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Economy

Arthur Hayes's Liquidity Index comparing to SPX, NDX & BTCUSD liquidity conditions are comprised of three parts: The size of the Fed’s balance sheet. FRED:WALCL The Fed credits member banks’ Fed accounts with money, and in return, banks sell the Fed US Treasuries and/or US Mortgage-Backed Securities. This is how the Fed “prints” money to juice the financial system. The size of Reverse Repo (RRP) balances held at the NY Fed. FRED:RRPONTSYD The NY Fed allows eligible counterparties to deposit USD and earn a rate of return. The deposited funds become dead money once they enter the Fed’s account. It is dead money because the Fed does not use the deposited funds to make commercial loans. If it did, it would increase the supply of credit money in the financial system. In effect, the money multiplier for RRP balances at the NY Fed is 0x, vs. a non-zero multiple when deposited with any other financial intermediary. (Pre-pandemic, the reserve ratio requirement hovered between 3% to 10% – resulting in a 33x to 10x money multiplier for US commercial banks – but the Fed has since slashed it to 0%, meaning that commercial banks can lend out 100% of the deposits they receive with no obligations to hold any of those deposits as a safety net). Money market funds (MMF) are funds in which retail and institutions place cash to earn short-term yield. In my brokerage account, any spare cash I have is deposited in an MMF, and I can get my cash back within one business day. MMFs can deposit funds in the RRP, and a variety of other low-risk short-term credit instruments (e.g. US Treasury bonds, AAA-rated US corporate commercial paper). Leaving money with the Fed is the least risky option, and pays about the same as the other two options, which do carry some risk. Therefore, MMFs prefer to park money with the Fed, if they can, rather than in the leveraged financial economy. The US Treasury General Account (TGA) balances with the NY Fed. FRED:WTREGEN This is the US Treasury’s checking account. When it decreases, it means the US Treasury is injecting money into the economy directly and creating activity. When it increases, it means the US Treasury is saving money and not stimulating economic activity. The TGA also increases when the Treasury sells bonds. This action removes liquidity from the market as buyers must pay for their bonds with dollars. USD Liquidity Conditions Index = (The Fed’s Balance Sheet) – (NY Fed Total Amount of Accepted Reverse Repo Bids) – (US Treasury General Account Balance Held at NY Fed)
FRED:WALCL
by Strky
2
Strong USDFundamentals Factors Affecting Reserve Balances of Depository Institutions reported a decrease in U.S. Treasury of $11.6 Billion ( Bullish) Inflation expectation are decreasing (Bullish) Exports from the United States increased by USD 4.3 billion (Bearish) Non-farm labor productivity in the US fell ( Bullish) Currency in circulation decreased by $428M ( Bullish) I am still learning fundamentals so if this is wrong please let me know I want to keep getting better at this. Student working toward my Series 86 and 87
ECONOMICS:USPRODLong
by TyrusL
Ever wonder what’s preventing the market from a massive crash?The answer is DEBT Real GDP (Green) US Public Debt(yellow). Look at how aggressively debt has grown from 1970 till today. Just to bring this a bit closer home. It’s like constantly getting yourself in financial trouble yet the bank keeps giving you more and more credit. If the government was an individual, it’s credit score would be less than 500. And even with a shitty score like that, they keep getting more and more into debt. This is NOT capitalism. This is the part where gamesmanship applies. The question becomes, what happens to our economy if the government didn’t bail out or print any NEW money for 10 years? In other words, Be slightly paranoid when it comes to your investment philosophy. Play offense, but stay alert.
ECONOMICS:CHWG
by nmcapital44
Stagflation is comingReal interest rates will probably start to fall soon because of stagflation. Real interest rates can be measured by subtracting inflation expectations FRED:T10YIE from US treasury yields FRED:DGS10 . Treasury yields will likely fall along with unemployment as measured by initial claims FRED:ICSA . Initials claims has started to slowly rise and when it does treasury yields will probably go down. Inflation expectations will likely take longer to fall because it takes longer to get prices to slow down than for unemployment to rise. Businesses will more likely fire people than lower their prices to protect their profits and now inflation expectations are probably well anchored. This should be bullish for silver OANDA:XAGUSD and gold OANDA:XAUUSD and negative for the dollar TVC:DXY . When looking at the charts for primary metals and DXY it also looks like they are ready for a major turnaround. A description of the above can also be found here: www.forbes.com
FRED:DGS10Short
by lucky_human_foot
2
Monthly Supply of HousesWill history repeat itself? Is it time to call Ben Rickert, Jared and Vinny. What would those guys think about it? Any other time the houses supply was this high it was considered a recession. I know what you’re thinking. Defaults are what caused the GFC. Loan Defaults? Delinquency rate bubbles are a result of higher interest rates and tight monetary and fiscal policy all of which are just now appearing. The sudden increase in rates may be too quick of a shock to the system. Who knows what other bubbles await. There may be enough stimulus to keep it going a little while longer. Could government spending be the bubble. The real problems start when a negative wealth effect from falling home prices and high interest rates cause a tsunami of foreclosures. Inflation isn’t going away and that means rates are here to stay.
FRED:MSACSR
by SPYvsGME
4