Operating at the Intersection of Technology and the Capital Markets
Tag: Federal Reserve
The Fed's actions with the money supply carry more economic weight than its actions with its Fed Funds rate. As far as QT is concerned, the Fed has already paused. Thus, whether the Fed raises rates tomorrow or in October or at all, the real story is that the Fed has put the brakes on … Continue reading The Fed Has Already Paused
For some companies, debt repayments are taking priority over innovation and other operational initiatives. Aside from zombie companies going bankrupt as a result of the Fed holding rates higher for longer, there is an entire class of Technology companies that will continue to suffer as a result of higher interest rates for longer. Take SS&C … Continue reading When Debt Payments Take Priority Over Investing In The Business
If you look at what's happening with Treasury yields on the 2yr, 3yr, 5yr, 7yr, 10yr, 20yr and 30yr bonds it implies that fixed income investors believe that the Fed is not taking rates back to zero. The 10 year Treasury bond yield still looks too low relative to the 5yr, 7yr and 20yr (I'd … Continue reading Treasury Yields Imply Rates Will Stay Higher For Longer
Layoffs are ticking up now (Google, Cisco, Roku, Evolve, Drift to name a few) as companies work through 2024 operating budgets. As interest rates and the cost of capital remain elevated in Q4, I suspect that companies - especially those with elevated Debt/EBITDA ratios - will announce further layoffs in October and November. However, I … Continue reading When Will The Next Big Round Of Layoffs Occur?
A Government budget deal will get done regardless of a looming Government shutdown. The $33 Trillion Treasury debt load is about to go much higher, and with that the purchasing power of the Dollar much lower (i.e. inflation). Rates are going lower next year as the interest expense burden on the debt outstanding is unsustainable. … Continue reading I Am Sorry To Say That Inflation Is Here To Stay
Yes, the GOP and Dems will get a deal done - Government shutdown / political theater notwithstanding - as both parties lack fiscal restraint. Treasury debt will continue to grow. Treasury debt sits at $32.96 Trillion as of September 13th and that number is going much, much higher! 2024 and 2025 and beyond will see … Continue reading Debt Mountain: Yes, A Fiscal Deal Will Get Done
The Fed may as well end QT. It has only trimmed its balance sheet by $1.03 Trillion since May 2022. This after growing its balance sheet from $4.0 Trillion in October 2019 to a peak of $9.0 Trillion in March 2022. The Fed's balance sheet stands at $8.1 Trillion today. Yet we wonder why inflation … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
This week’s BTFP activity: The Bank Term Funding Program (BTFP, bail out/QE) had approximately $108.0 billion in outstanding loans as of Wednesday this week, up from $107.9 billion (+ $0.1 billion) a week ago. The “other credit extensions” line item of $133.4 billion includes the FDIC loans made to regional banks. This figure is down from $133.8 … Continue reading Weekly Update: Bank Term Funding Program
For all of the Fed's tough talk, the money supply as measured by M2 is growing again. M2 sat at $15.5 Trillion in Feb 2020 (pre-Covid), peaked at $21.7 Trillion in July 2022 (a 40% increase) and bottomed at $20.7 Trillion in April 2023 during the Fed's recent QT cycle (trimming $1 Trillion from the … Continue reading The Money Supply Is Growing Again
With $34 Billion in outstanding debt, it is only a matter of time before American Airlines (ticker: AAL), comes calling hat in hand for a bailout. AAL will require financial aid (a bailout or a very large equity offering), before 2026 debt maturities occur. The 2020-2021 COVID bailouts were not the answer to the bloated … Continue reading When Will American Airlines Be Bailed Out Next?
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