1/ Stimulus Indigestion & Crowding-out: 1. Big picture
This is the total balance sheet size of bankcos in the US.
The big jump in March 2020 ($18Tn to $19.5Tn) forced Fed to suspend SLR. corporate bonds among other things were at risk to be crowded out, if no action were taken
This is the total balance sheet size of bankcos in the US.
The big jump in March 2020 ($18Tn to $19.5Tn) forced Fed to suspend SLR. corporate bonds among other things were at risk to be crowded out, if no action were taken
2/ Now we are at $21Tn on 3/10/2021 (pre-stimulus check), this year we would have the following to be added to banks' balance sheet
1. $1Tn TGA balance
2. $3Tn deficit (pre-infrastructure bill)
3. $1Tn from infrastructure bill
Banks need to raise $250Bn to accommodate that.
1. $1Tn TGA balance
2. $3Tn deficit (pre-infrastructure bill)
3. $1Tn from infrastructure bill
Banks need to raise $250Bn to accommodate that.
3/ Context: 2019 they did about $125Bn buyback.
Now they need to raise 2x of that. so understandably, they are not happy.
let's talk about the indigestion next time
Now they need to raise 2x of that. so understandably, they are not happy.
let's talk about the indigestion next time
4/ Let me just add there are also $200Bn RMBS this year (non-Fed share) to be added into the system. Corporate bond etc. Plus various good stuff(shadow bank system, leverage for derivative market etc) that the broker-dealer part of the bank holding companies will need to carry.
5/ So we are at this unprecedent operational regime for banks right now.
No, the system will not collapse, no matter what Zero Edge says.
But I promise you that the market will get very weird, if you are stuck with some traditional framework of thinking.
No, the system will not collapse, no matter what Zero Edge says.
But I promise you that the market will get very weird, if you are stuck with some traditional framework of thinking.
6/ Now please wait for my next installment of Market Noir (should be less than 1 day). 🤣
7/ The best part of Barton's Market Noir is that information has a good chance (70-75%) to be actionable for the next 24hr-7days, as opposed to next 9-18 months. 🤣
• • •
Missing some Tweet in this thread? You can try to
force a refresh
