Time to debunk the Fintwit myth surrounding the TGA balance & market liquidity.

As the debt ceiling approaches, talking heads are claiming a debt ceiling resolution would be "bearish" for stocks as liquidity would get removed from markets.

Here's why they're dead wrong 🧵 To understand this perspective, let's consider their reasoning. Why should the Treasury General Account (TGA) impact liquidity? There's a calculation circulating that assumes net market liquidity stems from the Fed Balance Sheet. It looks like this.

With all the noise on Sovereign Credit Default Swaps, given their recent rapid rise, I think it's important we simplify what this actually means for markets...

CDS 🧵👇 Sovereign credit default swaps (CDS) are a type of derivative that allows investors to protect themselves against the risk of a country defaulting on its debt. Essentially, the buyer of a CDS contract pays a premium to a seller. Think of it like a put option on a country.

The differences between Onshore and Offshore Dollar Funding are extremely important.

Foreign demand is what drives reserve status.

There is something valuable about having OTHER countries wanting to hold YOUR currency on THEIR balance sheet.

It goes something like this:

🧵 The primary difference between onshore and offshore dollar funding refers to the location of transactions. Onshore funding occurs within the United States, while offshore funding takes place outside of the US. Both types of funding are important for global trade and finance.

Let's take a moment here to understand WHAT is exactly going on in markets as people's emotions are bound to run rampant after what happened yesterday. We're going to go over $ES and what has happened psychologically to those participating...

🧵👇🏼

$SPY $QQQ $IWM $DIA Let's start with what happened on Oct 14th, we saw the emergence of underlying shifts in the #System that indicated just maybe there was more to Risk-On than would have met the eye. By this point, it was apparent to hedge an upside move into FOMC, Midterms, and CPI...

Daily Currency 🧵- Nov 11th, 2022

$DXY #DXY

Huge moves happening, some that require attention. Starting with the dollar, we saw this blow through momo yesterday and continue to fall this morning. To get a solid trend shift, we're going to need to see some components shift too! A trend shift in the dollar will add more confirmation to the Risk-On regime, which has been brewing under the surface for over a month now. Market Illiquidity improving is supporting the narrative of a possible shift. This really comes down to how the major components trade...

#Inflation: It’s existed since money's creation, yet people still don’t understand where it comes from and how to solve it. Societal leaders play games because they don't want you to realize this is the biggest scam of them all.

Let’s start with understanding inflation:

🧵👇🏼 Inflation measurements are derived from the changes in the Consumer Price Index “#CPI” over time. Inflation is the general increase in prices and fall in the purchasing value of money. Remember, Inflation is required in any monetary system to incentivize spending…

Daily Currency 🧵- Nov 10th, 2022

$DXY #DXY

The dollar is holding a bid ahead of the CPI print today. Remember, it's bullish trend until it isn't. Lower VAMP AND momo MUST hold for the trend to remain intact. $EUR (largest $DXY component)

EUR is back under parity this morning ahead of US CPI. For the time, we're still holding above mid-VAMP, but parity has been the key for quite some time now. If we can't hold it post-print, watch for lower VAMP.

$EURUSD #EURUSD #USDEUR $USDEUR

Daily Currency 🧵- Nov 9th, 2022

$DXY #DXY

The dollar seems to continue to hold above momo and lower VAMP. These levels would need to break before we can talk about a confirmed dollar top / "peak dollar". $EUR (largest $DXY component)

The EUR is still stuck around parity as bulls and bears fight for dominance. We are at upper VAMP so some significant momentum is going to need to appear quickly as this has almost 300bps of short-term downside risk.

$EURUSD #EURUSD #USDEUR $USDEUR