Can't stop, won't stop!
First Plato's Republic
Just a short note today, because, as you may suspect, it’s St. Patrick’s Day.
Thanks to everyone who’s signed up so far! Should be a fun year ahead.
Anyway, here are your only two choices:
“The bank is something more than men, I tell you.
It's the monster. Men made it, but they can't control it."
- John Steinbeck, The Grapes of Wrath
I saw this headline and thought to myself - Yes. Yes. YES!!
"What if your entire worldview was just because of near-zero interest rates?"
Do you suffer from QT-skepticism?
As a QT-skeptic myself, there was kind of a fun Fed H.4.1 report Thursday.
We had:
A $969 Million (with than ‘M’) Fed rolloff of Treasuries
A $186 Million rolloff of MBS
A $140 Billion increase in “Loans”
A…wait, what?
That $140 Billion must be because of the recent bank depositor unpleasantness.
I think the title of my rant from a few days ago (seems like a month) aged well: I have come to bury QT, not praise it.
So much for the elusive “QT” - Reserve Bank Credit is back up to January 2023 levels, and - in the year 2023 - the Fed has monetized TWO-POINT SIX TRILLION AMERICAN DOLLARS worth of mortgage-backed securities.
I know there are various ways to look at Wall Street’s “plumbing,” I just use the H.4.1 because it’s simple enough for a caveman like me to use. (e.g., This short note from one of my favorite 2008-era bloggers, or this QT-true believer view.)
To borrow from Sicario, I’m not sure exactly how the watch works, but I can see the time.
I am very sorry to announce that First CityWide Change Bank has been taken over by Federal Regulators:
Nobody saw that coming.
Some things I noticed over the last year or so:
November 2021 had a few friends who couldn’t shut up about stocks. Checking quotes on their smart watches. The conversations sounded like many I had back in the late 1990's. All were talking about nonsense like Jim Cramer, and the most Cathie Wood stuff, like Lucid.
April 2022: I mention the stock market - one of these guys says, "I haven't checked the quotes. I'm getting killed. I don't want to talk about it."
A few days later: Same guy, owns a decent chunk of Amazon. Not selling, he's gonna "hold it and eventually it'll come back." He's pushing 70.
Same guy, May 2022: I say, 'Well, futures are down but looks like they're moving up and...' He says, 'I don't want to talk about it.' I say ‘Ok, sorry. So have you sold anything?' Him: 'No.'
“Everyone's bearish but they haven't sold.” - Julian Brigden, July 2022
“There certainly doesn’t seem to be a lot of fear out there yet…” - Chris Irons, March 15, 2023
Yesterday: One of my buddies from November 2021 above talking about how he’s holding on to his stocks for the long term, like Jeremy Siegel.
So I don’t see any real March 2009-style fear. Just turn on CNBS (no, don’t!) Everything is “What are you buying here?”
Then again, I don’t own any bonds - outside of some I-Bonds. They say the smart people are in bonds so I stick to stocks.
Here’s Harley Bassman’s MOVE Index, which “measures Treasury rate volatility through options pricing.” Think of it I guess as like a VIX for bonds.
The KBE (Knights of the British Empire) is off 5% again today.
If you recall, financial war criminal Alan Greenspan was awarded an honorary knighthood from Queen Elizabeth II - get this - in recognition of Greenspan's "contribution to global economic stability."
"The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake."
Ahh, better than a therapy session
LOL! Fantastic!