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Jim Bianco Profile picture
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29 Sep, 5 tweets, 2 min read
More and more it is looking like the Democrats are not able to agree among themselves. A thread on what is might mean for markets.

1/5
Moderate Democrat Sen. Joe Manchin of West Virginia has issued a statement over his refusal to back his party's $3.5 trillion spending plan, calling "trillions more on new and expanded government programs" the "definition of fiscal insanity"

2/5
zerohedge.com/political/sena…
Progressives want huge spending, moderates like Manchin, want far less.

Why can't they get on the same page? Maybe it has to do with the elephant in the room, the chart below. The leader of the Democrat party continues to implode, making a new low yet again today.

3/5 Image
So how do they resolve this?

A compromise that cuts the spending bills to get moderate votes and sacrifices Powell for anti-banking Brainard to appease progressives.

Is this what Warren was signaling yesterday?

Betting market is might be sensing this.

4/5 Image
So we either get a debt deal and no Powell or Powell and no debt deal, but not both.

Jay Powell is now a bargaining chip.

5/5

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Jim Bianco Profile picture
2 Oct
A lot of news tonight.

The Democrats met to try and come to a deal, Biden spoke to the D caucus late this afternoon, no reporters, and no mobile phones were allowed. So this account in Politico, which is sympathetic to Ds, comes from other Ds in the room.

1/6
The open!

President Biden deflated the air of urgency around a bipartisan infrastructure vote and tamped down liberal dreams of a $3.5 trillion spending bill in a speech before House Democrats Friday that left some members fuming.
-
He made it worse!
2/6
politico.com/news/2021/10/0…
Remember the debt ceiling is tied to the infrastructure and (now formerly) $3.5 trillion spending bills via reconciliation.

With no deal on these two bills, we get no debt ceiling hike. Biden further said there is no urgency, then how is the debt ceiling getting raised?

3/6
Read 6 tweets
Jim Bianco Profile picture
28 Sep
Solid signals the debt ceiling is going to be a problem, and might be a catalyst (not they catalyst) behind today's risk market selloff.

Yes, it eventually gets resolved but the fear it will be messy and chaotic this time around.

A thread to explain.

1/6
First, their is 1.3 trillion in Fed reverse repo (RRP). The Fed is offering 5 basis points in this RRP facility

Their is no reason for a T-Bill to have a yield above the 5 bps RRP rate.

2/6
Here is the bill curve out the next 9 mos and the Oct 18 date that the govt runs out of money.

The only bill yield yields above 5 bps is from Oct 19 to Oct 28.

By trading above the RRP rate after Oct 18 signals the debt ceiling is going to be a problem in this time period.

3/6
Read 9 tweets
Jim Bianco Profile picture
24 Sep
A quick timeline about China and cryptos for those that think something significant was announced today (aka the financial media).

Dec 6, 2013 - China banned bitcoin knocking the price down 50% (from $1200 to $800)

forbes.com/sites/kashmirh…

1/6
Sep 11, 2017 - China bans crypto exchanges. Its price dropped to $4,100

2/6
theverge.com/2017/9/11/1628…
Apr 9, 2019 - China readies to ban bitcoin mining
bitcoin broke below $5,000 on the news.

3/6
 theguardian.com/technology/201…
Read 6 tweets
Jim Bianco Profile picture
22 Sep
I think everyone is getting Evergrande backwards.

It's not what a default means for China. Rather it's what happened to China to cause a default.

Start with this chart. Economists are hacking China growth forecasts, and the downgrades are accelerating.

1/5
These downgrades are consistent with the Economic Strength Indices (ESI) compiled by our colleagues at @DataArbor . They measure incoming economic data versus its 1-year average.

China’s ESI has been falling and recently turned negative.

2/5
Currently, China (orange) is the only large economy with an ESI below zero.

3/5
Read 5 tweets
Jim Bianco Profile picture
22 Sep
Maybe the US markets are not about Evergrande ... maybe it is Washington.

A thread to explain.

Let's start with this from CNN (!).

They are finally saying the quiet part out loud. His presidency is on fire, because his own party is the problem.

1/4
edition.cnn.com/2021/09/22/pol…
While his appr rating might be bottoming (Gallup today at 43%, so we'll see), his disappr keeps making new highs.

In a polarized world where the vast majority will never chg their opinion (either way), this is a big move and only about 2% higher than Trump on election day.

2/4
Rs are saying "Ds, you do it"

Biden is going have to use his political capital to get Ds to pass spending/debt ceiling.

Again, see Biden's approval/disapproval chart above ... what political capital? It seems to be disappearing by the day.

3/4
cnn.com/2021/09/22/pol…
Read 4 tweets
Jim Bianco Profile picture
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.

1/3
 wsj.com/articles/secs-…
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.

2/3
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.

3/3
Read 5 tweets

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