policy" The inversion policy is actually contributing to the deposit flight. Inversion policy is not only slowly destroying the regionals but needs to end before the banks can be successfully recaped. But the end of inversion policy will lead to more bond losses (and share price falls) and the need for more capital to recap the banks. Link to comment Share on other sites More sharing options...
MisFit Kid Posted May 27, 2023 Report Share Posted May 27, 2023 The MisFit Kid's ⚽ End of season Football Rant (Please feel free to comment and ADD) ----EPL Arsenal may have bottled it at the end of the season a) they still finished 2nd and higher than predictions b) Man City is a monster ----Germany Dortmund Choked their chicken....all hail Munich. Union Berlin with an excellent season Schalke 04 relegated, again ----France PSG still won ----Spain Barca beat Madrid (FFP, crime, etc. does not seem to effect La Liga, for the small teams) ----Italy Napoli took full control......Juventes with penalty points..... -----Dutch Ajax is no longer the King of the Dutch ----English Championship Luton Wins...and have to BUY a new Stadium...It does not meet Reqs...... 2 Small teams playing in playoff promotion to EPL Coventry vs Luton for BIG $$$ (one game playoff for 1/4 Billion in future payments) Check their payrolls, check their stadiums....for the winner, a lot of change is coming...... (Big US Tech, Big Gold, Big Oil, Big Soup..........that game is BIG Sterling) LUTON WON .....FROM THE ASHES One last note on Financial Misconduct (FFP, payola, etc) ..... too hard to explain who got by and who got what they deserved....... Did any criminal(s) pay the price? Link to comment Share on other sites More sharing options...
SiP Posted May 28, 2023 Report Share Posted May 28, 2023 On 5/26/2023 at 9:27 PM, Jorma said: Everyone is talking about the liquidity drain once the debt ceiling is lifted. even on the main page of Reuters which means... it will not happen. Maybe mutual or MMf funds will help or reserves at fed will be used https://www.reuters.com/markets/us/why-us-debt-deal-may-only-provide-short-term-relief-markets-2023-05-28 Link to comment Share on other sites More sharing options...
Jorma Posted May 28, 2023 Report Share Posted May 28, 2023 On 5/27/2023 at 2:58 AM, SiP said: Jorma, what do you mean by non discretionary spending cuts? You mean cuts of mandatory spending like medicare? https://en.m.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget I botched that. Should have been discretionary spending, with of course no decrease to the military. I guess the details will be leaking out the next dew days. Whatever they, are the on Friday the idea of deal + lower spending was in play. Link to comment Share on other sites More sharing options...
DrStool Posted May 28, 2023 Author Report Share Posted May 28, 2023 10 hours ago, SiP said: Everyone is talking about the liquidity drain once the debt ceiling is lifted. even on the main page of Reuters which means... it will not happen. Maybe mutual or MMf funds will help or reserves at fed will be used https://www.reuters.com/markets/us/why-us-debt-deal-may-only-provide-short-term-relief-markets-2023-05-28 Just because everybody knows something will happen doesn't mean that it won't happen. Here's the question. What are the plausible ways it might be prevented? Number one. RRP slush fund gets emptied. Link to comment Share on other sites More sharing options...
DrStool Posted May 28, 2023 Author Report Share Posted May 28, 2023 You're right. This is all over the mainstream media. So, hedge funds are over hedged. Modestly Hedged Dealers, Record Short Hedge Funds Suggest Disaster Ahead Link to comment Share on other sites More sharing options...
SiP Posted May 28, 2023 Report Share Posted May 28, 2023 1 hour ago, DrStool said: Just because everybody knows something will happen doesn't mean that it won't happen. Here's the question. What are the plausible ways it might be prevented? Number one. RRP slush fund gets emptied. Quote " The drain on liquidity is not a given, however. The T-bill issuance could be partly absorbed by money market mutual funds, shifting away from the overnight reverse repo facility, where market players lend overnight cash to the Fed in exchange for Treasuries. In that case, "the impact on broader financial markets would likely be relatively muted," Daniel Krieter, director of fixed income strategy, BMO Capital Markets, said in a report. The alternative, where the liquidity drain comes from banks' reserves, "could have a more measurable impact on risk assets, particularly at a time of elevated uncertainty in the financial sector," he added. Some bankers said they fear financial markets may not have accounted for the risk of a liquidity drain from banks' reserves." Link to comment Share on other sites More sharing options...
DrStool Posted May 28, 2023 Author Report Share Posted May 28, 2023 It's laughable that the mainstream media is just covering this stuff now. I was writing about and forecasting exactly this a year ago. They never pay attention to issues until it's too late. Link to comment Share on other sites More sharing options...
DrStool Posted May 28, 2023 Author Report Share Posted May 28, 2023 I guess that's why I make the big bucks, and they don't. ... Oh... wait. Link to comment Share on other sites More sharing options...
fxfox Posted May 29, 2023 Report Share Posted May 29, 2023 8 hours ago, DrStool said: It's laughable that the mainstream media is just covering this stuff now. I was writing about and forecasting exactly this a year ago. They never pay attention to issues until it's too late. I think the liquidity and FED stuff is in the MSM for quite some time yet. 10 years or so ago I didn‘t read or hear anything about it, with the exception of your site and maybe a handfull of others. At least since a year it is all over the place. So normally we would now say that the market would „arbitrage that away“. But how should that work out in pravtice? I mean liquidity is there or it isn‘t, right? I mean it is a fact. It is not a choice between different asset classes or something. So I really don‘t know how the fact that it became main stream could change the implications of it. Link to comment Share on other sites More sharing options...
DrStool Posted May 29, 2023 Author Report Share Posted May 29, 2023 They hedge the likely outcome in futures. The problem is that all the smart guys are all hedged the same way. Which is a record short position in the 10 year. So what could happen? What could go wrong? With that record short position in the bond futures, maybe instead of a crash we get a short squeeze. Which triggers massive margin calls and liquidation of everything else. Then after a week or two, all that reverses. Absolute utter chaos. Link to comment Share on other sites More sharing options...
Jimbo Posted May 29, 2023 Report Share Posted May 29, 2023 PARTY LIKE IT'S 1937 US M2 is contracting at the fastest rate since 1937. Was that a good year for stocks!!!!!!! Down 50% if I remember. This will eventualy lead to a FED pivot. Its just a question of how much gets broken in the interim. Link to comment Share on other sites More sharing options...
fxfox Posted May 29, 2023 Report Share Posted May 29, 2023 1 hour ago, DrStool said: They hedge the likely outcome in futures. The problem is that all the smart guys are all hedged the same way. Which is a record short position in the 10 year. So what could happen? What could go wrong? With that record short position in the bond futures, maybe instead of a crash we get a short squeeze. Which triggers massive margin calls and liquidation of everything else. Then after a week or two, all that reverses. Absolute utter chaos. So they are positioned wrong. Like in 2008. Amazing. Link to comment Share on other sites More sharing options...
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