Offshore
Photo
App Economy Insights
🏈 Is Google winning against Disney?
Contract talks broke down.
YouTube TV pulled Disney’s channels.
Now Disney's bleeding ~$4M/day.
Is distribution the real moat?
Here's what's at stake, visualized.
https://t.co/dPgqloJ2SF
tweet
🏈 Is Google winning against Disney?
Contract talks broke down.
YouTube TV pulled Disney’s channels.
Now Disney's bleeding ~$4M/day.
Is distribution the real moat?
Here's what's at stake, visualized.
https://t.co/dPgqloJ2SF
tweet
Offshore
Photo
Finding Compounders
Li Lu on the points that changed his life after he attended a Warren Buffett lecture. https://t.co/HUJXYx5PvW
tweet
Li Lu on the points that changed his life after he attended a Warren Buffett lecture. https://t.co/HUJXYx5PvW
tweet
Offshore
Photo
Finding Compounders
Another investment Li Lu talked about during his lecture at CBS is his investment into Hyundai Department Store H&S.
Li Lu says it should only take 5minutes to go through a S&P manual page before deciding whether you want to dive deeper
This is the page Li Lu saw. https://t.co/4v7N9jwvZX
tweet
Another investment Li Lu talked about during his lecture at CBS is his investment into Hyundai Department Store H&S.
Li Lu says it should only take 5minutes to go through a S&P manual page before deciding whether you want to dive deeper
This is the page Li Lu saw. https://t.co/4v7N9jwvZX
tweet
Offshore
Photo
Finding Compounders
Jim Simons lecture : Mathematics, Common Sense and Good Luck https://t.co/IlH8WHGUvK
tweet
Jim Simons lecture : Mathematics, Common Sense and Good Luck https://t.co/IlH8WHGUvK
tweet
EndGame Macro
When the Buffers Run Thin: Reading the Fed’s Balance Sheet in Real Time
If you look at the latest H.4.1 without getting lost in the line items, the message is pretty simple: the Fed has taken QT about as far as it can go without pressing directly on the parts of the system that actually matter. The asset side is still huge at roughly $6.58 trillion but the shift isn’t happening there. The interesting story is on the liability side, where you can see how QT, Treasury behavior, and foreign flows are all tightening the same bolts at the same time.
The Fed still holds an enormous pile of securities: just over $4.19 trillion in Treasuries and around $2.07 trillion in MBS. QT shaved a few hundred billion off those totals over the past year, but in the grand scheme it barely dents the mountain. Ending QT on December 1 simply freezes the portfolio where it is and lets it slowly tilt toward more Treasury bills as older MBS run off. It’s not a shift back to QE, it’s more like pressing pause and letting time shorten the duration profile.
Where the Real Tightness Is Coming From
The real pressure shows up on the liability side, the plumbing that determines how far QT can go before something breaks. Bank reserves are down almost $400 billion over the past year. Reverse repo balances fell by more than $200 billion. And now the Treasury General Account is sitting around $943 billion not quite a trillion, but still very high which means Treasury has rebuilt a large cash buffer. Every time they issue debt and leave the cash idle in the TGA instead of spending it, it quietly drains liquidity out of the banking system. Add to that the steady rise in physical currency in circulation, and you have another slow but constant pull on reserves.
Those pieces might look separate, but they all push in the same direction: the pool of easy excess liquidity has thinned out. Early in QT, most of the balance sheet shrinkage came from the reverse repo facility, a giant pool of cash money markets had parked at the Fed because they had nowhere else to put it. That buffer is mostly gone now. Any further QT would hit bank reserves directly, and the Fed remembers what happened in 2019 when reserves got too close to the floor. They have no desire to run that experiment again, especially now with larger deficits, heavier issuance, and more complicated global flows.
This is where the foreign side matters. The H.4.1 shows roughly $3.06 trillion in U.S. securities that foreign central banks and international institutions hold in custody at the Fed. That’s the official sector…reserve managers, sovereign wealth authorities, multilaterals, not traders. They still hold a massive amount of Treasuries, but over the past year they reduced those holdings by about $264 billion. That doesn’t mean a dump; it just means they weren’t adding to their positions during a period when the Treasury needed buyers and the Fed was letting its own portfolio shrink. Even foreign use of the Fed’s reverse repo facility has ticked slightly lower, which is another gentle sign that they’re not adding liquidity the way they did in past cycles.
Put all of that together and the picture comes into focus. The Fed still has a huge portfolio. Foreign official holdings remain enormous. But the buffers that made QT look effortless for a while…giant RRP balances, steady foreign accumulation, a smaller TGA have all moved in the opposite direction. So now, every additional step of QT would mostly come out of bank reserves at a time when nobody wants to find out where the new lower bound actually sits.
Ending QT here isn’t a dramatic pivot. It’s the Fed reading the room. The official sector isn’t stepping in to absorb more supply, Treasury is pulling liquidity by running a fat TGA, and the easy drains have been used up. Better to stop tightening the plumbing before the plumbing starts tightening them.
Interactive guide to our weekly #BalanceSheet report: https://t.co/75xiVY3BGu #FedData - Federal Reserve tweet
When the Buffers Run Thin: Reading the Fed’s Balance Sheet in Real Time
If you look at the latest H.4.1 without getting lost in the line items, the message is pretty simple: the Fed has taken QT about as far as it can go without pressing directly on the parts of the system that actually matter. The asset side is still huge at roughly $6.58 trillion but the shift isn’t happening there. The interesting story is on the liability side, where you can see how QT, Treasury behavior, and foreign flows are all tightening the same bolts at the same time.
The Fed still holds an enormous pile of securities: just over $4.19 trillion in Treasuries and around $2.07 trillion in MBS. QT shaved a few hundred billion off those totals over the past year, but in the grand scheme it barely dents the mountain. Ending QT on December 1 simply freezes the portfolio where it is and lets it slowly tilt toward more Treasury bills as older MBS run off. It’s not a shift back to QE, it’s more like pressing pause and letting time shorten the duration profile.
Where the Real Tightness Is Coming From
The real pressure shows up on the liability side, the plumbing that determines how far QT can go before something breaks. Bank reserves are down almost $400 billion over the past year. Reverse repo balances fell by more than $200 billion. And now the Treasury General Account is sitting around $943 billion not quite a trillion, but still very high which means Treasury has rebuilt a large cash buffer. Every time they issue debt and leave the cash idle in the TGA instead of spending it, it quietly drains liquidity out of the banking system. Add to that the steady rise in physical currency in circulation, and you have another slow but constant pull on reserves.
Those pieces might look separate, but they all push in the same direction: the pool of easy excess liquidity has thinned out. Early in QT, most of the balance sheet shrinkage came from the reverse repo facility, a giant pool of cash money markets had parked at the Fed because they had nowhere else to put it. That buffer is mostly gone now. Any further QT would hit bank reserves directly, and the Fed remembers what happened in 2019 when reserves got too close to the floor. They have no desire to run that experiment again, especially now with larger deficits, heavier issuance, and more complicated global flows.
This is where the foreign side matters. The H.4.1 shows roughly $3.06 trillion in U.S. securities that foreign central banks and international institutions hold in custody at the Fed. That’s the official sector…reserve managers, sovereign wealth authorities, multilaterals, not traders. They still hold a massive amount of Treasuries, but over the past year they reduced those holdings by about $264 billion. That doesn’t mean a dump; it just means they weren’t adding to their positions during a period when the Treasury needed buyers and the Fed was letting its own portfolio shrink. Even foreign use of the Fed’s reverse repo facility has ticked slightly lower, which is another gentle sign that they’re not adding liquidity the way they did in past cycles.
Put all of that together and the picture comes into focus. The Fed still has a huge portfolio. Foreign official holdings remain enormous. But the buffers that made QT look effortless for a while…giant RRP balances, steady foreign accumulation, a smaller TGA have all moved in the opposite direction. So now, every additional step of QT would mostly come out of bank reserves at a time when nobody wants to find out where the new lower bound actually sits.
Ending QT here isn’t a dramatic pivot. It’s the Fed reading the room. The official sector isn’t stepping in to absorb more supply, Treasury is pulling liquidity by running a fat TGA, and the easy drains have been used up. Better to stop tightening the plumbing before the plumbing starts tightening them.
Interactive guide to our weekly #BalanceSheet report: https://t.co/75xiVY3BGu #FedData - Federal Reserve tweet
www.federalreserve.gov
Fed's balance sheet
The Federal Reserve Board of Governors in Washington DC.
Offshore
Video
Finding Compounders
Every time Don Keough brought up New Coke, he made it simple: ‘We tried something. People hated it. So we fixed it.’ Sometimes that’s all it is.” https://t.co/lVsE75zPmx
tweet
Every time Don Keough brought up New Coke, he made it simple: ‘We tried something. People hated it. So we fixed it.’ Sometimes that’s all it is.” https://t.co/lVsE75zPmx
tweet