Inflation, Collateral, the FED & the FDIC. Updates from 01-05 to 01-07 (Paid)

In this week we will be looking at 5 separate sources for our macro recap.
We strive to incorporate as many independent views into this newsletter. We want to identify & synthesis this data for our audience, allowing you to get an understanding from a high level what is happening, then be able to quickly dig into the details of the newsletters linked below.
Let's Dive In!

Newsletter: Acorn Macro Consulting

Title: Five Themes for 2023.
Link: https://acornmacro.substack.com/p/five-themes-for-2023

Here are the top takeaways:

• Inflation is not going away anytime soon and will remain well above target for longer than policymakers have forecasted.

• Base effects will lower headline and core inflation figures in the coming year, but the overall trend will continue upward.

• This means that the era of free money is coming to an end, and record rate hikes will replace loose monetary policy in 2023.

• This will make refinancing debt more difficult for corporations and households.

• Despite slowing macro data, the labor market shows few signs of slowing down.

• This is partly due to the lingering effects of stimulus from the Covid-19 pandemic.

• However, profit margins are headed lower from all-time highs due to slowing sales growth and waning price pressures.

• Higher interest rates and strong wage growth will also play a part in this decline.

• The end of free money and cheap energy will continue to expose ESG as the fee-harvesting ruse that it is.

• Legal challenges over the abdication of fiduciary duties and poor performance will help to bring this issue to light.

YouTube Channel: Eurodollar University

Title: Collateral. Collateral. Collateral. Confirmed...by the Fed.
Link:

Here are the top takeaways:

• What we know as the repo market at one time was practically only the Federal Reserve.

• The reason we call it repurchase agreement is because the Federal Reserve wanted to bend the rules and to cheat. Right before WWI began, there was an interest from the Federal government in having the banking system financed the buildup up to the U.S involvement in that conflict, the issuance and flotation of Liberty Bonds.

• The Federal Reserve Act specifically prevented prohibited the Federal Reserve from financing speculative activities including government government payments for war.

• So the Federal Reserve came up with this workaround or bypass.

• They said the Federal Reserve was required to fund its own activities not be a burden upon the taxpayer.

• It was therefore required to own earning assets so it could buy and sell Securities, if only to fund its own activities. But that opened the door to buying and selling securities for perhaps other purposes, including these temporary repurchase and resale agreements where the government the Federal Reserve would buy bonds directly from the banking system only to resell them back to the to the banking system at a later date.

• In other words, to create a collateralized short-term funding transaction.

• The repudiation of other forms of collateral that leaves the repo market, forms the backbone of global dollars throughout the world. With fewer and fewer other alternative forms of collateral the demand for the best form of collateral, treasury bills, goes through the roof.

YouTube Channel: George Gammon

Title: Fed Finally Admits The TRUTH In New Report
Link:

Here are the top takeaways:

• The Federal Reserve has released a report admitting that the US economy is most likely already in a recession.

• The report looks at past recessions and notes that many states' economies continue to expand during a recession, despite the national economy suffering.

• They use a metric called the S.C.I. to track negative GDP growth at a state level and find that, in March 2020, 35 states were in negative growth.

• This surpasses the 26-state average threshold needed to confirm a national recession.

• The FED officials are painting a rosy picture of the economy, but this report provides evidence to the contrary.