The U.S. Treasury Is Neutralizing The Fed's Quantitative Tightening | Michael Howell & Andy Constan
ฝัง
- เผยแพร่เมื่อ 15 พ.ค. 2024
- Michael Howell of Crossborder Capital and Andy Constan of Damped Spring Advisors join Forward Guidance to discuss and debate all things liquidity.
Today’s interview is brought to you by YCharts. For a free trial and 15% discount on new memberships, visit go.ycharts.com/forward-guidance
Follow Michael Howell on Twitter / crossbordercap
Follow Andy Constan on Twitter / dampedspring
Follow 2 Gray Beards on Twitter / 2graybeards
Follow Jack Farley on Twitter / jackfarley96
Follow Forward Guidance on Twitter / forwardguidance
Follow Blockworks on Twitter / blockworks_
More info on Damped Spring Advisors: dampedspring.com/
More info on Crossborder Capital: www.crossbordercapital.com/
Michael Howell’s Substack: capitalwars.substack.com/
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Timecodes:
00:00 Defining Global Liquidity
04:07 Only Looking At Federal Reserve Liquidity Is A Big, Big Mistake
11:23 Why Has Michael Howell's Global Liquidity Index (GLI) Been Rising?
18:49 The U.S. Treasury's Issuance Composition Has Been A Huge Factor For Liquidity
31:36 Is This "Shadow Quantitative Easing (QE)"?
44:06 Inverted Yield Curve & Repo
53:19 Michael Howell's Bull Case For Stocks
59:10 The "Short All Assets" Trade
01:07:43 Will The Fed Return To Outright Quantitative Easing (QE)?
01:11:41 Is Liquidity Going To Expand? Yes, It Is - Michael Howell
01:17:44 Final Points On Term Premia, Fiscal Arithmatic, And The Dollar
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets. - บันเทิง
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Today’s interview is brought to you by YCharts. For a free trial and 15% discount on new memberships, visit go.ycharts.com/forward-guidance
20:15 really??? Guy went from 0 to negative credibility
So where exactly is liquidity coming from?
OY VEY .....IS THIS AMERICA OR TEL AVIV???
⁰😊pp0😊⁰000😊⁰😊p0😊⁰l⁰😊⁰⁰⁰⁰
Jack, I really admire the progress your show made over a time. Good job!
Agree. Jack its been a pleasure to watch you emerge as such a valuable interlocutor.
Absolutely. Blockworks is superb.
Thank you! It's been a great journey and is just getting started. Show YCharts some love! go.ycharts.com/forward-guidance
- Jack
this was one of the best of Forward Guidance. Great job by Andy as always.
This was the interview we needed. Cross border vs. Snider should be next,
Hell yeah. Show gets better and better, Jack
Great debate! Both Michael and Andy are amazing minds
I would love to see a discussion between Michael Howell and Tom Luongo.
Balance sheet capacity is a brilliant frame for liquidity. Kudos to Michael
I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Maria Reyes.
wow.. amazing to see others who trade with Maria Reyes, i'm currently on my 5th trade with her and my portfolio has grown tremendously.
I invest with Maria Reyes too, she charges a 20%commission on profit made after every trading session which is fair compare to the effort she put in to make huge profits.
this is not the first time i am hearing of Maria Reyes and her exploits in the trading world but i have no idea how to reach her.
As a first time investor I started trading with her, with just a thousand bucks. my portfolio is worth much more that now within just weeks of trading with her.
With the consistent weekly profits I'm getting investing with Maria Reyes, there's no doubt she is the most reliable in the market. such a genius
I really admire how far your show has come over time. a good job!
i love listening Mike for his beautiful Hugh Grant accent
Thank you for your show. I'm so grateful for TH-cam and the learning available here. I have wanted to learn about finances but they don't teach this in school unless you pay for college and be indebted to them forever. I have learned more in the past three years than I have in my life.
No money or finance in high school is a crime and waste of time... and not an accident. Part of the plan.
Anyone else feel like they are reading a drama but it’s current events? I love it!
I agree with Howell’s analysis his arguments makes way more sense 👍👍👍
I came across this channel
Involuntarily because my phone screen is cracked and was wildly tapping things. But it’s a good discussion.
Completely agree with Micheal on balance sheet capacity as liquidity. I sense the notion of disregarding Bank reserves as a factor in the financial market is directed at Jeff Snider. Would love to see them debate
Superb discussion.
👍Thanks. Michael has an interesting thesis -- that the state and its systems is just going to keep on providing liquidity, somehow.👍
I discovered the issue of liquidity with an economics book by Edward Stone Shaw to try to understand the markets, it was already being discussed around 1930. I agree with Michael, if you exist twice the world GDP in terms of liquidity, obviously it matters... I deal to learn how to implement it in the markets
That is what it means to debate! Let the best ideas flow without egos!
Great interview and debate gents. Thank you!
Good discussion.
Some good minds here and a great show, well worth the listen!
That beak shadow tho 🥸😂
Great show. Amazing insights.
Thank you so much, really good!
Been looking forward to this!
I hope you value investing?
@@DerickJordanDJI'm new to crypto Investing, I have also tried to invest on my own but it went bad, how can I get a trustworthy investment company to invest in
@@DerickJordanDJI like this question because not everyone has ever received a real profit from investing in digital currency like Bitcoin
Top notch content guys, just wow!
Excellent.
The yield curve is definitely an indicator for a recession 10 out of the last 11 inverted yield curves ended in a recession when the yield curve starts to uninvert
Which one didn't?
great discussion guys, thanks!
personally, i think the 'resilient economy' camp misses how much damage 3 years of high, compounded inflation has done to the average amarican household... as evident by the rise in credit debt and spike in delinquencies and defaults and repos. banks lending way down... consumer spending numbers, inflation adjusted are quite weak... no one ever talks about this when given the numbers....even retailers such as Con Agra and others have stated that consumers are buying markedly less volume, but are spending the same....that is masking the problem...i myself am doing this very thing, only buying necessities now and less goodies and toys... this, at some point will have to start manifesting in demand, since inflation is still going higher, and many households have already hit critical mass... maybe this is what the bond market is sniffing out?
What do you think of the ironic possibility of the inverted yield curve providing more liquidity to businesses, and therefore being bullish instead of bearish?
Bridgewater is a beautiful campus
Liquidity bets have to have a valid target to be effective and not evaporate into bad bets, Reality matters. Good discussion.
We is doomed...
Michael brings up October 2022 and how the Fed injected liquidity. However, he fails to mention through what mechanism. The Fed publishes their balance sheet statement every week, and it just does not reflect what Michael alleges. march 2023 / SVB is a different story (discount window etc). Michael, please substantiate your claim re October 2022.
Smartest guys in the room.
0:31: 💡 The discussion revolves around liquidity, its definition, and its impact on asset markets, with two different perspectives presented.
8:12: 💡 The speaker discusses the importance of understanding global liquidity and the role of central banks in financial markets.
15:37: 💧 Global liquidity is increasing, but it may not be the main driver of equity performance. Bond volatility has decreased, which boosts liquidity conditions globally.
24:15: 💡 The discussion revolves around the reasons behind the decision to tap the RRP to fund the TGA and the potential impact on liquidity and government financing.
32:16: 📊 The speaker discusses the manipulation of liquidity and bond market structure by the US government, suggesting that quantitative easing (QE) has effectively ended and yield curve control is being implemented.
40:24: 💰 The size of the deficits in the US is a concern, with potential funding of two trillion dollars per year for the next decade, and the question of how to fund it without the involvement of the Federal Reserve.
48:23: 💼 The speaker discusses the reasons why people engage in repo transactions in an inverted yield curve environment and why the private sector is levering up their portfolios.
56:42: 📊 The speaker discusses the relationship between inflation and equity holdings, as well as the impact of inflation and interest rates on bond and equity markets.
1:05:02: 💼 The speaker discusses the shift of pension funds towards bond investments due to aging demographics, the reduced interest rate sensitivity of the economy, and the potential for future quantitative easing by the Federal Reserve.
1:11:42: 📈 The speaker believes that liquidity will expand in the next 18 months, which is positive for markets, but there is uncertainty regarding the Federal Reserve's participation and the potential impact on the dollar.
1:19:44: 📉 The decline of the dollar and uncertainty about the fiscal outlook in the US may have a significant impact going forward.
Recap by Tammy AI
If the Fed massively printed money to "buyback" all that subprime debt, conjured out of the american dream in 2008 to bailout the big banks, of course that the big funds would be able to buy the Treasuries deficit spending issuance. The question is for how long would the corporations they make loans to would benefit from the IRA, CHIP, government spending, before these ESG investments proof to be unsustainable and stagflationary.
57:20 Would be nice to see the charts!
Central banks are required but public deficits do not have to be created as debt. Taxes on productivity or new money creation keep paying for the bureaucratic/welfare free lunch. The problem is government debt is never repaid something business can not do. NZ's reproductive powers (infrastructure, health, education, climate, etc) keep getting stripped by a banking system that takes the profits offshore. This must stop!!!
He said that cash wasn’t a risky asset! Really, ask someone from Argentina or Turkey that. Japan even.
He was referring to USD. Yes, there has been inflation, but still the best medium for global trade. Does anyone really believe that the Brics countries will be conducting business using a gold standard? I highly doubt it. Assuming there is even enough gold to make this possible, trade imbalances would rapidly deplete a countries reserves, then what?
Great debate and analysis! I have a better idea on how to manage my investment portfolio now
For the last 6 months, most of the financial network has been calling for a crash in the market due to high interest rate and lots of companies going bankrupt. Michael is the only one that said: “interest rate does not move the market. Liquidity moves the market”. Looking back 6 months ago at the S&P 500 til now, it’s been consistently on an upward trend. I believe he’s right about the liquidity been injected into the market. Hence, bull market ahead.
Quantitative tightening for some, quantitative easing for others
Such a fantastic discussion .... can't get used to Mike H without his Joe 90 glasses ... just doesn't look right
Andy == Michael
So, Gold will head back to $1800, then?
I see Andy Constan, I click.
I'm simple like that.
Me too, I click on something else.
Andy, let's talk about how your call at the beginning of the year was so disatrously terrible.
great moderation by Jack. I felt Andy was a bit too nice. Michael said a lot of outlandish things he could disagree with
i prefer the one on one
Two titans! Really heady stuff and complicated to understand. But I loved the show nonetheless
🤷♂
The current phase is people screaming economy so bad but the stock keep going up, that is crazy. The next phase is, the economy data are not bad and so good, why the stock goes to the floor, that's crazy. The market will turn when people are convinced the economy is not bad.
43:33 I’d add that look at how many billions of dollars worth of short duration treasury securities that stable coins like USDT have on their balance sheets. This will only grow as we enter the crypto bull market and with the growing popularity of tokenized real world assets that buy a lot of T-bills too.
Stable coin’s balance sheets have to be risk off because of how transparent people expect assets to be in DeFi.
So the crypto market is effectively a good source of funding for the US Treasury market.
@@trickyt1957 especially while they pay 5% yield. Well, there’s a lot of other examples, like a large bank in Australia that buys US equities. Since foreign exchange transactions take an extra day to settle, they can either…
Use that money in affectively by leaving masses of money with the broker they used, who could go bust too.
or
create a stable coin for instants settlement.
That’s a hundreds of billions of dollars use case in itself.
They all put buy pressure on US government securities.
Michael > Andy
Clearly
I think we benefitted from both of their voices. Sometimes Michael can be overly sure of his views so it's good to have someone in the room able to pressure him a bit. To see it as one person over the other in a conversation like this is dumb tribalism and missing the benefit of multiple data points and perspectives.
Joythought> Amandagreen
@@joythoughtit’s just fun. a debate has a winner. the other side seeks new evidence and refines their ideas. no big deal. nothing against Andy.
By a mile
46:30 don’t think this is correct. Have to agree with Michael on this one. If government borrows money to pay for someone’s Medicare and social security, that’s not the type of money that’s magically going to be recirculated in the economy to buy more us debt to fund the next persons social security check and Medicare. That debt will have to be monetized by the federal reserve. Basically print money out of thin air and buy the debt from treasury via an intermediary dealer.
Piano in the background during an interview? Really, Andy? 🤦
It's gunna crash like a mofo
All 3 not managing money. Irrelevant if you're just a spectator.
Wind bags.
Very true. What's the ROI if you're not a money Mgr or short term trader?
Of course, the economy isn't rate sensitive anymore... if you are a boomer.
Cash is not a risky asset is the dumbest thing I ever heard an expert say. You can loose a lot holding fiat especially right now with the credit rating downgrade, global decoupling, and the Saudis getting out of treasuries. It sounds like he is a fan of having no hedge for fiat for clients who want to minimize risk.
andy view is like saying japan can do qt, get its balance sheet down and maintain the economy, there is no fairy tale!
Andy probably says nothing with a lot of words. Anything can go and I dont have any views. A mark of a highly successful trader.
Andy > Michael
It makes me wonder what Yellen was doing in China?
cash is not risky asset???? u mad???? u nuts????
This discussion is so out of my league.
just keep listening, youll eventually get it
I watch stuff like this daily, and these guys were throwing around jargon like it was going out of style.
We've all been there and always learning. What's worked for me is to take a piece here and there and go research them individually. And then over time you can tie one piece to the next to slowly get the big picture. It simply won't happen by listening to complex guys talk shop at broad high level. I do try to break some of these down on my channel.
Poor Jeff Snyder 😂 he's really not popular with the mainstream tradfi crowd
Maybe he is a little rigid and simplistic in his view
That was some hard shade thrown at snider lmao. I've seen snider literally go through the actual treasury auctions and prove there were shortages because of the high end of the bids received. And you can't lever up your treasuries like he is saying with the volatility like it is like Howell was saying. MOVE going from 200 to 100 is a big drop but 100 is still quite high. And looking at that i would say the delta is too high to trust that it would stay at that figure
@@skillz4life360so would you say that the argument for the inverted yield curve providing liquidity, didn't sound quite right?
@@hill2750 I actually thought that was pretty interesting. taking your financing further out on the curve and using the front end for yield. It seems mechanistically plausible, but I would imagine only the most creditworthy are able due to inherent increased illiquidity further down the curve. I'm not very familiar with corporate bond markets though and those rate differentials. But I know for govt bonds lenders can't recoup their money from that posted collateral as easily or without taking a bigger haircut. That was the reason for the BTFP and the bank failures really, although again that was govt bonds not corporate. No one was willing to take on those long bonds as collateral for funds they could use to satisfy withdrawals, so they were forced to sell them into an illiquid market, then forcing the fed to make a new facility to temporarily liquify assets that were really never meant to be sold in the first place (Hold to maturity). Howell also talked about this issue in regards to the public sector competing with them for the market's appetite, or basically bids, for longer-term debt (and debt in general) as a reason for them issuing a higher-than-average quantity of bills instead of bonds right now. So that may actually be part of what's happening, Ofc it's just conjecture
@@skillz4life360I agree. That part I disagreed with. I think mechanically an inverted yield curve can work until it doesn’t. It would be odd for a clearly evidence global slow down to not affect the US
@@user-wg1if3nh4j Yeah it's probably one of those things that is a partial and temporary fix but the inevitable does come. But if he is right then that means asset markets could fair better than expected even in a pronounced recession, which the data is more and more looking like. More cash on hand means less fire selling of assets by corporates to come up with dollars
Andy is way out of his depth compared to Michael. night and day.
Great job Jack trying to pin down these weasel dick liquidity guys to define liquidity. IMHO isn't income is required to support a liquidity level? Fact is nominal and real GDI is falling, as are tax revenues. An asset isn't worth much if it doesn't produce the necessary income.
I dislike when Michael Howell is a guest. He doesn't define anything in a way that I can verify.
He claims they have some propriety formulas with regard to his definition of "liquidity", i.e. I can't look it up on St. Louis Fed or re-create it there. So what good does it do me?
It's the equivalent as if your guest had a Magic 8 Ball that was always right. Cool. Still useless from my point of view.
I believe the rise of bitcoin will be surprising so I advise serious people to take investing seriously
I'm new to crypto Investing, I have also tried to invest on my own but it went bad, how can I get a trustworthy investment company to invest in
@@Adtownsend139I know a professional investment advisor and admin that I have been helping me out
+1724
291
6476
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Hey Blockworks, new video - how exciting!
Here are some stats about your earlier video (th-cam.com/video/skQD-BRYhH4/w-d-xo.html)
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Total number of scam conversations: 5
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** These stats may include comments removed by you.
Wheres the @EuroDollarUniversity & Jeff Snider on the ending of this?
#Gold #DollarDominance
ps. I cant withdraw usd in asia right now from the ATM....hmmmmmmm