This has to be the craziest market ever. Many economic indicators are screaming recession but yet we are at all time highs. I have few points I would like to share.
- Jobs report has been revised down for 10 months straight, skipping December 2023. Even the latest job report of 175k was below expected. Many being part time jobs
- Yield curve 2yr/10yr has been inverted for 673 days, counting today.
- Yield curve 3month/10yr has been inverted for 561 days, counting today.
- Reverse repo has been falling but is at 475$ Billion – cushion to the system.
- Banks are underwater from low yield Treasuries and Commercial Real Estate. www.cnbc.com/2024/05/01/why-hundreds-of-us-banks-may-be-at-risk-of-failure.html
- Bullshit growth rate of GDP at 1.6% – probably be revised down.
- Fed has already over tightened but can’t cut b/c of the inflation rate, and the inflation rate is not going to come down anytime soon. 1.6$ Trillion in Federal Deficit this year
- 7.6$ Trillion of Debt is maturing this year, U.S Treasury doesn’t have that kind of money lying around so they are going to sell treasuries to pay off the principal of the ones that are maturing. Just like when a broke consumer pays one credit card off with another. The problem being the debt that is maturing was locked in at 1-1.5% but now it has to be given at 4-5% which adds to the cost to service all that debt.
finance.yahoo.com/news/7-6-trillion-us-government-040643412.html
- Oracle of Omaha is holding on to the biggest stock pile of cash/cash equivalents ever – 188$ Billion Dollars
So that means inflation is not coming down below 2% anytime soon yet the growth of the economy is slowing down – STAGFLATION and eventually a serious depression. The only real question is there has been Quantitative Easing that has happened 4 times. Fed’s balance sheet was at 900$ Billion before it all started, it stands at 7.36$ Trillion – How high will it go this time when they inevitably print again to avoid the pain and kick the can down the road?
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