The calculus was to push Inflation blame game on Russia…. Instead they are gonna get the Alt Left War on American Energy made Putin Richer & Americans Poorer.
Really bad optics…& factually correct. If I was him… I’d quickly come to some Russian resolution..
Like Yesterday.
Who is advising Biden? Republicans should shower them with gifts.
Biden’s Approval for handling Russia is only 36% & 35% with Independents.
All this is good for Banks & De-Reg.. the weaker he gets the lower the risk of the Alt Left filling up Fed roles.
Only 30% of Independents approve of his handling of the Economy… this could easily get to a 2 handle.
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Growth rarely Decelerates meaningfully with $ZROZ down to this degree, unless This Time Is Different. Highly Doubt it
$XLF #Reflation
Margins usually Peak ~Year 3 (+/-) of a Recovery. For instance, Margins Peaked a Decade before the last Credit Cycle ended. Leadership changes…& Cycles usually Sequence.
U nailed it imho….first thing people do is go back to the last episode (2018-2020) w/o a good understanding of the changing contextual backdrop as well as QT mitigants that are currently in place & evolving further.
$XLF #Reflation
Another big time clue imho… $BAC did a 4.5% Pref Issuance a few days ago… if that ain’t a sign the Market has too much liquidity not sure what is….
$XLF #Reflation
The question for Investors (longer term horizon) is when do you sell $XLF ?
The answer is when Deposit Betas finally catch up to ~50% or 10Y3M Inverts Investors start to Pay Less & Less for every $1 of earnings power (driven by the Flow Through Rate of Inflation)….
Long Term “Investors” who respect the Credit Cycle Started selling $XLF at the Peak of Price/TBV on $BKX in Jan 2018 at 2.1x & also long $ZROZ …as Deposit Betas were Peaking + Cyclicals/Commodity stocks like $CAT etc..
The other natural question that should pop up is…well if the Taper is coming & BKX is 1.8x…why shouldn’t 1 sell now? Won’t the Fed kill the Cycle w QT.. why on earth would 1 wait around… after doubling/tripling money from the March 20 bottom.. why wouldn’t 1 crystallize gains?
Yield Curve (10Y3M) Steepening, Dr. Copper Ripping, HY Bonds Unch all year at +310bps OAS, CCCs have tightened -12bps this year..& tightened by -18bps in the last 10 days…
$HYG is 4 year effective/spread duration… not terrible… CCCs shorter at 3 yrs & +667bps OAS. $XLF
The Yield Curve is Steepening….
Front End of the Curve ain’t anywhere close to a Double Dip Recession.
Maybe the Talking Heads know more than the Bond Markets?
I Highly Doubt it.
$XLF #Reflation