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Fed Liquidity Pump-- the fix is in-- Oh no? Oh no! Oh YEAA! Recently, experienced financial analyst/economist Michael Howell (see footnote 1) has made the case that central bank liquidity (and to a lesser degree, private sector liquidity) is what drives risk-on markets ( NASDAQ:QQQ , KRAKEN:BTCUSD ). While Dr. Howell uses his own deep analysis to predict that liquidity is now in an uptrend (see any of his numerous video interviews over the past 3 months on youtube), we point out that Elliot Waves have successfully predicted past liquidity changes (2012-2019), and that we now have a new Elliot Wave set up targeting a 35% rise in liquidity over the coming 24 months! Based on a reading of Dr. Howell's material, we can approximate Fed-sourced liquidity roughly by using a formula that makes use of the following weekly data-points: FRED:WALCL (Federal Reserve Balance Sheet) FRED:WDTGAL (US Treasury General Account) FRED:RRPONTSYD ("Reverse Repo" facility) " But but... the recession! " " But but... earnings! " " But but... CPI still over 2% " Will risk-on markets follow liquidity, or will they follow the main street economy? Dr. Howell and Elliot Waves point to the former! footnote 1: Founded CrossBorder Capital in 1996. Michael developed the quantitative liquidity research methodology while he was Research Director at Salomon Bros. from 1986. He was subsequently appointed Head of Research at Baring Securities in 1992, and was top-ranked “Emerging Market Strategist” by institutional investors for the three years prior to setting up CrossBorder Capital. Michael has worked in financial markets since 1981 and is a regular international conference speaker. He is a qualified US Supervisory Analyst and has a Doctorate in Economics. (from crossbordercapital.com)
FRED:WALCLLong
by BtcPowUpdate
IEA’s bullish outlook for electric vehicles “A new clean energy economy is emerging, and it is emerging much faster than many stakeholders, policymakers, industry players, and investors think today” – Fatih Birol, Executive Director, IEA during the Global EV Outlook 2023 press event on 26 April 2023. The International Energy Agency (IEA) published its Global Electric Vehicle Outlook for 2023 on 26 April. Its assessment of the state of the industry is encouraging and its projections for the industry’s growth are exciting. Electrification of road transportation is the disruptive innovation the industry has been waiting for. It appears that the tipping point has been reached. Highlights from 2022, and developments in 2023 Electric vehicle (EV) sales exceeded 10 million in 2022 (see Figure 1). This amounts to 14% of all new cars sold in 2022, up from 9% in 2021, and less than 5% in 2020. This trend has continued at the start of 2023 with over 2.3m EVs sold in the first quarter, 25% more than the same period last year. By the end of the year, sales could hit 14 million with an acceleration expected in the second half of the year1. China remains the dominant market, accounting for around 60% of global electric car sales last year, with Europe and the United States following behind. Nonetheless, there are promising signs of growth in emerging markets such as India, Thailand, and Indonesia where sales of electric cars last year more than tripled compared to 2021. The key tailwinds Policy support for the adoption of electric vehicles has never been stronger and it continues to strengthen. The European Union has set out CO2 standards for cars and vans aligned with 2030 goals set out in the Fit for 55 package. In the US, the Inflation Reduction Act (IRA), and California’s Advanced Clean Cars II rule could accelerate the journey to 50% EV market share by 20302. Given strong support from policymakers and adoption from consumers, innovation in battery manufacturing also appears to have been catalysed. While it is a given that battery chemistries will continue to evolve and greater levels of efficiency will be achieved, developments along the way, such as CATL’s recent condensed battery launch, are noteworthy and encouraging. On 19 April 2023, the Chinese battery manufacturer CATL, among the biggest names in the industry worldwide, unveiled a high-energy density, so-called ‘condensed battery’ at Auto Shanghai. CATL claims that this battery could not only meaningfully increase the range of EV batteries but could also help electrify passenger aircraft. Admittedly, there are multiple unknowns in CATL’s claims, including costs and delivery times, but it highlights how battery manufacturers are focused on achieving new degrees of efficiency. Growing competition and, therefore, more choice for consumers is also facilitating the adoption of EVs. The number of electric car models worldwide exceeded 500 in 2022, more than double compared to 20183. While this is still significantly lower than the number of internal combustion engine (ICE) models on the market, this proliferation of models is increasing competition among original equipment manufacturers (OEMs) which should help bring costs down. Electrification, however, is going beyond passenger cars. In 2022, over half of India’s three-wheeler registrations were electric. Similarly, electric light commercial vehicle sales worldwide increased by more than 90% in 2022 compared to the year before4. Such encouraging growth is also being witnessed in other market segments like electric heavy-duty trucks and buses. The forecast Even in the IEA’s stated policies scenario (STEPS – a conservative scenario which only factors in existing policies), growth of electric vehicles is expected to be strong this decade (see Figure 2). Across the globe, countries are swiftly introducing bans on the sale of new ICE vehicles. Some countries, like Norway, have taken the lead by making this ban effective from 2025. For many other countries, the bans come into effect between 2030 and 2040. Collectively, therefore, it is reasonable to expect a meaningful uptick in EV sales as we progress towards those deadlines. One of the biggest hurdles in EV adoption is the availability of ample public charging infrastructure. Fortunately, charging infrastructure is developing quickly, albeit at different rates in different countries. Overall, however, the IEA have an optimistic view on the number of publicly available charging points worldwide by 2030. A renewed focus on the supply chain According to the IEA, automotive lithium-ion (Li-ion) battery demand increased by about 65% to 550 gigawatt hours (GWh) in 2022, from about 330 GWh in 2021, primarily because of growth in electric passenger car sales. In 2022, about 60% of lithium, 30% of cobalt, and 10% of nickel demand was for EV batteries. Only five years prior, these shares were around 15%, 10% and 2%, respectively. Electric vehicles are not only driving demand for batteries, but also the underlying commodities. For investors, this means a holistic view of automotive and battery value chains is warranted when considering the electrification megatrend. For example, China holds a dominant position in both value chains and its role in terms of where it sits within the value chain is evolving rapidly. China is the biggest manufacturer of batteries worldwide but is also quickly establishing itself in the segment of car companies (OEMs) with the emergence of brands like BYD. But as competition increases, more regulation is introduced, and further innovation happens, supply chains will develop. Some links may get broken while others get formed. All in all, an exciting time to be following this space.
FRED:TOTALSA
by aneekaguptaWTE
Manipulation pushing higher inflation into the future. Inflation rate has been precisely manipulated to stay inside this triangle pushing the problem forward to the 2040's to 2050's. Important market corrections are dated for references. Look at the dates and compare with economic issues, inflation and market trading. There is a very narrow window moving forward into 2024 to 2025. The chart shows after 2025 the inflation rate will continue to creep up until the 2050's. Government manipulation is just pushing the issues forward 20 years or so. That makes since considering most of the people in charge will not have to deal with the fallout of their decisions. Almost everyone manipulating the us economy is over the age of 60 yrs old. Debt doesn't solve economic issues. US economy needs to move out of this debt and generate a strong wealthy economy. This publication is just for research purposes. Use as a tool and guide for your research. Thanks for reading.
ECONOMICS:USIRYY
by UnknownUnicorn35774657
Inflation will never stop...its time to short inflation 50%Inflation will never stop no matter how much money you make. Right now the cost of living avg is 50% too high for the current wages to keep supporting too much longer. homelessness and families moving in together to survive is already happening. The signs are out there for everyone to see and the government is playing with your lives. When wages increase so does the cost of living. Now the cost of living since the 1950's is too high to maintain in 2022 with current wages and 2023 will be worse. Unsustainable economic breakdown is coming and depression in society is at the highest i have ever seen it in my life time. Fuel shortages, Food shortages, high utility bills, taxes keep going up, government keeps overspending, times are tough for working families. United States Statistics for inflation and cost of living Year Median Home Value Median Rent Household Median Income Gas Prices vary by state this is the avg Avg wage per hour worked 1950 $7,400 $42 $2,990 $0.27 $0.75 1960 $11,900 $71 $4,970 $0.31 $1.15 1970 $17,000 $108 $8,734 $0.36 $1.50 1980 $47,200 $243 $17,710 $1.20 $3.10 1990 $79,100 $447 $29,943 $1.10 $4.25 2000 $119,600 $602 $55,030 $1.40 $5.15 2010 $221,800 $901 $49,445 $2.60 $7.25 2022 $428,700 $1295 - $2495 $78,075 $3.40 to $6.00 $7.25to $16.00 varies by state Federal Minimum Wage Information $5.15 - Sept. 1, 1997 $5.85 - July 24, 2007 $6.55 - July 24, 2008 $7.25 - July 24, 2009 Inflation and supply shortages keeps getting worse. I hear so much everyday from people and this is what people say to me when i ask. I don't make enough money to survive. Bank won't give me a loan. I don't make enough money this year to cover bills. I need things and the store doesn't have it or its too expensive for my budget. power bill too expensive. gas is too expensive. my car has been in shop for months and still not fixed. my bank won't refinance my home. i can't afford groceries because i no longer qualify for government "snap" benifits with my raise at work and i have 4 kids. I am losing my farm to drought and excess cost of fuel and supplies. Automated warehouses put my entire family out of business. several people came forward with police not doing there job while communities are getting robbed while they are at work. the covid epidemic cost me everything my home and my business. my health insurance went up and can no longer afford it. so many people out there struggling to survive and the normal services that help these people have exhausted there funding without any more support for the demand of help. i don't see an end to this economic struggle people are facing and its only going to get worse. Fed rates hikes, the covid pandemic and the countless defaulted loans and ongoing bankruptcies with inflation has banks refusing personal loans and refinancing to alot of people without collateral. All i can say is stick with the job you have and try to manage your finances carefully. resources are stretched thin and customer service everywhere has a high turnover rate with people that don't really know what they are doing. People are taking any job they can to survive and when they lose or find another job they move on and don't really care about the service they are providing. They are basically a third party for the companies and some have reported security violations that resulted in fraud to access individual finances. I'm not writing a book here so i will leave this info here for you reading to digest and research on your own. Maybe a post from you on social media or here with some resources to help others find the help they need. thx for reading
ECONOMICS:USIRYYShort
by UnknownUnicorn35774657
The US Treasury cash rebuild; volmageddon or a nothing burger While Congress still needs to pass the debt limit agreement, the debate in the market has shifted to the need for the US Treasury Department (UST) to rapidly rebuild its depleted cash levels. We have no understanding of the timetable, but already the debate is whether the significant level of Treasury bill issuance will result in a major headwind for global financial markets, while others believe this is pure hype. Some are contrasting what lies ahead as a massive liquidity withdrawal from financial markets – Quantitative Tightening (QT) on steroids – where we will essentially see USD liquidity sucked out of the system. The process of raising cash levels To raise and rebuild its now low cash balances, the US Treasury Department (UST) will look to issue around $1.3t of US T-bills over the following 12 months. Around $700b of this T-bill issuance will be fast-tracked, tapping up the market within a matter of months, with the private sector expected to buy what the Treasury is selling. US Treasury bills (‘T-bills’) are high-quality debt instruments which have a maturity of less than 12 months. With the US Treasury replenishing its cash balances it would be able to make ongoing payments and meet its obligations. Plus they will keep its additional capital on the Fed’s balance sheet (under the Treasury General Account or ‘TGA’) for future payments. The effect on markets The concern in the market is around the notion of a “liquidity drain” – whereby the UST remove such staggering levels of liquidity out of the system, in a short period, that we see bank funding costs heading markedly higher and USD rates rising to highly concerning levels. Could this dynamic cause renewed concerns in the US regional banks? Drilling into the theme - the potential stress in markets really comes down to who exactly absorbs the issuance, as this is key in determining the potential impact on system liquidity. A drawdown in RRP balances US money market funds (MMF) have historically been the big buyers of T-bill issuance and could again play a key role in supporting the USTs quest to recapitalize. Money funds currently have near-exclusive access to the Fed’s Reverse Repo facility or ‘RRP’ (TradingView code – RRPONTSYD), and have around $2.2t parked there, where they get 5.05% (annualized) risk-free. If US T-bills are issued to the public at a yield close to the RRP rate (of 5.05%), then there’s a case that we see money funds withdrawing a sizeable level of holdings from the RRP facility and supporting the US T-bill issuance. It is widely considered that risk assets (e.g. equities) would not be impacted when a large percentage of the USTs issuance is funded by RRP balances. In fact, some are saying this could be a net positive given there has been a scarcity of high-quality T-bills in the system of late. A drain in bank reserves would be more problematic for markets Banks are required to hold a level of reserves as a percentage of their deposit base. However, banks/depository institutions often hold reserves in excess of their regulatory requirements - this can be highly advantageous should they have to meet increasing deposit withdrawals. Instead of keeping these excess reserves (cash equivalent) on their balance sheet, they can be offered to the Fed, where since 2008 they will receive interest paid at 5.15% (annualized) through the Fed’s IORB facility (Interest on Reserve Balances - TV code: WRBWFRBL). The RRP and IORB spread guides overnight lending rates With the RRP rate currently at 5.05% and IORB paid at 5.15% this spread represents the corridor by which the fed funds effective rate (EFFR) – the rate at which banks will borrow/lend cash overnight – trades. This is the fundamentals of how the Fed sets monetary policy and to date, it has been very effective. The concern from some is where money funds have less involvement in supporting UST T-bill issuance - resulting in a comparatively low RRP drawdown – with a large percentage of the issuance supported by a drain of bank reserves. Some strategists estimate that of this potential $700b in near-term T-bill issuance around $400b to $500b of this will be funded by the liquidation of bank reserves balances. That could the scenario where we could – in theory - see higher market volatility. It’s really about a scarcity of reserves There are currently $3.28t of excess bank reserves parked on the Fed’s balance sheet - so if we were to see a $500b drawdown in reserves then this balance would fall quite rapidly to around $2.8t. This is important because many feel the Lowest Comfortable Level of Reserve (LCLoR) that must be in the financial system is between $2.5t and $2.2t. Interestingly, some feel an aggressive decline in reserves would be a headwind for risk assets – if we look at the regression between reserves and S&P500 futures, we can see an R^2 of 0.79. In effect, 79% of the variance in US equity futures can be explained by reserves – statistically, it’s very meaningful. So this injects some credence to the idea that reserve drawdown could be a short-term headwind for risk. However, where this becomes interesting, and where we would see true stress in the system is through monitoring the spread between the Fed’s effective rate (TradingView Code: EFFR) and upper bound of the rates channel and Interest paid on Reserve Balances (on TradingView code: IORB). Currently, this spread sits at -7bp, but if we were to see the fed funds effective rate (EFFR) moving to the top of this corridor and even trading at a premium to IORB, it’s at this point where the market is telling us that we’re moving closer to a scarcity of reserves in the system. This is where things would be far more prone to breaking, and the Fed will need to act swiftly. When EFFR trades at a premium to IORB it essentially portrays that the money market channels are breaking and demand for short-term loans is becoming increasingly inelastic – subsequently, those in need of short-term loans will continue to pay ever higher prices. Of course, this may not play out. We may see reserves falling precipitously and risk assets and the USD show no relationship at all to this dynamic. However, it is a risk, and we need to recognise the triggers and be open to the possibility it does cause a higher volatility regime, especially given it comes at a time when EU banks are having to pay back E500b of TLRO loans to the ECB. Price is true, but I will be the moves in the KRE ETF (US regional bank ETF), as well as watching the EFFR- IORB spread as this could be far more important for the USD and signs of increased risks in the financial system.
FRED:WRBWFRBLEducation
by Pepperstone
5
The Debt Ceiling AgreementThe debt ceiling is a limit set by the U.S. Congress on the amount of debt that the federal government can have outstanding. This debt is primarily made up of two components: debt held by the public (like U.S. Treasury bonds held by investors) and intragovernmental holdings (like those in the Social Security Trust Fund). From a financial perspective, the debt ceiling is significant for several reasons: 1. Creditworthiness of the United States: The U.S. government is seen worldwide as an issuer of risk-free assets, primarily because it has never defaulted on its debt. If the debt ceiling is not raised in time, it could potentially lead to a default, shaking the world's confidence in U.S. government securities. This could increase the interest rates that the U.S. has to pay to borrow money in the future. 2. Global Financial Markets Stability: U.S. Treasury securities are used as a benchmark for many other types of credit and are widely held by financial institutions around the world. A default could cause significant upheaval in these markets and potentially lead to a financial crisis. 3. Economic Recession : A default could lead to severe economic consequences. It could cause a sharp decrease in government spending (since the government couldn't borrow to finance its operations), which could in turn lead to job losses and potentially a recession. Treasury Secretary Janet Yellen warned of this risk in the case of the 2023 debt ceiling negotiations. 4. Budgeting and Planning: The debt ceiling also has implications for how the government budgets and plans its finances. When the debt ceiling is reached, the Treasury Department has to use "extraordinary measures" to keep the government funded, which can create uncertainty and inefficiency. 5. Political Tool: While not strictly a financial point, it's worth noting that the debt ceiling has often been used as a political tool. Lawmakers may refuse to increase the debt ceiling without certain concessions, such as spending cuts or policy changes. This can lead to financial uncertainty, as was the case during the 2023 debt ceiling negotiations. The negotiations that led to the agreement were marked by considerable compromise. President Biden, for instance, noted that the agreement represented a compromise where not everyone got what they wanted but was nonetheless an important step forward1. House Speaker Kevin McCarthy, despite opposition within his own party, committed to passing the bill within 72 hours of its introduction on the House floor. This commitment was a testament to the urgency felt by lawmakers due to the looming threat of a potential default on the U.S. debt obligations. The agreement was a product of compromise and necessity, driven by the urgent need to avoid a default on U.S. debt obligations. It included a two-year budget deal holding spending flat for 2024 and imposing limits for 2025, effectively reducing spending as Republicans had insisted. This was in exchange for raising the debt limit for two years, until after the next election. The deal would boost spending on the military and veterans' care and cap spending for many discretionary domestic programs. However, the specifics of these spending caps remained subject to further debate between Republicans and Democrats. Conclusion The 2023 U.S. debt ceiling negotiations showcase the intricate dynamics of American politics and its intersection with economic policy. They underscore the importance of compromise in a divided government and the challenges that ideological divergences within parties can pose to such compromise. These negotiations and their outcome also highlight the potential economic implications, such as the risk of default, that can arise when political disagreements hinder prompt fiscal decisions.
FRED:GFDEGDQ188SEducation
by financialflagship
6
Data error Japan Tokyo CPI Ex Food And Energy (JPTCPIEFA) & JapHello good morning & good day to all! There seems to be an error for these 2 Japan econ data when we chart on Trading View, Japan Tokyo CPI Ex Food And Energy (JPTCPIEFA) & Japan Tokyo Core CPI (JPTCCPI). Previously, these 2 data have been presented in index values but it seems that yesterday, their format has been changed to y/y % for the last 2 months but does not adjust prior historical data points to y/y. Thus, right now, I cannot do any meaningful analysis of these charts. Wrote in about these errors and sent a ticket to Hep Centre but no reply. Can anyone help over here? or is there a rep from Trading View here? Much appreciated. Thank you
ECONOMICS:JPTCCPI
by Kelvin-Wong
The Overnight Reverse Repo Facility Looks to be Breaking DownMoney that is being parked at the Feds Reverse Repo Facility due to attractively high interest rates the fed has set for money parked at the facility has been on a steady decline since late 2022 and we have now confirmed a lower high and are looking to break down below a Bearish Dragon trend line that could be the initial trigger that gets it started to going down all the way to an 88.6% retrace or lower even. One can only speculate that the money exiting this facility will lead to more trading of short term debt on the open market, which could eventually lead to yields coming down overall and for all of this excess liquidity to chase Equities instead as the value of the US Dollar declines due to the shock of all this newly added supply of liquid cash to the open market thereby causing a loosening of market conditions.
FRED:RRPONTSYDLong
by RizeSenpai
🔥 Is The Bitcoin Halving Causing Bull Markets? New Theory!The classical Bitcoin theory about halvings is that they "cause" bull-markets because the supply mined gets halved, leading to a negative supply shock and therefore increasing the value per Bitcoin. This is not a surprising theory since it makes a lot of sense and has worked in the past. But, is the halving really that important for the Bitcoin price? I've plotted the balance sheets of the largest central banks in white. If this line goes up, it indicates an expansion of the balance sheet (Quantitative Easing / QE), which can roughly be interpreted as printing money. It appears that Bitcoin bull- and bear-markets are highly correlated with central banks expanding their balance sheets. White line goes up, BTC goes up, white line goes down (or sideways) BTC goes down. I've marked two previous occurrences where the central banks started QE in purple. Bitcoin arguably started the bull-market from those points, and not once the halving (yellow) took place. From this chart we can conclude that the Central Banks are a decisive factor in the start and end of Bitcoin bull markets. Sure, the halving is a highly anticipated event among retail investors and manages to revive the interest into crypto, but I'd argue that QE (= a better investing climate) is the main reason why Bitcoin goes up and down in cycles. In other words, we can have a BTC bull-market during a period of QE without the halving taking place. We can't have a bull-market after the halving without QE. If you enjoyed this analysis, please give it a like. Share your thoughts below 🙏
ECONOMICS:USCBBSLong
by FieryTrading
9