*Money Printing*

A seemingly simple, yet confusing topic.

I mean, why even sell bonds to the public, when the Fed can just print more dollars and pay for whatever the government wants to spend?

The answer is simple but requires a little critical thinking.

Time for a Fed 🧵👇 If you’ve been on Twitter in the last week, you likely saw a video clip of Jared Bernstein, the Chair of the United States Council of Economic Advisers, ‘explaining’ bonds

(Yes, the group that advises the White House on economic policy)

There was massive hype and fanfare leading up to the #Bitcoin spot-ETF launch.

Yet, the launch didn't quite live up to expectations. There wasn't a tsunami of capital inflow, and there was no 'God Candle'

So, was the #Bitcoin ETF launch a failure?

Time for an ETF 🧵👇 🤓 BTC Launch Stats

First things first, how are the new spot-based Bitcoin ETFs are different from the other Bitcoin ETFs (futures-based) that have been trading for years?

The US Treasury just closed out 2023's debt bacchanal with a final 7yr Note auction.

While it wasn't quite abysmal, it was nothing short of dismal.

Time for a quick Treasury 🧵👇 First, remember the last 7yr Note auction in Nov *was abysmal*

- BTC of 2.44
- A 2.1bp tail
- Foreign demand down to 63.9%
- Primary Dealers stuck with 20.3% of auction

Markets have ripped higher, up 5% this month, and much of the move came after Fed Chair Powell's last press conference.

The famous 'Fed Pivot'

But what is the Fed Pivot, and what does history tell us about the market and economy *after* a pivot?

Time for a Fed 🧵👇 😏 What is a Pivot?

First, what exactly is The Fed Pivot?

Put simply, when the Fed tightens monetary policy, it raises interest rates and/or sells assets off its balance sheet (i.e., quantitative tightening or QT)

When it stops raising rates, this is called a Fed Pause.

Success! It seems that today's 30-Yr Treasury Auction was solid, across the board.

But was it *stellar*?

Time for a short Treasury 🧵👇 Some quick stats:

- BTC was 2.43 vs 2.24 last auction
- No tail, and actually a slight stop-through of .3 bps
- Foreign demand alleviated pressure from primary dealers

Here's a visual comparison vs. the last two auctions:

The Reverse Repo Facility

Lots of talk about how it's dwindling fast and may soon be empty...but does it really matter?

Yes, it matters. A whole lot more than you may think.

Time for a Fed 🧵👇 🎯 Repo vs Reverse Repo

What are they, and what're their differences?

Put simply, they are two overnight lending markets run by the Federal Open Market Committee (FOMC)

All purchases and sales (open market operations) are made by the NY Fed Open Market Trading Desk (the Desk)

Abysmal. Disastrous. Catastrophic.

All terms you may have heard describing the most recent US Treasury Bond auction.

But how bad was it? Did it really almost fail?

Time for a Treasury 🧵👇 🧐 Treasury Spotlight

A couple of weeks ago, the US Treasury made a big announcement on the same day that the Fed voted to keep rates steady

Big news from the Fed, though widely expected

But even bigger news from the Treasury.

Why?

You may have heard about the Strategic Petroleum Reserve last year, and as we enter election season, you'll likely hear quite a bit more about it.

But what exactly is the SPR? Why have its inventories been depleted? And what are the implications?

Time for an Oil 🧵👇 🛢️What is the SPR?

First of all, the Strategic Petroleum Reserve is a critical component of the United States' energy security infrastructure.

But why, and how?

The Bank of Japan has been doing some wild things recently with monetary policy.

But how has it affected the US Treasury market? And perhaps more importantly, are the BoJ's antics a sign of what's to come from our own Fed?

Time for a Debt 🧵👇 🤑 Abenomics

First, the Japanese yen used to be a *flight to safety* currency

Lately, though, it has been anything but a flight to safety and has been rather weak

In fact, you can get 150 yen per USD these days, a level we haven't seen since the late 90's.

Bond Vigilantes.

If you’ve been following the markets, you may have heard the term *Bond Vigilante* recently. And how they've caused all this bond market pain.

But are Bond Vigilantes really to blame? And who are these so-called vigilantes, anyway?

Time for a Debt 🧵👇 😡 Who are the Bond Vigilantes?

If the term Vigilante stirs up images of Batman or Dirty Harry, then you're on the right track

Though in this story, Bond Vigilantes may be more like John Wick in V for Vendetta when it comes to sheer tenacity and type of justice they're seeking

Swap Lines.

A fancy feature of Fed and Central Bank plumbing.

But are they just another form of stealth QE?

Time for a Fed 🧵👇 🧐 What are Fed Swap Lines?

First things first, what the heck is a swap, anyway?

You may have first heard the term Credit Default Swap (CDS) back in 2008 or 2009, when the entire housing market imploded.

We keep hearing how long bond yields are spiking higher.

Sounds ominous, but why? And more specifically, what does it mean for investors?

Time for a debt 🧵👇 🤨 Reality of ‘risk free’

Before diving in here, a quick primer on bonds and Treasuries, what they are and how they work. For those of you who are comfy with this part, feel free to jump ahead

But if you want a bit of a tune-up, let’s proceed...

Over $1.6 trillion of student loan payments are set to resume next month for 43 million borrowers.

Will this crush consumers, like some claim it will?

Time for a debt 🧵👇 🧐 State of the economy

Starting at 100k feet, let’s first check the pulse of the economy as a whole

How is Powell’s inflation fight going, and where’s the economy headed in the near term?

In what appears to be a direct attack on the USD, BRICS recently announce a plan to introduce a gold-backed currency for the nation bloc.

Does this really mean the end is near for the USD as global reserve currency?

Time for a Currency 🧵👇 🧱 What is BRICS?

BRICS is simply an acronym for a bloc of countries looking to form an economic cooperative

A *non-Western* bloc.

Stock buybacks can drive companies’ stock prices higher.

This is obviously good for shareholders and the executives who execute them.

But is it price maximization or stock manipulation?

Time for an Equity 🧵👇 🤨 What are Buybacks?

First, what exactly are stock buybacks, and why are we seeing so many of them?

Put simply, buybacks are when a company uses cash from its treasury to buy back its own stock in the open market, i.e., the NYSE or NASDAQ.

Timing a recession is quite difficult, but predicting one is quite easy. And much of the developed world is headed for one.

How do we know?

By watching something called 'yield curves'.

Time for a bond 🧵👇 📉Yield Curve Inversion

First things first, let’s review yield curves and their implications

A yield curve takes all the yields of the various maturities of government bonds and plots them on a chart

From 1-mo all the way out to 30-yrs (or longer)

We're hearing more and more about how the CRE market could crumble soon, and take down some banks with it.

But what exactly is CRE, what's wrong with it, and why is it so important?

Time for a Credit 🧵👇 🤓 What is CRE?

First of all, what exactly is the Commercial Real Estate or CRE market, and what are its components?

To keep it simple, the CRE market can be divided into six main sectors:

Office, Retail, Industrial, Multi-Family Property, Hospitality, and Special Purpose.

Good News: The debt ceiling is resolved, so the Treasury will not default.

Bad News: The Treasury’s accounts are drained, and must be refilled with over $1T.

Question is, could this break the markets?

Time for a Debt 🧵👇 😵 The Treasury General Account

Let's start at the top here. What exactly is the Treasury General Account or TGA?

Just like it sounds, this is basically the US Treasury’s checking account

Where it holds cash and pays its bills.

I've written quite a bit about finance, economics and investing.

My goal is to simplify these important concepts, make them easy for everyone to understand.

All of these threads can be found below. Enjoy and please share!

a mega 🧵👇 The US Debt Clock

https://twitter.com/jameslavish/status/1615067930403954688?s=20

*Hyperinflation*

With inflation soaring the past two years, this term is being thrown around quite a bit recently.

And people are starting to wonder: Could the USD hyperinflate?

Time for a Currency 🧵👇 🤔 What is hyperinflation?

First, hyperinflation is when a currency experiences extraordinary and accelerating rates of inflation

The currency's value falls so quickly it becomes virtually worthless

So, people resort to using alternative forms of money or bartering.

One question that seems to be on many people’s minds today: Will the US default on its debt?

Simple question with a not-so-simple answer.

It's time for a debt 🧵👇 Here we are again, talking about debt ceilings and defaults. Republicans offer a deal, Democrats won’t negotiate. Yet, with no resolution, the US will default on its debt

We’ve heard it all before, many of us…many times before

Ah, the joys of political theater. 🎭 🤡