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Tag: Federal Reserve
Powell’s Attempt To Talk Down Inflation Will Fail
Powell may be forced to lower rates while inflation remains elevated. Price inflation as measured by CPI won't get down to the Fed's 2% target without unemployment rising if history tells us anything (See below chart: Unemployment Rate = Red, CPI = Green). Source: click here to enlarge chart. Core CPI will likely remain above … Continue reading Powell’s Attempt To Talk Down Inflation Will Fail
Weekly Update: Bank Term Funding Program
This week's BTFP activity was muted. The Bank Term Funding Program (BTFP, bail out/QE) had approximately $109.1 billion in outstanding loans as of Wednesday this week, flat with $109.1 billion a week ago. The “other credit extensions” line item of $46.8 billion includes the FDIC loans made to regional banks. This figure is down from $48.3 billion … Continue reading Weekly Update: Bank Term Funding Program
The Fed’s Balance Sheet Reduction (QT) Update
The Fed is likely done hiking its Fed Funds rate. However, the Fed ramped up its QT effort, purging its Balance Sheet of $40 billion of Treasuries this week, the most since it reduced its Treasury holdings by $43 billion the week-ended August 16th 2023. Treasuries: The Fed’s Treasury security holdings declined by $40.0 billion for … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
Apple: Now vs. Then
My, how things have changed with Apple's valuation. We compared AAPL today versus 2015 from a Revenue growth and valuation standpoint. Apple grew Revenues 33% in the June 2015 quarter (see table below for details). Today, Apple's topline is shrinking. Fed Funds was essentially at zero and the 10 year Treasury yielded half what it … Continue reading Apple: Now vs. Then
A Modest Uptick In October Employee Layoffs. I Expect Layoffs To Spike Higher In January.
Layoffs have ticked up in October as compared to September. I expect a step function up in layoffs in January 2024 as I believe that a number of CEOs, CFOs and Boards have yet to find religion around higher interest rates. We are not going back to a zero percent Fed Funds rate in Q1, … Continue reading A Modest Uptick In October Employee Layoffs. I Expect Layoffs To Spike Higher In January.
The United States’ Spend, Print, Inflate Fiscal Policy Is Unsustainable. The Fed’s Monetary Policy Isn’t Helping.
The final numbers are in. The Federal Government posted a fiscal deficit of $1.7 trillion in fiscal year 2023 on $6.1 trillion in fiscal spending. The fiscal deficit figure is up 23% from fiscal 2022's deficit. Blame the Biden Administration and Congress for the deficits in fiscal years 2021-2023. Blame the Fed for subsidizing those … Continue reading The United States’ Spend, Print, Inflate Fiscal Policy Is Unsustainable. The Fed’s Monetary Policy Isn’t Helping.
Will The Fed Hike On Wednesday? Who Cares?
The Fed Has Already Lost Control Of The Long End Of The Yield Curve The Fed's monetary policy has been wrong since it kicked off QE in 2009. If the Fed holds rates steady on Wednesday, and if CPI continues to grow sequentially at a rate similar to August and September, then it is likely … Continue reading Will The Fed Hike On Wednesday? Who Cares?
Weekly Update: Bank Term Funding Program
Before we get to this week’s BTFP activity, when investors ask "When will we see a recession?", recall that back in March we were days away from a number of bank failures which surely would have caused those banks left standing to dramatically tighten access to credit. Rather than allow those mismanaged banks to fail, … Continue reading Weekly Update: Bank Term Funding Program
The Fed’s Balance Sheet Reduction (QT) Update
All is fairly quiet in the Eccles building as the Fed essentially held its Treasury position constant while modestly trimming its mortgage holdings. Treasuries: The Fed’s Treasury security holdings declined by $1.7 billion for the week-ended October 25th and declined by $47.7 billion on a rolling 4-week basis. Agencies: The Fed’s Government Agency security holdings declined by … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
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