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Aug 4, 2020 10 tweets 6 min read Read on X
Anyone who has followed me since QT began in late ‘17...know these charts are a Summation of my work for the last 2+ years... from the Peak of the Credit Cycle in January 2018.
#BankReserves
As they say Tops are a Process (u can make a lot of 💰waiting in ).. & Bottoms are Events.
Tsy Strips have done absolutely nothing but lose money -3% since its March 9, 2020 Peak.

Total Returns: (Since March 23)

: +118%
: +55%
: +49%
: +48%
: +46%
: +37%

#Reflation
not shabby +27% since then..as close as u will get as an equity proxy.
Barclays HY OAS +471bps... from a peak of 1,100bps on March 23.
Markets are healing... so Lending Standards aren’t gonna be tight forever. #Reflation Image
Ultimate Arbiter of Truth are always the Govt. Bond Markets... The #Deflation & De-Leveraging Credit Cycle began with QT in Jan 2018... in all likelihood ended in March 2020.. given QE Bank Cash Liquidity. -Ve Real Rates did the Trick.. don’t last forever.
#Reflation #FSOC Image
CCC OAS already lapping Lending Standards.. healing trend.. gapping down from a recent peak ..got to ~20% OAS..Not every recession has to be a Financial Crisis with Banks...especially with this amount of capital going into Recession..& huge liquidity now.

. #Reflation ImageImageImage
10 Yr Real Rates now -1.0%... May have put in a bottom on Aug 5th at -1.06%? Regardless, even if not... this is a 2+ Std Deviation Left Tail. Real Rates aren’t gonna be this low forever..Bear Steepening coming. Imho Playing with #DV01 Fire.
#Reflation #PyroManiacs
200x P/E Image
10 Year getting lit up this morning.
Yields up to 70bps +5bps.
#DV01
This only gets worse for the guys pretending that is the only game in town... It’s Cyclicals.. getting worse from when they were jamming everyone into & on Deflation. Heck horrendous RV..
Real Rates starting to bottom? TBD
2 Standard Deviation Left Tail in a Massive Bubble with #DV01 Risk rising fast. Long Bonds & in Purgatory -8% since March peak.
#Reflation #Sequencing Image

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More from @gamesblazer06

Nov 2, 2022
Problem with the Fed is they suddenly have this view that they can just put the Deflation toothpaste back in the tube with the utmost of ease. It’s very complacent, unfortunately.
This is nothing like the 1970s to even use a Volcker playbook is flat out wrong.
There are enough Academics & Street Intelligentsia that are convinced Inflation is entrenched like the 1970s… thus the issue.
Read 4 tweets
Nov 2, 2022
CPI 8.2%… 1 Year Breakevens 2.85%

5Y5Y 2.66%… we were North of 3% in 2011 & 2012 when we were fighting Deflation at ZIRP.
The Bond Markets don’t believe in entrenched LT Inflation.
The irony is… they never did all the way up to 9% CPI. Peak in 5Y5Y Inflation Swaps were at 2.85% in late April.
Read 4 tweets
Nov 1, 2022
Decent thread… I would say around 1Q23 we see Terminal Reserves. This year more of a Balance Sheet Scarcity issue v Liquidity at GSIBs (small nuance that ultimately ends in less intermediation)..& QT can actually free up more Balance Sheet for 2023 in conjunction with RWAs down
Banks have overcome SCB & GSIB Scores get better with less liquidity.. via solid retained earnings + suspended buybacks in 2022…plus at Basel IV end state so SLR relief also on the horizon especially if Congress changes hands, but heavy lifting already largely done in 2022.
So that’s on the Balance Sheet side that’s clearing up… now strictly on Liquidity let’s remember MMFs absolutely provide liquidity into Sponsored FICC Repo which is low Sheet usage coz Netting + also Triparty… so Cash moving from $2.3T RRP would foam runway for further QT….
Read 12 tweets
Oct 31, 2022
“Internal metrics thus far in October suggest continuing solid performance in 4Q22 as Sep did v Aug & Aug v July. It’s certainly possible things could change for the worse..but that would require an adverse change that we don’t broadly see in current environment.”
- $GPN CEO
$GPN clears $900B+ of annual Merchant Processing Spending Volume w 3Q22 at +11% YoY.
First Data TrendSpend +9.33% YoY for the Full Month of October.. that’s 1/3 of 4Q22.
Read 5 tweets
Oct 14, 2022
$JPM 3Q22 Solid Beat:

Rev $33B +10% YoY
NII $17.5B +35% YoY (Once again Raising FY22 Guidance to $66B on Hikes & subdued Deposit Betas)
Loans +7% YoY w Flat Deposits YoY… Fed’s draining continues but Bank Liquidity is extremely strong w 113% HoldCo LCR & Bank OpCo at 165%…
Reverse Repo was down 6% QoQ…not surprising given GC/SOFR still at RRP Floor & massive Hikes offering huge IORB returns w Loan Growth that’s partially been funded on RWAs at expense of Cap Markets.. $JPM usually Repo Liquidity provider at 11AM Repo Stress..& prices accordingly.
Front End Stress non existent.. given huge Buffers.. but Long End Stress was coz SLR etc… still needs recalibration.. better to front run $JPM imho… they will ultimately be buyers…
Read 13 tweets
Oct 12, 2022
September PPI Final Demand +0.4% MoM… last month MoM revised down to -0.2% MoM.. +8.5% YoY.

Core PPI +7.2% YoY v +7.3% YoY in August.

PPI Series Peaked in March 2022 at +11.7% YoY. Core CPI Series peaked in March at +9.7% YoY.

Inflation Deceleration continues..
September CPI… +8.2% YoY vs a recent high of +9.1% YoY in June.

Core CPI +6.6% YoY took out +6.3% YoY high in March.. Core driven mainly by Rents… Rental Appreciation is BLS sticky… But in the Real World appreciation has been cut in 1/2 already.

Energy down big…
BLS OER Estimates are +6.7% YoY v +6.3% YoY in August…

OER Growth Rate is in a +2.78 Sigma Right Tail Bubble (data since 1984)…

We already know Rental Growth has been cut in 1/2 in September in the Real World.. Ask Sternlicht or Redfin.

Rental Bubble already popped.. Image
Read 28 tweets

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