Operating at the Intersection of Technology and the Capital Markets
Tag: Treasury
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.
When I look at Technology company earnings estimates for 2024 they appear too bullish. 2024 EPS growth rates will decline. For many companies EPS will go negative on an absolute basis (2024 EPS as compared to 2023). Here are some reasons why: Revenue growth will decline: Revenue growth will decline for many Technology companies as … Continue reading Earnings Growth Rates Will Decline In 2024
Interest expense on Treasury Debt is climbing higher as Treasury Debt issues roll over at higher rates. 42% of Treasury Debt outstanding is in the form of Treasury Notes at an average interest rate of 2.08%. Notes that roll over will do so at a rate much higher than 2.08%, thereby pushing up the average … Continue reading Treasury Debt: Interest Expense Climbing Higher
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
Fed Chair Powell began his Quantitative Tightening (QT) campaign in May 2022. Meanwhile, Treasury Secretary Janet Yellen ran her own campaign - a counter campaign that offset the Fed's monetary tightening. Yellen stimulated the economy by pumping money from the Treasury's General Account (TGA) into the economy - more than offsetting the Fed's tightening efforts … Continue reading While Powell Tightened, Yellen Opened Her Purse
Last week we wrote about upcoming Treasury auctions. You may ask "What does Treasury estimate as its borrowing requirements for the balance of the year?" After all, more borrowing equals more Treasury debt. Higher interest rates mean Treasury interest expense is growing as a percentage of Federal tax revenue, which will crowd out fiscal spending … Continue reading Treasury Debt Going Higher As Treasury Borrows
For the past two years we have written that the long-end of the Treasury yield curve was too low. I see no reason why we won't see a 5 handle on the 10-year. The 10-year Treasury yields 4.32%. Yields are going higher as we wrote last week (HERE). We said that long-term, the 10-year may … Continue reading A 5 Handle On The 10-Year Is Reasonable
$32.7 Trillion in Public Debt and counting as of this morning. Treasury Secretary Janet Yellen set the table in 2021 and 2022, thereby pre-determining Powell's rate path - or at least limiting Powell's rate ceiling. The U.S. simply can't afford to have $13.7 Trillion in Treasury Notes outstanding roll over at present interest rates. The … Continue reading The Public Debt Bomb
If you plan to run the credit risk exercise that I mentioned at a high level last week (HERE), the exercise is not a simple one. For example, if Company ABC issued a 5-Year note in August 2020 when the 5-Year Treasury was at 0.19% and credit spreads where at "Y", it would be incorrect … Continue reading Credit Spreads Will Widen The Longer The Fed Maintains Elevated Rates
We looked at FDIC bank failures from the year 2001 through today. Here is a brief summary as told using tables and graphs. Source: FDIC; TEK2day
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