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16 Jun, 4 tweets, 2 min read
He’s not gonna Taper if stuff rolls over.
I think that the “Tables are Set for a Booming Economy.”

The Bank Reg Tourniquet is gonna getting loosened… So Supply is gonna find Demand for Loans imho… Key is when Loans do come back? I don’t think we are that far away as most think. Let see tho.

$XLF #Reflation
Imho… if they are really gonna loosen Baki Regs.. seems like he’s super serious to the point he was reading off a script when the question came up… then they can hike IOER at least 4 times to 1% w/o Breaking a Sweat in 2022, given backdrop. $XLF #Reflation
The Consensus view is that the Fed has to go to -15% Real Rates or World will End. $DXY & $XLF up today gives one an early look into that thesis being dead wrong imho.

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More from @gamesblazer06

PlungeProtectionTeam Profile picture
18 Jun
The Fed intentionally raised IOER & RRP to start the process.. people clearly sold Bills 4 RRP.. lots of em why Curve flattened some..but GC < IOER & no stress anywhere… no $DXY shortages anywhere…I don’t think Sterilizing is a big deal in this context… but actually necessary.
Banks are encouraging this…not a surprise.. they have been firing Non Op Deposits since last November that don’t hold any LCR or RLAP credit. $JPM has a 160% OpCo LCR it’s way too high…There or others’ issue isn’t a future lack of liquidity… it’s a lack of Balance Sheet..
… imho there’s a big difference between both concepts.. there’s $7 Trillion of XS of Deposits over Loans which for the most part is HQLA. Loan/Deposit ratios is at 60% & 45-50% for GSIBs. They can’t contain any of this liquidity… more draining is great. ImageImage
Read 7 tweets
PlungeProtectionTeam Profile picture
17 Jun
Dow Down 240bps… HY tighter by 1.5bps.

That’s all the Fed cares about is No Disruption to Govt. Bond & Credit Markets… if some hot air comes out of Equities… that’s on you.

$XLF #Reflation
When you have Deflation & Systemic Liquidity Stress on $DXY Up…

… Gold Goes Up Not Down… Gold is a great Deflation & Systemic hedge.
$BKLN Flat.
Read 4 tweets
PlungeProtectionTeam Profile picture
17 Jun
$DXY Ripping Does NOT = Bank Funding Shortage (Global De-Levering #WreckingBall) imho

Here’s one clue… FRA OIS is still pinned at 3bps & NII still stinks…
Partly why Credit markets couldn’t care any less about the 5s30s Curve coz nobody funds at the 5 year point.
Let’s move across the pond to some European Banks… they have almost Zero issues with access to $DXY. 3M Cross FX Basis Spreads are -3bps.. But the Intelligentsia they keep telling me EM & EMEA has a lot of dollar debt.. u know all those BIS Reports and all…
While true that there are large Cross FX Claims…higher $DXY has a marginal impact on debt service.. but higher $DXY just means there’s some marginal increase in debt service.. that could pail in comparison to a Reopen & stronger earnings power that’s lagged by 6 months on Covid.
Read 5 tweets
PlungeProtectionTeam Profile picture
17 Jun
Trouble came & went in 2020 in one of the most Epic Downturns…& Bank Capital proved Super Resilient.
That’s not to say there’s not going to be some Tail in Credit Losses/NCOs rising from now such epically low levels will be close to nothing in 2021… partly coz of Stimmy.. but people forget $2Trillion in XS Savings isn’t all Stimmy.. Regardless the Insane amount of Loss Reserves
that r already built into Capital coz of actions taken to their P&L & BS getting smashed in 1H20 coz of CECL Pulling Forward Loan Loss Reserves for “Lifetime Losses” vs previous “Incurred next 12 months Loss” regime is what killed Banks & Market on Build in 1H20 but also swift V.
Read 6 tweets
PlungeProtectionTeam Profile picture
16 Jun
Great question #SLR
Powell: “We are working on it. Don’t have particulars & timing. We want the Leverage Ratio (SLR) to be a “Backstop” to Risk Based Capital Requirements. When Leverage Ratios are Binding it does skew incentives for firms to substitute Low Risk Assets for High Risk Ones.. it’s a…
“….straightforward thing…& because of the substantial increase in Reserves, “Treasuries” & other Safe Assets in the Banking System the SLR is “Rapidly Ceasing to be the intended Backstop” that we want it to be.”

- Powell $XLF 🔥🔥🔥🔥🔥
Read 4 tweets
PlungeProtectionTeam Profile picture
16 Jun
Isn’t $SQ gonna take a #Bitcoin impairment in 2Q? Just asking for a friend.
Unless they Diamonds Hands it & #Bitcoin rallies like crazy till quarter end.. which is 2 weeks away. $SQ
What happens to $SQ when Debit GPV starts to flail after Stimmy runs dry.. & lower cost Debit starts to recede & Credit finally takes over later this year… & people figure out Cash App & $SQ ain’t nothing but a #Bitcoin platform that purchases $170MM of this Spec stuff at highs.
Read 5 tweets

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