The WSJ just released a Janet Yellen Op-Ed imploring congress to raise the debt ceiling.

Maybe this is not the done deal everyone thinks it is ... a thread to offer some thoughts.

So who is Yellen talking to here?

The democrats have the presidency and the majority in the House and the tie-breaking vote in the Senate (50/50, VP breaks ties).

They do not need a single republican vote to raise the debt ceiling.

So what is Yellen worrying about?

Could it be that Biden is losing political cloud?

As this chart shows, and I have mentioned in previous tweets, we are a very polarized country. No one ever changes their opinion (for or against). So a move of this size is significant.
Evidence of this loss of clout is abundant, Joe Manchin (D, WV) is turning against the leader of his party's (Biden) spending plans.…

Ditto Kyrsten Sinema (D, AZ). She is running around the capitol with spreadsheets redesigning her parties spending plans (read: reducing them).

Bernie Sanders has said he will vote no to lesser spending plans. Right now, Biden cannot win.

So, is Yellen talking to her own party? Is she worried the democrats are the problem? It certainly is when it comes to Biden's spending plans.

If so, it all comes back to his approval rating collapse over the last two months.


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More from @biancoresearch

21 Sep
Gensler taught a blockchain class at MIT. When he was nominated the crypto universe was excited as a guy that "gets it."

Now we see he really thinks the entire space (incl BTC) is a giant scam and his agency must protect investors from themselves.

What is going on here?

Gensler is a career bureaucrat, nothing more, nothing less.

That means he gets important positions of power and he gets to be in the room when the policy is formulated, and offer his opinion, and it will be seriously considered.

But when the policy is made (read: Yellen decides) Gensler is to prostitute to the full force of his office/reputation to sell it. And sell it like he means it!

Otherwise, they will find another bureaucrat and he can go back to MIT.

This is how Washington works.

Read 5 tweets
19 Sep
An addendum to this thread about the debt ceiling debate maybe moving from non-event to event.

Two issues to clarify.


First, the Ds have the ability to raise the debt ceiling by themselves, explained here. So, they are not hostage to a filibuster.

BUT! This assumes the Ds are in agreement on a spending bill. As I noted in my earlier tweet, they are not.

In 2013 the SEC ruled that any Govt sec that does not pay on maturity date is in technical default and must be valued at $0.

So, money market funds holding T-Bills maturing while in a debt ceiling fight, must market them at $0 until paid.

Read 5 tweets
15 Sep
A thread about transitory vs persistent inflation and why persistent might be actually be winning.

This comes from @economics And it breaks down CPI by reopening and non-reopening components.
Of the 5.25% inflation rate in the last year, only 1.62% was reopening components.

Breaking it down for August we find that reopening CPI components (or transitory inflation) FELL by 0.22% while CPI non-reopening components (or persistent inflation) ROSE by 0.35%

Detailing this we find that CPI non-reopening (persistent) components are surging to its highest monthly level since at least 2016.

Restated, this series of persistent inflation is trending higher, and is 78% of overall CPI.

Read 6 tweets
3 Sep
Ok, Biden troubles are worsening. Joe Manchin (D-WV) is abandoning him (for now?)

This is Manchin's op-ed in today's WSJ

Remember the Senate is 50/50 so losing Manchin (for good) sinks the bill.…

Maybe this chart is making Manchin worry about blindly following the leader of his party.

Recall that we are a very polarized country. The vast majority of the country will NEVER change its opinion about a President (for or against). So this is a big move.

How bad is this for Biden. This chart shows Biden's approval rating decline since July 9 (his recent peak) after the COVID turned higher and Afghanistan vs Trump's Nov 11 peak, after the Election and the Jan 6th protest.

Biden's approval rating is taking a bigger hit.

Read 7 tweets
27 Aug
Worth noting that this is the Fed's fourth tapering attempt in the last 13 years.
All tapers end when the economy weakens (2012 leading to Operation Twist) or markets turn wobbly (19% SPX correct after they tapered QE1 in 2010 and the repo market blowing up in September 2019, after tapering QE3).

View this as a cyclical move. The Fed will turn on the printing press again should circumstances demand it.

So, markets have no reason to crash on the removal of accommodation because it is never gone for good.

Read 4 tweets
25 Aug
Tweet storm on stock market valuation.

Bottom line, companies have delivered earnings like a .300+ hitter with 35+ hrs. But you're paying that hitter $35m+/yr (record salary). Good for now. But will this hitter earn its pay next year, and the year after?

As of August 23, 2021, 475 (95%) S&P 500 companies have reported Q2 2021 earnings with a beat rate of 87%, a new record. This compares to an average beat rate of 71% since the Great Recession ended.

Analysts expected YoY earnings of ~55%. The latest blended est. is ~ 95%. This jump of ~40% is record.

YoY earnings is compared to Q2 20220, the worst point of the lockdown, big base effect. This is why estimates for Q3 2021 earnings growth drop to 29% and 20% for Q4 2021.

Read 8 tweets

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