Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125k ETF/Growth Stock portfolio.
Concentrate on two main objectives. First, keep yourself safe by knowing when to sell stocks in order to limit losses and maximize gains. Second, get ready to benefit from market changes. I advise consulting a CFP or other professional for advice.
Yes, I have been in touch with a CFP ever since the outbreak. Today, investing in hot stocks is quite easy; the difficult part is deciding when to buy and sell. With an initial starting reserve of $80k, my adviser chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
my 401k growth has been stagnant since the 2019. I wouldn't mind consulting the advisor who guides you, I really want to grow my retirement fund since I could retire in 3 years.
Finding financial advisors like Carol Vivian Constable who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Looking at the US Bureau of Statistics, under the Consumer Price Index, one can notice that in the last quarter of this year, stocks are not really doing well, especially energy stocks as they seem to be below the zero point. However, I don't know if stocks will quickly rebound as I have no clue the direction of the market. Can I get an advice on any other stocks that I can acquire to diversify my reserve of $300k across multiple markets while creating a comprehensive portfolio.
Consult a fiduciary counsellor; these professionals are among the best in the business and offer individualized guidance to clients based on their risk tolerance. There are undesirable ones, but some with a solid track record can be excellent.
For you to grow your portfolio in today's market, you really need to be coachable and willing to get off your high horses. I for example, have managed to grow mine from $150k to 300% of my initial deposit within the past 18 months just by copying trades from a broker that has better skillset and technical know-how than me.
@@hasede-lg9hj I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Annette Marie Holt for about 4 years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
AI stocks are set to dominate 2024. I prefer NVIDIA because they're well-positioned for long-term growth and support other AI companies. I know someone who made over 200% with NVIDIA. I'll also consider the other recommendations you made.
I agree. Just because there are opportunities doesn't mean we should dive in without caution. We should look for market analysis or guidance, or seek advice from certified market strategists.
Absolutely, having a solid plan is crucial. My portfolio has been well-balanced and recently doubled since early last year. My financial advisor and I are working towards a seven-figure goal, although this might take until Q3 2024.
That's where someone like DESIREE RUTH HOFFMAN steps in. She's a former Wells Fargo advisor. Her insights and advice have truly made a difference for numerous investors in these challenging times.
That's truly remarkable! I've heard wonderful things about her. I'm eagerly anticipating hearing more about her achievements. I actually cleared my mortgage by following her helpful advice.
That's awesome! I've been considering getting a financial advisor as well. I did a quick search and it was super easy to book a call with DESIREE RUTH HOFFMAN.
I really appreciate the dedication in each video you post. To be successful one has to have multiple income streams and so on, also investors should understand the crossover between asset classes & liquidity flow, joanna claire focuses on Multi-asset trading, a single strategy to manage risk, profit, and the code or the actual decision-making across multi-asset classes. Her skills set is top notch
The short version of what they are saying is Luke Gromen's observation that the shorter the duration of Treasury issuance the more "money like" it is. The Treasury is flooding the market with this "money like" issuance. One day the piper must be paid.
This goes along with what Michael Howell has stated on this channel recently. Global liquidity is rising and the Treasury is in the game. Wait until the Fed cuts in the Fall. Boom.
Michael Howell did point out the back door QE sometime ago whilst explaining his Global Liquidity Index however he could not pin point the source. Now it’s laid bare.
I understand how under-issuance of coupons reduces the amount of interest rate risk on offer, but how is it that additional issuance of T-bills constitutes the money creation? Are T-bills given away for free or something? Don't they need to be bought with....uh.... money?
Maybe they are regarded as more liquid, so in times of highering rates, the money will easier be allocated to stuff holes in real cash liquidity And more important, they are more likely to be used as collateral to use leverage in speculative investments Like day trading etc, pushing up values in assets and thereby creating a wealth effect My thoughts
@@1985yf Both coupons and bills would flow into fiscal spending. Otherwise no reason to issue. Pretty sure a bill is better collateral, due to no interest risk. So money creation because of new loans is bigger on bills than coupons Day traders can be levered 10 times, inflating equity
The long term interest rate on US Treasury bonds is set by the GIGANTIC global bond market and NOT treasury operations. Growth & Inflation expectations are the key!
You weren't listening, it's also set by supply...therefore shift issuance to the front of the curve, reducing supply at the long end...equals bond prices rally
Isn't this basic Asset Liability Management that most fiduciary institutions engage in for risk management? Why is it any different for the US Treasury? No matter the inferences or interpretations.
So these fair gentlemen would rather that the US would have issued 800B in long term debt at 4.5%, increasing the average interest on outstanding debt and the gov't interest expense expanding FOR THE LONG HAUL. I believe they're making a spurious argument. According to THEIR GRAPH, bill issuance ratio (BIR) has only just converged on its long term average (LTA), that is all. Isn't it telling that all the times when BIR was high coincides neatly with high policy rates? Also, the only period were BIR dipped below its LTA was when ZIRP reigned supreme. And shrewd public officials obviously took advantage of that environment and tilted issuance towards the long term! Now these gentlemen argue as if the ZIRP issuance regime was the norm! This argument would have made sense only if the 10s were at 1.5%. In fact, Druckenmiller was rightly angry at the Treasury for having squandered the opportunity when they didn't tilt the balance of issuance towards the long end when rates were low, that is, pre FED-hikes. Way too much ado for a quarter percentage of implied/stealth YCC! As if that makes all the difference in the world! Ladies and gentlemen; policy discipline has been thoroughly compromised!
as of this morning the 2-10 was only .2 off. They say the changes to the fed funds rate is 1 whole percentage point, so this would imply that the ATI is keeping the curve upside down.
I mean this is exactly what independent means, The fed is going to be doing things on its own and that means it will at times clash with and be doing the opposite of what say the treasury is doing. Seems to me what the treasury is doing makes perfect sense in the context of not issuing a bunch of long-term debt at the time when it's thought rates are higher than the long-term average. Why wouldn't they change their ratio In that case? I think there's too much blending of what is monetary policy versus what effects monetary policy. Sure the treasury's actions are going to have the same effects as changes in monetary policy, they are the largest player everything they do is going to have an effect. I don't see why that would or should impact or constrain their actions. The previous guidance they had on the ratio of debt was just guidance and is subject to change at any time should treasury think that it's not the best course of action anymore. Theres no rational reason why the treasury would or should just accept paying much more when thry dont have to, why would they issue long term debt into a market that has insufficient demand for it? That would drive up the yield and be directly in opposition to the treasuries goal of handing the debt with the keast cost to the govt. Frankly QE was the Fed moving monetary policy more in the direction of what treaury does, thats why treauries actions have much of the same effects. Definitely important to study this and note the effect it has on the economy, thats good economic work. But its not something "bad" or to be worried about.
I intuitively understood this but im glad these guys quantified it. Now i'm certain why people are buying crypto. Looks to me as if the near-complete elimination of private property is imminent. (Perhaps I should say the near-elimination of private wealth outside the government's reach or ability to manipulate. The Treasury is pushing us all into short-term treasuries b/c with inflation as it is, and the yield curve inverted, you have to be there to earn enough to ~"keep pace" with inflation, which the FedGov is manufacturing.) US individual investors will be just like the Chinese...only choices will be real estate or gold. What is the grand plan? Are they going to push us all into treasuries before the federal government defaults on the debt, impoverishing those who were "rich" and thought they had actual investments, making everyone (except those funding "national leaders" and lobbyists) dependent on the federal government?
think they missed more impactful channel, collateral and collateral velocity. think that's why bill issuance it's more stimulative. you have an abundance of on the run collateral (in so much chronic shortages are the norm). Not saying they're wrong, just saying, I think that's more impactful. repo's not some obscure part of the market, it is the market.
The Federal Reserve knows what treasury is doing, so are they credible when they claim interest rates are restrictive... apparently "transient" as an idea was never retired...
It seems to me that there are two mechanisms here. First there is the stated mechanism of decreasing long duration UST issuance and effectively reducing rates on that end of the curve and pushing more risk capital further down the risk curve. Second it seems to me that this policy (combined with the Feds raising rates on the short end) is putting more cash into consumers pocket via interest income from bank accounts and money market funds. I would expect this to be stimulative, but you would have to net out increased interest expense paid by consumers. BTW, a Trump Treasury (although he won't come close to understanding it) will put this on steroids. The concept that Trump won't try to game the system is incredibly naive. Has anyone done an analysis on the net annual cost to the Treasury of this policy?
Activist Treasury Issuance (ATI) involves the Treasury issuing more short-term debt and less long-term debt, effectively lowering long-term interest rates similar to quantitative easing. This can lead to higher inflation and economic instability. Bitcoin, seen as a hedge against inflation and currency devaluation, may become more attractive as a result.
Please guys, get rid of the false thoughts (despite being active policy) that the government needs to borrow money according to its deficit that onve has to be paid back! It is not true! I hoped Treassury and FED employees should know this!? Please regard Modern Money Theory (MMT) herefore!
Great work guys. Even got Grandma Yellen to respond. Of course she doesn't really know what is going on - labor economist, but the people running the treasury know you hit the bullseye.
I don't understand how it undermines anything. You can't spend bonds, you can't spend notes, you can't spend bills, so that money is out of circulation. Money out of circulation is out of the money supply and not chasing goods. The market arbitrages long and short rates so that they match expected inflation. (Buy short sell long or vice versa, depending on which way the rates are in "error")
Borrowing puts somebody else's money out of circulation so that you can circulate it, net money supply change is still zero. All the collateral does is reduce risk to the lender.
It seems to me that what the Treasury is doing is trying to get the right price on bills, notes and bonds so that arbitrage doesn't produce obvious profits, on the average.
Simple, you the person purchasing bonds are not spending the money, the government who receives the money in exchange of the bond is the one spending it.
Right, that's the point of the bonds. Take the money out of my hands so that the government can spend it without competing with me. I can't spend a bond. (Or, of course, as an open market operation, the government may burn the money, to meet the Fed's interest rate target by reducing the money supply.)
Yes, but what is the upside? It makes sure all the debt issued at 5% is short term. What does that do? It gives the next president more power over the interest payments and potential bankruptcy of the USA.
In summary: "His time" of Treasury bill issuance was different (..this time, 2020). At a time that sure looks like vwar winds like the 1930s, economic disruption like the 1930s, financing at the short end so the long end doesn't blow out seems like a good idea. Sad to see Nouriel back up this "oh it's normal times so this is odd" crazy view.
The characterization of this as a political tool is not really neccessary if you understand how the fed works. The fed has said it will lower rates in time, so Yellen is selling short term bonds. What this does is give the next president the power to lower interest payments because he or she (shudder) will be alble to finance 3 year 5% bonds with 10 year 2% bonds. Thats pretty important if you want the USA not to go bankrupt
@@davidanalyst671 in 2025 the US will need to issue more bonds due to the maturity of all those short term bonds issued this year as well as the standard yearly bonds to support fiscal spending. Who is going to buy all those 10 year 2% bonds? The Fed will need to step up to the plate. I see no other choices or the long end will blow up.
Too Long Can't Listen. What's the point? Is there a problem? Is there unsterilized money printing going on here? You guys are explaining 2+2 with calculus.
😂😂😂Catch up buddy. Treasury issuance is being manipulated to cause a hotter economy. The Treasury Department is doing this because of political reasons. More long term bonds are needed to tighten monetary policy.
@@primecash144 the treasury is not doing this for political purposes. They are doing it for sanity purposes. The fed said they will lower rates in the next few years. So the treasury is issuing debt that matures when the fed says we will have lower rates instead of forcing the government to pay 5% on all the debt for 10 years. This is very very important if you want the USA government to not go bankrupt
@@davidanalyst671 100% political, if there is a recession there is no way the Democrats hold on to the White House. Government manipulation at its finest.
This is wrong…..it is what Yellen implemented and she called it a TWIST. these guys should know this. Issuing bills is part of the total public debt. So issuing short or long dated is simply taking money from long end or short end. They make it sound as if this new money is printed from thin air. This analysis isn’t very accurate nor very thought out. Kinda shameful they both worked at Treasury.
Are you guys sure you really understand what (useful) public spending is really doing? Just talking about crowding out something. Public spending to the private sector is supposed to be good: investments that private companies wont do or giving money to low income people who spend everything as consumers. Large public budget deficits do not crowd out private investments! Just forget about (high) interest rates on bonds! It solves a lot of problems. None needs to finance US government spendings, since the USA are souvereign currwncy issuers
QE is not printing, Fed reserves are not "money". And treasuries are not "money like" You can't spend fed reserves. The only thing the Fed can trade them for are treasuries and similar assets held by banks. All banks can do with them is use them as collateral to make loans. What is printing is; the government deficit spending and in particular having the treasury send stimi checks directly to businesses, consumers, . sending money to green ponzi schemes, using tax payer money to pay tech companies that make $10's of billions in profits each qtr to build factories student loan forgiveness,... These aren't "money like". This is exactly printing because,.. there is no obligation to pay the money back as there is when the Fed issues reserves to banks in exchange for debt assets used to make loans (to increase money supply).... which have an obligation to be paid back. The important part is whether it is inflationary or not. QE is not necessarily inflationary,... The government deficit spending and especially sending checks directly to businesses and consumers is definitely extremely inflationary,.. unless QE is used to counter it. But I agree with these guys,......this admin unnecessarily and unprecedentedly spending 50% more in '21, '22, '23, '24 years after the pandemic is over,.. than was spent the year before it started is,.. when we weren't in a recession and/or awar,... is criminalfiscal abuse,... all done to buy votes. And you can't say this has been done for the last few decades,... No,.. this admin's stealing from tax payers to buy votes is on a all new paradigm shift level.
Said with your fingers in your ears over and over. Pretty soon you will start believing your comments.. When the treasuries are bought by the fed at artificially low rates and the digits the fed gives to the government is spent into the economy it creates inflation.
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Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125k ETF/Growth Stock portfolio.
Concentrate on two main objectives. First, keep yourself safe by knowing when to sell stocks in order to limit losses and maximize gains. Second, get ready to benefit from market changes. I advise consulting a CFP or other professional for advice.
Yes, I have been in touch with a CFP ever since the outbreak. Today, investing in hot stocks is quite easy; the difficult part is deciding when to buy and sell. With an initial starting reserve of $80k, my adviser chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
my 401k growth has been stagnant since the 2019. I wouldn't mind consulting the advisor who guides you, I really want to grow my retirement fund since I could retire in 3 years.
Finding financial advisors like Carol Vivian Constable who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Looking at the US Bureau of Statistics, under the Consumer Price Index, one can notice that in the last quarter of this year, stocks are not really doing well, especially energy stocks as they seem to be below the zero point. However, I don't know if stocks will quickly rebound as I have no clue the direction of the market. Can I get an advice on any other stocks that I can acquire to diversify my reserve of $300k across multiple markets while creating a comprehensive portfolio.
Consult a fiduciary counsellor; these professionals are among the best in the business and offer individualized guidance to clients based on their risk tolerance. There are undesirable ones, but some with a solid track record can be excellent.
For you to grow your portfolio in today's market, you really need to be coachable and willing to get off your high horses. I for example, have managed to grow mine from $150k to 300% of my initial deposit within the past 18 months just by copying trades from a broker that has better skillset and technical know-how than me.
@@hasede-lg9hj I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Annette Marie Holt for about 4 years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
AI stocks are set to dominate 2024. I prefer NVIDIA because they're well-positioned for long-term growth and support other AI companies. I know someone who made over 200% with NVIDIA. I'll also consider the other recommendations you made.
I agree. Just because there are opportunities doesn't mean we should dive in without caution. We should look for market analysis or guidance, or seek advice from certified market strategists.
Absolutely, having a solid plan is crucial. My portfolio has been well-balanced and recently doubled since early last year. My financial advisor and I are working towards a seven-figure goal, although this might take until Q3 2024.
@@NancyAllen-n7t Can you share details of your advisor?
I work with BONITA JEANETTE RODRIGUEZ. Just look her up online.
Thanks! After looking her up and reviewing her credentials, I'm Impressed too. I've scheduled a call with her for advice
OH,OH,OH. My head is spinning trying to follow this.
Jack is one of my favorite interviewers
Every time I want to hear something very "Regarded" I listen to Professor Roubini.
The money market hasn't been too kind to commoners lately. I feel like I'm not making as much as I could be.
Have you considered getting a certified expert in Wealth Management ? They could help optimize your investments.
Hmm, who do you use?
That's where someone like DESIREE RUTH HOFFMAN steps in. She's a former Wells Fargo advisor. Her insights and advice have truly made a difference for numerous investors in these challenging times.
That's truly remarkable! I've heard wonderful things about her. I'm eagerly anticipating hearing more about her achievements. I actually cleared my mortgage by following her helpful advice.
That's awesome! I've been considering getting a financial advisor as well. I did a quick search and it was super easy to book a call with DESIREE RUTH HOFFMAN.
This is a very important informative interview. Great job to all
Great interview, thank you all.
Very interesting topic! Thank you for the informative discussion, gentlemen!!
I really appreciate the dedication in each video you post. To be successful one has to have multiple income streams and so on, also investors should understand the crossover between asset classes & liquidity flow, joanna claire focuses on Multi-asset trading, a single strategy to manage risk, profit, and the code or the actual decision-making across multi-asset classes. Her skills set is top notch
This was a very insightful episode. Learned a lot.
Awesome Insights! The Treasury Department is being manipulated for political purposes.
Fascinating information, also i like following the thought process. Great interview.
This system is sick and crooked. Its is unnecessarily complicated and not really functional, not to speak of tranparency
Great insights and descriptions.
The short version of what they are saying is Luke Gromen's observation that the shorter the duration of Treasury issuance the more "money like" it is. The Treasury is flooding the market with this "money like" issuance. One day the piper must be paid.
This goes along with what Michael Howell has stated on this channel recently. Global liquidity is rising and the Treasury is in the game. Wait until the Fed cuts in the Fall. Boom.
Great interview, thanks
Interesting chat
Michael Howell did point out the back door QE sometime ago whilst explaining his Global Liquidity Index however he could not pin point the source. Now it’s laid bare.
really good bro. thanks,
I understand how under-issuance of coupons reduces the amount of interest rate risk on offer, but how is it that additional issuance of T-bills constitutes the money creation? Are T-bills given away for free or something? Don't they need to be bought with....uh.... money?
Maybe they are regarded as more liquid, so in times of highering rates, the money will easier be allocated to stuff holes in real cash liquidity
And more important, they are more likely to be used as collateral to use leverage in speculative investments
Like day trading etc, pushing up values in assets and thereby creating a wealth effect
My thoughts
Tbills are used as collateral for leverage wheras long term bonds are not, hence more liquidity
Probably feeds into fiscal spending?
@@1985yf Both coupons and bills would flow into fiscal spending. Otherwise no reason to issue.
Pretty sure a bill is better collateral, due to no interest risk. So money creation because of new loans is bigger on bills than coupons
Day traders can be levered 10 times, inflating equity
I am in concurrence with what these gents said and expect, very good and important to understand.
Good discussion!
This is quite interesting, thanks
It’s more accurate to say the Treasury is performing an “Operation Twist”, a form of yield curve control.
removing duration and adding collateral.
The long term interest rate on US Treasury bonds is set by the GIGANTIC global bond market and NOT treasury operations. Growth & Inflation expectations are the key!
You weren't listening, it's also set by supply...therefore shift issuance to the front of the curve, reducing supply at the long end...equals bond prices rally
Isn't this basic Asset Liability Management that most fiduciary institutions engage in for risk management? Why is it any different for the US Treasury? No matter the inferences or interpretations.
So these fair gentlemen would rather that the US would have issued 800B in long term debt at 4.5%, increasing the average interest on outstanding debt and the gov't interest expense expanding FOR THE LONG HAUL.
I believe they're making a spurious argument. According to THEIR GRAPH, bill issuance ratio (BIR) has only just converged on its long term average (LTA), that is all. Isn't it telling that all the times when BIR was high coincides neatly with high policy rates? Also, the only period were BIR dipped below its LTA was when ZIRP reigned supreme. And shrewd public officials obviously took advantage of that environment and tilted issuance towards the long term! Now these gentlemen argue as if the ZIRP issuance regime was the norm!
This argument would have made sense only if the 10s were at 1.5%. In fact, Druckenmiller was rightly angry at the Treasury for having squandered the opportunity when they didn't tilt the balance of issuance towards the long end when rates were low, that is, pre FED-hikes.
Way too much ado for a quarter percentage of implied/stealth YCC! As if that makes all the difference in the world! Ladies and gentlemen; policy discipline has been thoroughly compromised!
I'm 20 mins deep in this vid, and i've already gotten a headache. Money shouldn't take an hour to explain.
Great interview
If you expect the FED to cut rates soon, issuing more bills might lower overall servicing costs.
ATI’s impact on the yield curve? 😮
as of this morning the 2-10 was only .2 off. They say the changes to the fed funds rate is 1 whole percentage point, so this would imply that the ATI is keeping the curve upside down.
I mean this is exactly what independent means, The fed is going to be doing things on its own and that means it will at times clash with and be doing the opposite of what say the treasury is doing. Seems to me what the treasury is doing makes perfect sense in the context of not issuing a bunch of long-term debt at the time when it's thought rates are higher than the long-term average. Why wouldn't they change their ratio In that case?
I think there's too much blending of what is monetary policy versus what effects monetary policy. Sure the treasury's actions are going to have the same effects as changes in monetary policy, they are the largest player everything they do is going to have an effect. I don't see why that would or should impact or constrain their actions. The previous guidance they had on the ratio of debt was just guidance and is subject to change at any time should treasury think that it's not the best course of action anymore.
Theres no rational reason why the treasury would or should just accept paying much more when thry dont have to, why would they issue long term debt into a market that has insufficient demand for it? That would drive up the yield and be directly in opposition to the treasuries goal of handing the debt with the keast cost to the govt. Frankly QE was the Fed moving monetary policy more in the direction of what treaury does, thats why treauries actions have much of the same effects.
Definitely important to study this and note the effect it has on the economy, thats good economic work. But its not something "bad" or to be worried about.
removing duration and adding collateral. T-Bills act as cash that pays interest.
I intuitively understood this but im glad these guys quantified it. Now i'm certain why people are buying crypto. Looks to me as if the near-complete elimination of private property is imminent. (Perhaps I should say the near-elimination of private wealth outside the government's reach or ability to manipulate. The Treasury is pushing us all into short-term treasuries b/c with inflation as it is, and the yield curve inverted, you have to be there to earn enough to ~"keep pace" with inflation, which the FedGov is manufacturing.) US individual investors will be just like the Chinese...only choices will be real estate or gold.
What is the grand plan? Are they going to push us all into treasuries before the federal government defaults on the debt, impoverishing those who were "rich" and thought they had actual investments, making everyone (except those funding "national leaders" and lobbyists) dependent on the federal government?
Taxation also crowds out private capital. Taxation is a form of crowding out.
think they missed more impactful channel, collateral and collateral velocity. think that's why bill issuance it's more stimulative. you have an abundance of on the run collateral (in so much chronic shortages are the norm). Not saying they're wrong, just saying, I think that's more impactful. repo's not some obscure part of the market, it is the market.
many guests on this program have made this point months ago
is ATI inflationary?
Absolutely! And higher asset prices & higher inflation maximize taxes! Scumbags!
Thanks
The Federal Reserve knows what treasury is doing, so are they credible when they claim interest rates are restrictive...
apparently "transient" as an idea was never retired...
Nouriel: "Ok, I'm come on, but only if you promise to not run an sh*tcoin ads during it"
👀
It seems to me that there are two mechanisms here.
First there is the stated mechanism of decreasing long duration UST issuance and effectively reducing rates on that end of the curve and pushing more risk capital further down the risk curve.
Second it seems to me that this policy (combined with the Feds raising rates on the short end) is putting more cash into consumers pocket via interest income from bank accounts and money market funds. I would expect this to be stimulative, but you would have to net out increased interest expense paid by consumers.
BTW, a Trump Treasury (although he won't come close to understanding it) will put this on steroids. The concept that Trump won't try to game the system is incredibly naive.
Has anyone done an analysis on the net annual cost to the Treasury of this policy?
Activist Treasury Issuance (ATI) involves the Treasury issuing more short-term debt and less long-term debt, effectively lowering long-term interest rates similar to quantitative easing. This can lead to higher inflation and economic instability. Bitcoin, seen as a hedge against inflation and currency devaluation, may become more attractive as a result.
Please guys, get rid of the false thoughts (despite being active policy) that the government needs to borrow money according to its deficit that onve has to be paid back!
It is not true! I hoped Treassury and FED employees should know this!?
Please regard Modern Money Theory (MMT) herefore!
Awesome
Great work guys. Even got Grandma Yellen to respond. Of course she doesn't really know what is going on - labor economist, but the people running the treasury know you hit the bullseye.
TLDR; High bill issuance = QE. Aka money go burr. Risk on baby!
Wow!
I don't understand how it undermines anything. You can't spend bonds, you can't spend notes, you can't spend bills, so that money is out of circulation. Money out of circulation is out of the money supply and not chasing goods. The market arbitrages long and short rates so that they match expected inflation. (Buy short sell long or vice versa, depending on which way the rates are in "error")
Treasuries can be used as collateral to borrow on. That's how.
Borrowing puts somebody else's money out of circulation so that you can circulate it, net money supply change is still zero. All the collateral does is reduce risk to the lender.
It seems to me that what the Treasury is doing is trying to get the right price on bills, notes and bonds so that arbitrage doesn't produce obvious profits, on the average.
Simple, you the person purchasing bonds are not spending the money, the government who receives the money in exchange of the bond is the one spending it.
Right, that's the point of the bonds. Take the money out of my hands so that the government can spend it without competing with me. I can't spend a bond. (Or, of course, as an open market operation, the government may burn the money, to meet the Fed's interest rate target by reducing the money supply.)
The Fed is properly reacting to a HUGE Collateral shortage in the global financial and eurodollar system!
ATI is terrible for true asset price discovery.
Yes, but what is the upside? It makes sure all the debt issued at 5% is short term. What does that do? It gives the next president more power over the interest payments and potential bankruptcy of the USA.
That’s one clever ponzi scheme they got there at the treasury
I think quite a few people understand the duration issuance management as even this novice here has been aware of it's effect. Crypto and tech send it
Additional 50bps to be released for a hard landing.
Fed is certainly flighty the treasury . They lean so far right the could easily fall on their face.
In summary:
"His time" of Treasury bill issuance was different (..this time, 2020).
At a time that sure looks like vwar winds like the 1930s, economic disruption like the 1930s, financing at the short end so the long end doesn't blow out seems like a good idea.
Sad to see Nouriel back up this "oh it's normal times so this is odd" crazy view.
Give credit to Yellen. She is the MVP of the Dems to win this election cycle.
The characterization of this as a political tool is not really neccessary if you understand how the fed works. The fed has said it will lower rates in time, so Yellen is selling short term bonds. What this does is give the next president the power to lower interest payments because he or she (shudder) will be alble to finance 3 year 5% bonds with 10 year 2% bonds. Thats pretty important if you want the USA not to go bankrupt
@@davidanalyst671 in 2025 the US will need to issue more bonds due to the maturity of all those short term bonds issued this year as well as the standard yearly bonds to support fiscal spending. Who is going to buy all those 10 year 2% bonds? The Fed will need to step up to the plate. I see no other choices or the long end will blow up.
pause
More noise…
Too Long Can't Listen. What's the point? Is there a problem? Is there unsterilized money printing going on here? You guys are explaining 2+2 with calculus.
😂😂😂Catch up buddy. Treasury issuance is being manipulated to cause a hotter economy. The Treasury Department is doing this because of political reasons. More long term bonds are needed to tighten monetary policy.
@@primecash144 the treasury is not doing this for political purposes. They are doing it for sanity purposes. The fed said they will lower rates in the next few years. So the treasury is issuing debt that matures when the fed says we will have lower rates instead of forcing the government to pay 5% on all the debt for 10 years. This is very very important if you want the USA government to not go bankrupt
@@davidanalyst671 100% political, if there is a recession there is no way the Democrats hold on to the White House. Government manipulation at its finest.
@@davidanalyst671 100% Political
yucks, Nouriel Roubini an angry boomer. this episode is trash
This is wrong…..it is what Yellen implemented and she called it a TWIST. these guys should know this.
Issuing bills is part of the total public debt. So issuing short or long dated is simply taking money from long end or short end. They make it sound as if this new money is printed from thin air.
This analysis isn’t very accurate nor very thought out. Kinda shameful they both worked at Treasury.
Shut the hell up, you clearly have a poor grasp of what was discussed
Are you guys sure you really understand what (useful) public spending is really doing?
Just talking about crowding out something. Public spending to the private sector is supposed to be good: investments that private companies wont do or giving money to low income people who spend everything as consumers.
Large public budget deficits do not crowd out private investments!
Just forget about (high) interest rates on bonds! It solves a lot of problems.
None needs to finance US government spendings, since the USA are souvereign currwncy issuers
QE is not printing,
Fed reserves are not "money".
And treasuries are not "money like"
You can't spend fed reserves.
The only thing the Fed can trade them for are treasuries and similar assets held by banks.
All banks can do with them is use them as collateral to make loans.
What is printing is;
the government deficit spending and in particular having
the treasury send stimi checks directly to businesses, consumers, .
sending money to green ponzi schemes,
using tax payer money to pay tech companies that make $10's of billions in profits each qtr to build factories
student loan forgiveness,...
These aren't "money like".
This is exactly printing because,..
there is no obligation to pay the money back
as there is when the Fed issues reserves to banks in exchange for debt assets used to make loans (to increase money supply).... which have an obligation to be paid back.
The important part is whether it is inflationary or not.
QE is not necessarily inflationary,...
The government deficit spending and especially sending checks directly to businesses and consumers is definitely extremely inflationary,..
unless QE is used to counter it.
But I agree with these guys,......this admin unnecessarily and unprecedentedly spending 50% more in '21, '22, '23, '24 years after the pandemic is over,.. than was spent the year before it started is,.. when we weren't in a recession and/or awar,... is criminalfiscal abuse,... all done to buy votes.
And you can't say this has been done for the last few decades,... No,.. this admin's stealing from tax payers to buy votes is on a all new paradigm shift level.
Said with your fingers in your ears over and over. Pretty soon you will start believing your comments..
When the treasuries are bought by the fed at artificially low rates and the digits the fed gives to the government is spent into the economy it creates inflation.
😂😂😂
Thanks