Thread by @VietVantage

Literally a swap every single day now...

When was the last time swaps were used so heavy?
The gfc...

yesterdays move was a swap BACK

streamable.com/hgak4k

wsj.com/articles/some-…

you might want to read this a little closer.

Debt payments are too high to pay - so the govt is going to have to do some really weird shit now to cover these payments to treasury hodlrs.

OR its gun have to massively increase the debt ceiling.

The govt is outta dough to enable fed to continue raising interest rates to fight inflation.

So they HAVE to raise taxes or they have to increase debt ceiling (a bad look in a high inflation env)

This is why this legis was pushed thru quickly.
npr.org/2022/07/27/111…

This govt only works when there is a crisis.

Guess what?

We have arrived at another one...

Pow needed to raise rates 100bp. He didnt.

And this is why...

It also means there is little room to bail out stonk market or do stimmies or forgive student loans.

They cant ease cause inflation would skyrocket higher.

They cant increase rates cause govt cant afford that.

The relief valve is taxes.

You: "Oz, who would they tax?"

You: "Fuck.
Oz, what would that do to growth?"

Theres more.... todays swap weakened USD (UUP instrument)& STRENGTHENED opposing currencies - about every country that has a swap line with US got a stronger currency today, esp USDJPY

On this chart, when say USDJPY goes down, it means japanesa yen STRENGTHENED.

Infl in japn--

To do that particular swap, I think the fed bought USDJPY, USDEUR, USDAUD, etc...

This is also btw why corporations love globalization - when currency games result in favorable exchange rates...

india in particular comes to mind...
rn indian IT backoffice labor is DIRT CHEAP

$UUP (PINK) vs $VIX vs $US30y (purple) vs $USDJPY (YELLOW)

USDJPY strengthened (inflation in japan went DOWN)
USD weakened (inflation in usa went UP)

Now fed has room to raise rates again higher now that currency strength exported?

Notice what us30y is doing rn...

I know there is a lot on this chart - but same data (no vix) now including Michigan consumer sentiment.

Never in 20y has the fed hiked when consumer sentiment this bad.... (green)

The only time this cocktail was present was when consumers were kinda happy.

That aint now...

and a little history lesson....
streamable.com/rxqsxx

and from same testimony - this is as close to a technocrat getting choked by a senator as i've seen in recent memory...
streamable.com/1e2lml

(sorry for crappy vid quality)

And remember me saying taxes goin up?
A lot of corps avoid tax and some pay less tax than you do, even tho they make BILLIONS.

Well, those days are numbered....

A tax increase on corporations is good for profits?

https://twitter.com/ThePlumLineGS/status/1552406036350386176

they'll need that deficit reduction amount to keep funding bidens war in ukraine....

Then, there's this.... i think i was mistaken about swap on this one. It wasnt a swap. Foreign CB's bought everything they could get their hands on cause yield is so much greater than their own.

Eventually the Fed will buy it all back with next cycle of QE...

This little mistake JPow made is gun cost u.
See,higher interest rates means it costs more to run the govt.

Who pays those costs?

U do: Thru taxes,fees,customs duties,etc

Foreigners/rich ppl ARE snapping up all this debt-hi interest pmt is a tax U will pay to THEM.

#EpicFail

Tin foil hat time:
The fed raises rates and foreign CB's buy it all to hold on their balance sheet.
This weakens USD and strengthens their currency (IE USDJPY)

With USD weak, US can continue to raise rates.

The goal is to get the interest rate number HIGHER, not crash stonks.

Is this why company after company can report shitty earnings, and no forward guidence, zombie companies like $CVNA can rally with terrible future prospects?

Why Vol keeps getting suppressed?

And why we havent already crashed?