Month: June 2023
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Weekly Update: Bank Term Funding Program
Here is our weekly update on the Fed’s back door QE program, also known as the Bank Term Funding Program (BTFP), also known as a bank bailout program. FEDERAL RESERVE statistical release: https://www.federalreserve.gov/releases/h41/current/
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The Fed’s Balance Sheet Reduction (QT) Update
The Fed has to ramp up QT or stop pretending that it is tightening in a meaningful way. The Fed added $4.8 Trillion to its balance sheet over a two year period and the 7% reduction that has occurred over the past 15-16 months is a drop in the QT bucket. There remains far too…
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The Fed Has To Pivot By 2024
$67 billion of Speculative Grade Bank Loans and Bonds mature in 2023 per Moody’s (see our table below). That figure balloons to $199 billion in 2024. How many of those companies will survive if they are required to rollover debt at 12-15% versus the 4-6% coupon they did their deal at in 2020 or 2021?…
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The Fed Hasn’t Tightened Liquidity
The Fed has not removed liquidity from the system despite Powell’s rhetoric. A consistent QT program that removed significant liquidity from the system each month would have been far more effective in the battle against inflation and general excess than the Fed’s arbitrary lifting of its Fed Funds Rate. As Bank reserve balances have moved,…
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Generative AI Flips the Script on AWS, Azure and GCP
In years past AWS (Amazon) was the leading cloud platform from a Revenue standpoint followed by Azure (Microsoft) with GCP (Google) in the third position. All three companies offer broadly-defined “AI” capability, in particular Machine Learning, which customers such as Netflix (an AWS customer), use to track and predict user behavior. When it comes to…
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