In Other News Media https://validator.w3.org/feed/docs/rss2.html The Interest Expense on US National Debt rose to a record $1.178 trillion in the last 12 months, an increase of 142% over the past 4 years. The US Government now spends more money on interest than it does on National Defense. Dollar hits new low — valued in real money: Meta is the only member of the Magnificent 7 that’s outperforming the S&P 500 this year. The other 6 are underperforming YTD with returns ranging from -9% (Microsoft) to -44% (Tesla). International stocks have outperformed US stocks by 14% over the last 2 months, the biggest 2-month spread since 2008. Over the last 10 years, US Federal Government Tax Revenue has increased 60% while Government Spending has increased 98%. The result: a doubling in the US National Debt from $18 trillion to $36 trillion. A major fiscal policy divergence is unfolding between Europe and the US 2-year yields appear to be rolling over again, Is the #Fed making the same error as the mid 1970s? How hot has the stock market been recently? Even the lowly Russell 2000 index has traversed back to its range highs, although it remains some distance from its all-time highs. The “Everything Rally” has brought even the small caps to the party. People are looking at the Federal Reserve as the cause of inflation. That’s certainly been true. Over the last 15 years, since 2008, the Fed’s Balance Sheet has gone from under $1tn to over $8tn. Being Human in the Age of AI Employment growth has significantly slowed since the Fed started raising rates. And is expected to continue slowing further. It’s only a matter of time before the labor market deteriorates rapidly. While the US$ represents 59% of world reserve currencies, the Yuan is a paltry 2-3%. Let’s talk about bonds: The “Everything Rally” has taken the 10-year bond yield from 5.02% in late October to below 4% last week, taking the term premium back below zero. The towering monolith of government debt is scraping the heavens. The endgame is looming. Bond trade looks a bit crowded: Record 62% of Fund Managers polled by BofA in December expect #bond #yields to be lower in 12 months’ time.Source: BofA, HolgerZ THE BANK OF ENGLAND’S QUANTITATIVE EASING PROGRAM IS ON TRACK TO COST THE UK TAXPAYER AS MUCH AS THE ENTIRE HS2 HIGH-SPEED RAIL LINK The shocks to the Panama and Suez canals are a reminder that with climate change and growing geopolitical risk, supply chain instability is here to stay. https://on.ft.com/3ND98sW The SPY ETF, mirroring the S&P500, has experienced its most significant #inflow to date subsequent to the recent shift in Federal Reserve policy. JPMorgan’s Marko Kolanovic said in a note on Wednesday that investors should favor cash over stocks in 2024 as it appears unlikely that the Federal Reserve will rapidly cut interest rates. Powell created a massive risk-on rally, except in China! Inflation risks are mounting. Supply chain pressures collapsed from highs as the world came out of lockdown, but are now rising again. FT: Recession fears in Europe punish risky borrowers with higher yields 📈📈📈 Does this recent stock market rally feel right to you? Does it feel very speculative? Why did the FED reverse interest rate guidance so significantly in such a short time frame? “The SPX is currently at its most overbought level in 30+ years.46% of SPX members have a 14d RSI > 70, the most since 1991.” Between 2:00 and 4:00 PM ET today, the S&P 500 erased ~$600 billion of market cap.To put this in perspective, the S&P 500 added ~$600 billion of market cap over the last week.The index was up for 10 straight days but erased 5 of those daily gains in 2 hours.The volatility index, $VIX, spiked ~10% in a matter of minutes.Source: The Kobeissi Letter The unrealized losses remain, ahem, material in the US banking system #Bitcoin currently is the 14th largest currency in the world 🌍 #btc In my experience, this week was one of the most #ashtonishing ever. Looks like Canada has found a solution to most of its social issues.The level of development of a society is a function of its ability to take car of its weakest members. Can we still call this a civilization then? Despite the S&P 500 climbing 23% this year, an unprecedented 71% of its stocks are lagging behind the index, marking the largest such percentage since at least the year 2000. ALERT: Job openings are collapsing (but from a very high level)Source: Game of Trades 81% of stocks in the S&P 500 are currently trading higher than their 100-day moving average, a situation we’ve encountered twice already this year.#sp500 #market #movingaverage #dma #finance #stocks 58% of US households own #stocks, the highest percentage on record. Government:-Tell the 🇺🇸 Poors that Inflation is 3% and going to 2%🇺🇸Poors:-But Govt, my daily & monthly goods I buy are up 100% to 400% higher then the 3% your telling me like beef up 12%, bread 6.5%, veggies 6%, poultry 5%, auto insurance 20%Govt: hashtag#Bidenomics is working Regarding the stock market, the S&P 500 is exactly at the same level it was two years ago today, December 6, 2021. As the black line shows, the change in the index is up just 0.17%. 💵 The Fed is injecting liquidity into the market through various facilities , raising concerns This chart is what is driving Fed policy. They think real yields are too high and drag the economy. So, they have to cut rates to bring them down. Intriguing dichotomy between US homebuilder #stocks (which are rallying) and Pending home sales (plunging). Can it last? Interesting point highlighted by HolgerZ: It is striking that the #us #banks are continuing to obtain liquidity via the BTFP, even though long-term yields have fallen sharply. Is this the reason why #Fed chair Jerome Powell has suddenly communicated a pivot and announced #interestrate cuts? Source #chart: Bloomberg The #equity bull market is broadening. We are starting to see a broadening of market leadership emerge, especially as the notion of lower rates next year is embraced by investors. Over the past month, the Magnificent 7 stocks, which have led most of the year, were up just 1.5%, while the Russell 2000 small-cap index, a laggard in 2023, was up nearly 11%. Bitcoin transaction fees just hit $37.14. The highest since the 2021 bull run to all time highs. The net long positioning on the Nasdaq 100 by asset managers and leveraged funds is at a record high. When a trade becomes this crowded, how long until things reverse course? While the #Fed and the #ECB are reducing their balance sheets and taking some #liquidity out of the market, the Chinese central bank (#PBoC) is pumping even more money into the market to stop the economic crash.Source: HolgerZ, Bloomberg The US Federal Government spent $307 billion more than it took in during the month of February, bringing the budget deficit over the last 12 months up to -$2.15 trillion. That’s the highest in 19 months. Biden, Krugman, Stiglitz and more recently Powell – Keynesian disinflation hoax: Prices continue to rise at a very high level, just a little more slowly than in recent months. Everyone pays the “special inflation tax” for the crazy monetary, financial, economic or debt policies and notices it every day at the cash register or at the gas pump … This is likely the biggest #debt chart on earth, even though it has no actual debt in it! Yet it involves, by far, the biggest bond market on earth. Over the last 120 years, 98% of countries where sovereign debt to GDP hit 130% end up defaulting Bitcoin is siphoning money out of small caps as the Russell 2000 versus the S&P 500 reaches 22 year lows. Volatility has tanked from 23 down to 14.7 $VIX more worried about the Black Swan event in the stock market. The US Policy Uncertainty index has risen to its second-highest level in history, yet credit spreads remain near record lows. Credit markets, especially junk bonds, appear dangerously out of sync with the recent increase in risk. This is an imbalance that seems unsustainable, in my view.  As risk begins to be more accurately priced, I believe we are likely to see a significant widening of credit spreads.