1/The Fed released its Financial Stability Report for Nov 2020. It is always interesting to read the Fed's take on markets and its degree of self awareness. federalreserve.gov/publications/2…
2/Asset Valuations
-Asset prices have generally increased since May, and, when adjusted for low interest rates, valuation pressures appear roughly in line with their historical norms
Seems correct. When expected future cashflows are discounted at these rates, the PV isn't insane
3/Asset Valuations
-Asset prices remain vulnerable to significant declines, given a high degree of uncertainty around the course of the pandemic and the pace of the recovery
Lack of awareness that the Fed can be the greatest source of instability if they ease liquidity.
4/Treasury Yields
-Treasury yields are near historical lows
File this under: "No kidding Sherlock Holmes..." Though no comment about the curve or recent rising long yields.
5/Corporate Debt
-Corporate debt market spreads returned to historical norms, market functioning improved, and issuance resumed
Mention travel/leisure still at wide spreads, but fail to acknowledge their intentional role in managing this 'market'.
6/Equity Prices (the good stuff)
-Equity prices rose sharply, with higher valuations supported, in part, by low interest rates
A lot to unpack in the comments here, with no acknowledgment of their role in yields impacting equity prices.
End/The report continues and includes comments on CRE, Farmland and other real estate. It is worth a read, but mostly tells us what we already know. The tone is that these valuation levels are organic and not a result of Central Bank financial repression.

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More from @BlacklionCTA

19 Nov
Busy Econ Day:
-UI Claims, will it reflect new restrictions?
-Philly & KC Fed
-Existing Home Sales
-EIA Nat Gas, late injection
-Benchmark TIPs Auction $12B Reopening, yesterday's 20yr was rough
-POMO: $3.6B 7-20's
-Bill & Note Announcements, Treasury's needs important
The EU merits attention today. Three (3) Bundesbank speakers and rumors of Madame LaGarde getting on the mic.
Philly Fed Mfg Survey down 6 points. Expect more weakness with NEast USA imposing new restrictions.
Read 5 tweets
18 Nov
#ZB_F was sitting at support, did the 20yr auction push it down?
#ZB_F not recovering and $NQ_F taking notice.
Read 4 tweets
9 Apr
24/April 8, 2020
Fed announced it is temporarily modifying restrictions on Wells Fargo so it can provide additional small businesses support. The change allows WF to make additional small business loans as part of the PPP, and the Fed's forthcoming Main Street Lending Program.
25/April 9, 2020
> Term financing for PPP institutions
> $600B Main St. Lending Program
> PMCCF, SMCCF, and TALF ⬆️$850B
> $500B Municipal Liquidity Facility 🚨
26/April 14, 2020
Fed defers certain real estate appraisals. federalreserve.gov/newsevents/pre…
Read 23 tweets
17 Mar
1/The Fed and FOMC is proactive trying to stave off a credit collapse. Successful so far this is a thread of what steps the Fed has done to date:
Note: This list is not all encompassing, some specific policies are in separate implementation notes.
2/March 3, 2020:
Lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4%.
> Post G7 Conference Call
4/March 12, 2020
> Expand 60B TRMRP to all maturities (coupons)
> $500B 3mos Term REPO offered weekly
> $500B 1mos Term REPO offered weekly
> $175B Daily O/N REPO offer
> $45B 2week Term REPO offer twice weekly
Read 35 tweets
26 Jan
1/I got an update from a friend born/raised in China. She has a biology degree, is not an infectious disease expert, and doesn't claim to be. She is in Taiwan with her Mother right now, staying home, and avoiding crowds, etc. This is her take.
2/Corona virus is highly contagious, easily transmitted. It is going to spread. While she is being prudent and avoiding contact in the short term she is not worried about herself or 1st world countries.
3/The situation in Wuhan hospitals and elsewhere is chaos, not because coronavirus is deadly, if completely untreated, but because China is a 3rd world communist country (her words).
Read 6 tweets

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