I'VE SEEN ENOUGH.

Don't usually try to predict the Fed's exact moves, but this jobs report, combined with next week's inflation data that's expected to show 7.1% CPI and 5.4% core, will lead the Fed to prime markets for a March rate hike at this month's meeting. I had written "green light" for March initially, but a certain someone beat me to the punch. 👁️

https://twitter.com/RenMacLLC/status/1479446380099903488

another potentially weird jobs report from the looks of it

*U.S. DEC. PAYROLLS INCREASE 199,000; EST. 450,000

but

*U.S. DEC. UNEMPLOYMENT RATE FALLS TO 3.9% VS 4.2% Also worth noting that average hourly earnings had a SOLID beat.

+0.6% m/m, compared with estimates for +0.4%
+4.7% y/y, compared with estimates for +4.2%

ECI, which Powell singled out as a crucial data point, is coming at the end of the month.

~feels~ like the FOMC minutes due in 2 mins could be among the most market-moving of the past 2 years I have the 5-year yield up on my screen, which is already starting to move a bit in anticipation

*U.S. APRIL CONSUMER PRICES INCREASE 0.8% M/M; EST. 0.2% TRANSITory

I'll see myself out.

https://twitter.com/conorsen/status/1392457928414744578

Yellen points to the drop in U.S. interest payments as a percentage of GDP as a reason that she still sees fiscal space, though notes "it certainly doesn't mean that anything goes."

"Longer-run, we do have to raise revenue to support permanent spending that we want to do." Oh wow we just got a question on the significance of 2s10s hitting 160 basis points. Going mainstream!

YELLEN: "In fact, I think we may see a return to full employment next year." POWELL: "Our best view is that the effect on inflation will neither be particularly large nor persistent."

If 2020 has taught investors one thing, it’s that the Fed is all-powerful.

Except in fighting wealth inequality. A thread:

bloomberg.com/opinion/articl… At its core, the Fed sets the level of interest rates in the economy.

Low rates (now) = higher prices for stocks and risky assets = the wealthiest profit

Higher rates (circa 2018) = higher U.S. Treasury yields = those who can afford to save the most (i.e. the wealthy) profit

Wow. Major news coming out of the Treasury, as reported by @SalehaMohsin:

All emergency programs from the CARES Act will expire on Dec. 31. So that's:

Municipal Liquidity Facility
Main Street Lending Program
Primary and Secondary Market Corporate Credit Facilities Oh also the Term Asset-Backed Securities Loan Facility.

There WILL be a 90-day extension of the Commercial Paper Funding Facility, Primary Dealer Credit Facility, Money Market Liquidity Facility and the Paycheck Protection Program Liquidity Facility.

https://twitter.com/stevenmnuchin1/status/1329539416306618368

The U.S. housing market is 🔥🔥🔥

In particular, record-low mortgage rates have encouraged a ton of refinancing. That's freed up a lot of cash for Americans across the country in the past several months.

But what happens now?

bloomberg.com/opinion/articl… Remember, the Fed is still adding $40 billion of MBS to its balance sheet each month. That's a ~net~ figure, so it's actually gobbling up closer to $100 billion each month and doing its best to suppress mortgage rates.

With President Donald Trump ordering a review of funding of Democratic-run cities (or what a memo calls "anarchist jurisdictions"), now would be a good time to recall just how vital New York City is to the U.S. economy.

bloomberg.com/opinion/articl… The nominal GDP of the NYC metro area is $1.8 trillion, or almost 10% of the overall output of America’s metropolises.

That's a greater share than 2009, even though other cities like Portland and Seattle (also targeted by the memo) grew faster during the expansion.

MILLENNIALS

You might think “avocado toast” or “participation trophies.” But they’re about to become the biggest adult cohort in America, and Wall Street wants to know if they can lead the U.S. economy (and stock market) to greater heights.

Thread!

bloomberg.com/graphics/2019-… I worked with the masterful @hecharts to make graphics that provide a better sense of where millennials are at right now.

Using Fed data and other statistics, we can see how young Americans (under 35) now compare to those of the past. And how they compare to older generations.

Still confused about why the repo market is freaking out, and whether you should care?

It’s about BUDGET DEFICITS.

Thread!

bloomberg.com/opinion/articl… Budget deficits, while nothing new, obviously add up over time.

While the U.S. deficit soared after the crisis, it declined each year from 2011 through 2015. It widened again under President Donald Trump.

That’s TRIPLED the amount of U.S. Treasuries out there.

Donald Trump, the self-proclaimed “King of Debt,” had some advice for the Fed today.

Most of it doesn’t hold up to the slightest scrutiny.

THREAD

bloomberg.com/opinion/articl… Zero or negative interest rates would probably do more harm than good right now.

They would likely cause an immediate problem for banks. And it’s a very open question whether Americans would take negative yields sitting down. They’ve never had to before.

Young Americans have fallen seriously behind on their credit-card payments.

Some 8.05% of outstanding credit card debt among 18 to 29 year olds was delinquent by at least 90 days, the highest level since early 2011.

Here's why that's worrisome. 1/5

bloomberg.com/opinion/articl… The fact that millennials are more behind on credit-card payments than older generations isn't too surprising. But they had been closing the gap in recent years.

Now delinquencies are on the rise again, even though the labor market is as strong as ever. 2/5