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- Unlimited Trsy/MBS + new agy CMBS buys
- $300bn ESF backed by $30bn from UST
- PMCCF to buy new bond/loans
- SMCCF to buy existing corporates
- TALF to buy ABS (student loans, autos, credit card, SBA)
- VRDNs and bank CDs added to MMLF
- CPFF adds munis
federalreserve.gov/newsevents/pre…
This is going full-ECB and they're definitely going bigger. "Main Street Business Lending Program" will be a CCF/TALF for SME loans.
Primary and secondary facility term sheets. Secondary facility CAN BUY ETFs, buh-bye ETF discounts.
TALF is an open bid for any fund that is long high quality ABS and needs liquidity.
Fed stated estimate is all this comes to $300bn...could be right but looks at face to be way, way larger than that given how much carry they're incentivizing.
This seems under-discussed. Discuss!
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George Pearkes
@pearkes
Anybody that tells you we can just open things back up and the economy will hum right back to life after a shock this big is lying to you, please for the sake of working people stop listening to them. (OpenTable restaurant dine-in visit traffic, YoY % change)
It's hard to imagine a worse policy course right now than "get America back to work". Thousands - possibly a lot more - will die needlessly, the recovery in output will not take care of itself, and the end of lockdowns will be used to argue against stimulus.
You have to be an absolute ghoul to both understand how massive demand shocks, services sector margins, and balance sheets work to want this outcome. Do not listen to anybody that argues for it, they're hurting people either intentionally or through lack of comprehension.
Read 6 tweets
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George Pearkes
@pearkes
Seeing some confusion over what the Fed is/isn't buying.

What they are buying:
- UST
- MBS backed by Fannie/Freddie/Ginnie, incl. CMBS

What they are not buying:
- corporate bonds
- corporate bond ETFs
- ABS
- commercial paper
- etc.

Wait what? Yes.
On the Fed's balance sheet recorded as assets will be loans to legal entities ("SPVs") that are owned by the US Treasury. The Treasury puts up cash, then this small entity borrows from the Fed at scale, giving it WAY more $ than the equity put in by Treasury.
In practice, given the leverage with which the Fed will be lending to the SPVs, this is a distinction without difference.

But it's important to understand the basic mechanics at work here if you're going to do something other than trade headlines IMO.
Read 4 tweets
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George Pearkes
@pearkes
Some stuff on Uber, using a quick survey of media reports on their financial conditions back to Q4 '16.

Using Uber's "Adjusted net loss" figure (-768mm in Q4), I show YoY incremental margins of -35.7% on a net revenue basis, -9.5% on a gross revenue basis.
Keep in mind that the adjusted figure is all sorts of hokey, massaged, and made pretty.
Gross revenue = what people pay for rides
Net revenue = what Uber gets after drivers.

"Net" (see above) incremental margins are negative, but they have been on a YoY basis for quite a while now.

What's really crazy is the incremental margin on *gross* revenue is also negative.
Read 8 tweets

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Mayank Jain
@jainmayank_943
1/ Thread on the fascinating Credit Card economics ahead of SBI Cards IPO. Quoting someone - “Credit Cards (CC) is in the business of transferring money from poor to the rich.''
2/ Qn I’ve always wondered: is credit card a payments product? Or is it a rewards product? Or is it a credit product? Or is it a social status signalling product? Or is it all of them? Let’s uncover this.
3/ Total consumer to merchant flow in India is >$1.2T, of which $100B i.e. ~7% flows via CC (same as DC). While the share of offline merchant flow is ~4%, the share of online flow is as high as >35%.
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Bill Dedman
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Under President Trump, banking regulators have slowed enforcement of laws against racial discrimination in lending. A thread...
#fairlending #fairhousing #redlining #thecolorofmoney @CFPB @FDICgov @federalreserve @TheNCUA @USOCC @HUDgov @TheJusticeDept
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Either redlining and lending discrimination by race have nearly disappeared, or the law enforcement has nearly disappeared.
#fairlending #fairhousing #redlining #thecolorofmoney @CFPB @FDICgov @federalreserve @TheNCUA @USOCC @HUDgov @TheJusticeDept
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The new information is disclosed in a new Department of Justice report that seems to have stayed under the radar.
#fairlending #fairhousing #redlining #thecolorofmoney @CFPB @FDICgov @federalreserve @TheNCUA @USOCC @HUDgov @TheJusticeDept
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www.rahkimsabree.com
@finance_fridays
My first approved credit card had a $500 limit. That same car today has a $50,000 limit. Here’s how I did it (not to be taken as advice!):
In the early stages of my building credit my score was impacted by delinquent student loan payments (30 day, 60 day, 90 day, 120 day) which I knew were going to be on my report for 7 years (yikes). I had to navigate around these delinquencies as much as I could.
I decided to take an aggressive approach to credit building. First of all I brought my student loan payments current. Secondly I made sure I paid my credit card on time every month, more than the minimum AFTER the bill would post a “statement balance” (major 🔑)
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Trinh Nguyen
@Trinhnomics
An important read & a key public policy of our time. The solution isn't more free $ but education: we need to teach people about opportunity costs & redefining middle class. The macro story of this u know - Americans borrow to consume.

But why & on what?
wsj.com/articles/famil…
If u look at US household debt as a share of GDP, then the US has deleveraged (from ~100% peak GFC to ~80% of GDP). But that's not the whole story:
a) Most consumption done by the poor & middle class (rich people have everything & so invest);
b) They borrow to CONSUME not invest.
The growth of Americans borrowing to consume & not invest surpasses those that borrow to buy a house (theory is that they build equity over time & not go on a binge to fill up McMansions);

What are the non-housing debt? Student loans/autos/credit cards.
Read 13 tweets

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