β‘οΈπΊπΈβ’οΈπ£Here is a link to Jen's policy brief: "The US Dollar's dominance as a reserve currency is rapidly eroding."
In terms of content, there is nothing new there, we are attaching a couple of graphs from the material that speak for themselves.
In terms of content, there is nothing new there, we are attaching a couple of graphs from the material that speak for themselves.
β‘οΈπΊπΈπ²π± Goldman Sachs: US default already in June
πA full blown debt ceiling crisis that could push the US economy into recession if the government does not take any action will happen as early as June, not August . The downside outlook was affected by lower tax revenues, as well as financial market turmoil, fueled by the ongoing fight to raise foreign borrowing limits in Congress.
π‘As a result, the cost of insuring US sovereign debt rose to its highest level since 2011 at 50 basis points. Investors are increasingly trying to protect their investments, which they are afraid of losing in the event of a default.
πA full blown debt ceiling crisis that could push the US economy into recession if the government does not take any action will happen as early as June, not August . The downside outlook was affected by lower tax revenues, as well as financial market turmoil, fueled by the ongoing fight to raise foreign borrowing limits in Congress.
π‘As a result, the cost of insuring US sovereign debt rose to its highest level since 2011 at 50 basis points. Investors are increasingly trying to protect their investments, which they are afraid of losing in the event of a default.
β‘οΈπΊπΈβ’οΈπ£ The brief look on current situation:
βͺοΈUS Treasury cash assets on Fed account rose to $265.1 billion. The tax season is in full swing, but the tax collection is not impressive compared to last year's period.
βͺοΈThey say they want to raise the ceiling for 1.5 trillion there, cutting spending 3 times... but due what account? Pentagon?
βͺοΈThe structure of short-term interest rates has finally broken down: the 1-month Treasury bill is trading 170+ basis points below the federal funds rate. The spread has not been so negative since 2008.
βͺοΈ Fed lending to banks increased last week: the crisis is not over. Loans through the discount window rose 3.4% to $69.9bn. BTFP loans rose 3% to $74bn. QT is sluggish at $17bn. Foreign securities swaps are down $10bn to $20bn.
βͺοΈ US debt credit default swaps jump to highest level since 2011
βͺοΈFormer US Treasury Secretary Larry Summers warns that there is "growing recognition of the fragmentation" of the world and that the US "may not be the best fragment to identify with." Larry is right.
___________________________
Bank reserves in the US system fell by $183 billion in a week to $3.164 trillion due to an increase in TGA (tax payment), while reverse repo reserves (RRP) remain stable at $2.3 billion:
Liquidity injections since the SVB crisis appear to have reached their peak, with the Fed's balance sheet shrinking by $141 billion in 4 weeks. As bank reserves continue to dwindle in the coming weeks, net liquidity in financial markets will quickly evaporate. Be careful.
βͺοΈUS Treasury cash assets on Fed account rose to $265.1 billion. The tax season is in full swing, but the tax collection is not impressive compared to last year's period.
βͺοΈThey say they want to raise the ceiling for 1.5 trillion there, cutting spending 3 times... but due what account? Pentagon?
βͺοΈThe structure of short-term interest rates has finally broken down: the 1-month Treasury bill is trading 170+ basis points below the federal funds rate. The spread has not been so negative since 2008.
βͺοΈ Fed lending to banks increased last week: the crisis is not over. Loans through the discount window rose 3.4% to $69.9bn. BTFP loans rose 3% to $74bn. QT is sluggish at $17bn. Foreign securities swaps are down $10bn to $20bn.
βͺοΈ US debt credit default swaps jump to highest level since 2011
βͺοΈFormer US Treasury Secretary Larry Summers warns that there is "growing recognition of the fragmentation" of the world and that the US "may not be the best fragment to identify with." Larry is right.
___________________________
Bank reserves in the US system fell by $183 billion in a week to $3.164 trillion due to an increase in TGA (tax payment), while reverse repo reserves (RRP) remain stable at $2.3 billion:
Liquidity injections since the SVB crisis appear to have reached their peak, with the Fed's balance sheet shrinking by $141 billion in 4 weeks. As bank reserves continue to dwindle in the coming weeks, net liquidity in financial markets will quickly evaporate. Be careful.
β‘οΈπΊπΈβ’οΈπ£ A recently declassified US government document confirmed what the alternative media has been reporting for years: that the 9/11 attacks were an internal act carried out by US government entities (but there is one important caveat, more on that in a moment).
Former CIA director John Brennan disappeared from view after the release of a sensational Guantanamo military commission court document that says his department recruited two hijackers ahead of 9/11 before they flew planes into the World Trade Center buildings.
π₯ The most important thing is not the information per se, because it is well known fact that was widely introduced and discussed in the net for a long time. The most important thing is the timing of publication and it is official confirmation, when global politics is actively re-shaping.
Former CIA director John Brennan disappeared from view after the release of a sensational Guantanamo military commission court document that says his department recruited two hijackers ahead of 9/11 before they flew planes into the World Trade Center buildings.
π₯ The most important thing is not the information per se, because it is well known fact that was widely introduced and discussed in the net for a long time. The most important thing is the timing of publication and it is official confirmation, when global politics is actively re-shaping.
β‘οΈπͺπΊβ’οΈπ£EUR Bulls are hoping for some hawkish commentary from the European Central Bank's policymakers and for plenty of data that suggests the central bank could keep rates higher for longer than the Federal Reserve.
The premium of U.S. market rates over their European counterparts reached their narrowest in many months in early April, on the view that U.S. rate cuts are coming later this year while borrowing costs in Europe have further to climb.
Those expectations have pushed the euro, the pound and the Swiss franc to multi-month highs, although this rally could lose steam as markets reassess whether Fed cuts are really coming.
Anything that dents the dollar's yield appeal should help keep European currencies looking perky, at least for now. Reuters
The premium of U.S. market rates over their European counterparts reached their narrowest in many months in early April, on the view that U.S. rate cuts are coming later this year while borrowing costs in Europe have further to climb.
Those expectations have pushed the euro, the pound and the Swiss franc to multi-month highs, although this rally could lose steam as markets reassess whether Fed cuts are really coming.
Anything that dents the dollar's yield appeal should help keep European currencies looking perky, at least for now. Reuters
β‘οΈπͺπΊβ’οΈπ£Goldman Sachs on Tuesday raised its terminal rate forecast for the European Central Bank (ECB) to 3.75%
from 3.5%, citing easing worries about the banking system, signs of underlying inflation remaining strong and generally hawkish commentary from policymakers.
Goldman economists expect the ECB to raise rates by 25 basis points (bps) in May, June and July, but said the choice between a 25 bps and a 50 bps increase in May will be a close call due to lower banking risks, growth resilience and strength in underlying inflation. Reuters
from 3.5%, citing easing worries about the banking system, signs of underlying inflation remaining strong and generally hawkish commentary from policymakers.
Goldman economists expect the ECB to raise rates by 25 basis points (bps) in May, June and July, but said the choice between a 25 bps and a 50 bps increase in May will be a close call due to lower banking risks, growth resilience and strength in underlying inflation. Reuters
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β‘οΈπΊπΈβ’οΈπ£ Cool idea - visualization of the S&P 500 in 2023 π
β And additionally visualization by day
β And additionally visualization by day
βοΈβ’οΈπ£ - πΊπΈSteve Bannon: China is dropping a bomb - questioning Ukraine's "sovereignty"...
Steve Bannon: The collapse of the EU, when Xi enters the game with his own hands...
Steve Bannon: The collapse of the EU, when Xi enters the game with his own hands...
β‘οΈπΊπΈβ’οΈπ£π΅π£Bloomberg - Four reasons for the dollar to fall further
πNearly 90% of the >330 economists surveyed by Bloomberg believe that the Fed's key rate will drop to 3% or lower in the foreseeable future. 40% believe that the regulator will start easing monetary policy already this year . There have already been historical examples of divergence not in favor of the dollar. From August 2007 to April 2008 (!) the Fed lowered the rate by 325 basis points. And the ECB raised it by 25 bp. in July 2008.
π―π΅The second reason is the possible strengthening of the yen. Experts do not exclude that the new head of the Bank of Japan, Katsuo Ueda, deliberately projects the image of the most boring functionary. Something may be hiding behind this facade, and by βsomethingβ we mean unexpected decisions in monetary policy that play into the hands of the yen.
π¨π³The third is, of course, the yuan. Citigroup has a separate indicator, the Economic Surprise Index for China, and it is now at its highest level since 2006. At the same time, the yuan has grown by only 1% since the beginning of 2023 against a wide basket of currencies. There is a clear discrepancy, and in the foreseeable future it can be eliminated.
πAnd the fourth is de-dollarization as such, without being tied to new favorites . A third of economists surveyed by Bloomberg believe that within 6-10 years the dollar's share of world reserves will be reduced to less than half. Moreover, another 20% are sure that 2-5 years will be enough for this. However, there are also about 18% of economists who are confident in the role of the dollar as a hegemon for another quarter of a century - or even an eternity.
πNearly 90% of the >330 economists surveyed by Bloomberg believe that the Fed's key rate will drop to 3% or lower in the foreseeable future. 40% believe that the regulator will start easing monetary policy already this year . There have already been historical examples of divergence not in favor of the dollar. From August 2007 to April 2008 (!) the Fed lowered the rate by 325 basis points. And the ECB raised it by 25 bp. in July 2008.
π―π΅The second reason is the possible strengthening of the yen. Experts do not exclude that the new head of the Bank of Japan, Katsuo Ueda, deliberately projects the image of the most boring functionary. Something may be hiding behind this facade, and by βsomethingβ we mean unexpected decisions in monetary policy that play into the hands of the yen.
π¨π³The third is, of course, the yuan. Citigroup has a separate indicator, the Economic Surprise Index for China, and it is now at its highest level since 2006. At the same time, the yuan has grown by only 1% since the beginning of 2023 against a wide basket of currencies. There is a clear discrepancy, and in the foreseeable future it can be eliminated.
πAnd the fourth is de-dollarization as such, without being tied to new favorites . A third of economists surveyed by Bloomberg believe that within 6-10 years the dollar's share of world reserves will be reduced to less than half. Moreover, another 20% are sure that 2-5 years will be enough for this. However, there are also about 18% of economists who are confident in the role of the dollar as a hegemon for another quarter of a century - or even an eternity.
β‘οΈβ’οΈπ£πΉπΌRecession in factories in Taiwan | Industrial production falls amid weak global demand .
It fell 14.5% last month from a year earlier, the biggest decline since May 2009 - just after the global financial crisis - for any month other than January and February (those months are often misrepresented by the Lunar New Year holiday) .
Structural crisis? Never heard about it...π
It fell 14.5% last month from a year earlier, the biggest decline since May 2009 - just after the global financial crisis - for any month other than January and February (those months are often misrepresented by the Lunar New Year holiday) .
Structural crisis? Never heard about it...
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βοΈβ’οΈπ£ - πΊπΈπ¦γ½οΈAmerican First Republic Bank collapsed 29% after the market opened.
FRB has released statement yesterday after trading day close. What is in there? It shows that in principle it is impossible to rely on bank statements in the context of "Statements of income" when assessing the potential risks of banks.π
Despite the fact that the FRB was almost destroyed, the bank reported a profit of 229 million compared to 364 million a year earlier.π
The problem is that the bank took on super-expensive loans at 4.8% rates, with a weighted average yield on loans of 3.73%, and on securities at 3.08%, creating a huge gap in returns between liabilities and assets, which in the short term will lead to huge lossesπ€
And it has reported profitπ. Now spread this over whole small and mid banking sector and you understand what is going on...π€
FRB has released statement yesterday after trading day close. What is in there? It shows that in principle it is impossible to rely on bank statements in the context of "Statements of income" when assessing the potential risks of banks.
Despite the fact that the FRB was almost destroyed, the bank reported a profit of 229 million compared to 364 million a year earlier.π
The problem is that the bank took on super-expensive loans at 4.8% rates, with a weighted average yield on loans of 3.73%, and on securities at 3.08%, creating a huge gap in returns between liabilities and assets, which in the short term will lead to huge losses
And it has reported profitπ. Now spread this over whole small and mid banking sector and you understand what is going on...
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βοΈβ’οΈπ£ - πΊπΈAccording to The Economist , America's banks are missing hundreds of billions of dollars.
They said: over the past year, commercial banks have sunk by half a trillion dollars, a drop of almost 3%. This makes the financial system more fragile as banks have to contract to pay off their deposits.
They said: over the past year, commercial banks have sunk by half a trillion dollars, a drop of almost 3%. This makes the financial system more fragile as banks have to contract to pay off their deposits.
β‘οΈβ’οΈπΊπΈ πConsumer confidence in the US fell to its lowest level since July amid a deteriorating outlook
"Consumers have become more pessimistic about the outlook for both business conditions and the labor market," said Ataman Oziildirim, senior director of economics at the Conference Board.
"Consumers have become more pessimistic about the outlook for both business conditions and the labor market," said Ataman Oziildirim, senior director of economics at the Conference Board.
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β‘οΈπΊπΈβ’οΈπ£Thus far, one of the key takeaways from this earnings season is that profits have begun to disappoint while revenues have remained resilient.
This is a common trend during a business cycle downturn.Recent reports indicate that corporate profits have fallen by 13%. Source
This is a common trend during a business cycle downturn.Recent reports indicate that corporate profits have fallen by 13%. Source
β‘οΈπ’β’οΈπ¨π³Rumors are making rounds that Saudi Arabia is selling oil for yuan, which it converts into gold on the Shanghai International Gold Exchange (SGEI). Zerohedge