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Good as Gold 2020 Vision 8/25/23


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Posted

Over at Intraday Chart Central, the ES 24 hour S&P futures are trying to form a 5 day cycle low. If they get to 4400 by this afternoon, that would tend to confirm.

Otherwise, we're still looking at a 5 day cycle projection of 4445 or fight. 

116cgp

 

Meanwhile, the 10 year Treasury yield remains within an uptrend, within an uptrend, within an uptrend.

116ch1

Meanwhile, Bloomberg is floating a trial balloon about the Fed ending QT because the T-bill issuance is "draining reserves." That's just total bullshit. The bill issuance pulls cash out of the banking system for a week, and then the Treasury spends the money, paying beneficiaries, employees, and contractors. The money gets deposited right back in bank accounts and instantly shows up on the Fed's balance sheet in the banks' accounts at the Fed.

Which bank deposits at the Fed the econocognoscenti all erroneously refer to as reserves. The reserve requirement is zero. Therefore, these accounts are not "reserves." They're just money, just the same as when they are in the Treasury's account at the Fed, or overnight RRPs RRPs at the Fed, in money market funds or in bank accounts.

It's all money. It only differs as to the line item at the Fed. It's like spaghetti on a plate. Only difference is that some of it gets pushed around on the plate, some goes in your mouth, and some comes out in the end. 

The mainstream media is ignorant on purpose.  It gets paid to be ignorant. Same for econ academia. The word academia sounds like a disease. Appropriately. They are all handmaidens to the Wall Street Mob. Pimps. 

But they're useful pimps. Once the trial balloons are floated, you know that it's coming. Usually the lead time is about 6 months from the first balloon. The end of QT is coming. 

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Posted
13 minutes ago, DrStool said:

 

The mainstream media is ignorant on purpose.  It gets paid to be ignorant. Same for econ academia. The word academia sounds like a disease. Appropriately. They are all handmaidens to the Wall Street Mob. Pimps. 

But they're useful pimps. Once the trial balloons are floated, you know that it's coming. Usually the lead time is about 6 months from the first balloon. The end of QT is coming. 

 

Looks like the usual March low. March 2003, March 2009, March 2020, March 2024... 

Gonna be interesting what happens till then...

Posted

Best macro guys i follow (like capital economics) still forecast bonds to fall.

 10-year Treasury yield of 3.25% and 3.00% by end-2023 and end-2024.

They are sayin that bond yields peaked

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Posted
10 minutes ago, SiP said:

Best macro guys i follow (like capital economics) still forecast bonds to fall.

 10-year Treasury yield of 3.25% and 3.00% by end-2023 and end-2024.

They are sayin that bond yields peaked

74448-1.png

-2_150.png

-3_112.png

-6_60.png

-7_44.png

What did the same guys say 1 year ago?

Posted
13 minutes ago, fxfox said:

What did the same guys say 1 year ago?

More Wall Street wiseguys have been more wrong about bonds for longer than any other investment in history. They get paid many millions to be wrong. Their job is to find suckers for the dealers to sell to. With Treasury inventory constantly piling up, they constantly have to sell, sell, sell.

This is a secular bear market. Treasuries will continue to trend lower in price and yields will continue to rise until the supply-demand equation changes. And the only foreseeable thing that would change that is if the Fed starts buying again. 

I called the top in the bond market (bottom in yields) in September 2020. I have been resolutely bearish on the long term ever since. I don't know anyone who has been as right about it as I have. Some of the most famous bond guys and economists have been the most wrong about it. 

Like I said, they get paid to be wrong. 

Posted
4 minutes ago, DrStool said:

More Wall Street wiseguys have been more wrong about bonds for longer than any other investment in history. They get paid many millions to be wrong. Their job is to find suckers for the dealers to sell to. With Treasury inventory constantly piling up, they constantly have to sell, sell, sell.

This is a secular bear market. Treasuries will continue to trend lower in price and yields will continue to rise until the supply-demand equation changes. And the only foreseeable thing that would change that is if the Fed starts buying again. 

I called the top in the bond market (bottom in yields) in September 2020. I have been resolutely bearish on the long term ever since. I don't know anyone who has been as right about it as I have. Some of the most famous bond guys and economists have been the most wrong about it. 

Like I said, they get paid to be wrong. 

Spot on, Lee... you nailed it.

image.jpeg.b5e167338eca619bf34b3dc231c1b01f.jpeg

Posted
Just now, potatohead said:

thoughts on the idea that they diminish QT but raise the reserve requirement to attempt to control any inflationary effects?

I wouldn't want to speculate on something like that. I still think that money moves markets. Anticipation doesn't. At least not for long. 

I think that reinstituting a reserve requirement would be so cataclysmic that it would never even be discussed. They would have to limit sweep accounts, and institute a reserve requirement on savings accounts. Furthermore, it would be a one shot deal. Once it's instituted, that's it. Unless they keep raising it. The Fed doesn't like draconian measures. It likes gradualism. 

Another thought is that QT is an ongoing process of constant pressure. So they can reduce that, but what would happen with zero QT and zero QE? It would be totally up to market participants. Just like now. 

Only a return to QE would retilt the playing field to bullish.  

Posted

I was thinking of the reserve requirement increase as a monetary control over regular bank loan and leverage creation. Allow borrowing from T-bills (repo) to continue and not allow banks to compete with Treasury yields.  Attempt to internally fund the US Government's enormous supply with more retail/institutional bank customers. Would end up gutting bank's profit margins. These banks stocks look sick.

Posted
9 minutes ago, potatohead said:

I was thinking of the reserve requirement increase as a monetary control over regular bank loan and leverage creation. Allow borrowing from T-bills (repo) to continue and not allow banks to compete with Treasury yields.  Attempt to internally fund the US Government's enormous supply with more retail/institutional bank customers. Would end up gutting bank's profit margins. These banks stocks look sick.

astute observation

Posted
41 minutes ago, potatohead said:

I was thinking of the reserve requirement increase as a monetary control over regular bank loan and leverage creation. Allow borrowing from T-bills (repo) to continue and not allow banks to compete with Treasury yields.  Attempt to internally fund the US Government's enormous supply with more retail/institutional bank customers. Would end up gutting bank's profit margins. These banks stocks look sick.

If they marked their bond portfolios to market, we would all see why they look sick. Because not only are they sick. They're dead. 

How long can this be papered over? How long will the con succeed?

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Posted
1 hour ago, DrStool said:

I wouldn't want to speculate on something like that. I still think that money moves markets. Anticipation doesn't. At least not for long. 

I think that reinstituting a reserve requirement would be so cataclysmic that it would never even be discussed. They would have to limit sweep accounts, and institute a reserve requirement on savings accounts. Furthermore, it would be a one shot deal. Once it's instituted, that's it. Unless they keep raising it. The Fed doesn't like draconian measures. It likes gradualism. 

Another thought is that QT is an ongoing process of constant pressure. So they can reduce that, but what would happen with zero QT and zero QE? It would be totally up to market participants. Just like now. 

Only a return to QE would retilt the playing field to bullish.  

„Retail“ better hopes there will be not a zero QT/zero QE market. The pro dealers would massacre and cruzify them. It would be like skeet shooting:

 

 

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