The Treasury, American Economic Policy, & Yield Curves.(12-28 to 01-04)

In this week we will be looking at 10 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: The Last Bear Standing

Title: Spotlight on the Treasury.
Link: https://thelastbearstanding.substack.com/p/spotlight-on-the-treasury

Here are the top takeaways:

• The Federal Reserve's quantitative tightening (QT) policy has been in effect for six months, and so far, markets have remained relatively stable. However, this does not mean that QT will not have any negative impacts going forward.

• One key way that QT will impact markets is by reducing the Treasury General Account (TGA), which is used to fund the federal government.

• As the TGA balance decreases, the federal government will be forced to issue more debt to replace the funding from the Fed.

• This new debt issuance will put downward pressure on market liquidity as cash is pulled out of the private sector to fund the government.

• Once the debt ceiling is raised, expect a surge in new debt issuance from the Treasury and a corresponding decrease in market liquidity.

• This dynamic will be made worse by the fact that the Fed is also reducing dollar supply via QT at the same time.

Newsletter: Stay At Home Macro

Title: Economic policy for all Americans.
Link: https://stayathomemacro.substack.com/p/economic-policy-for-all-americans

Here are the top takeaways:

• The winds of economic policy are shifting for the better in the United States due to the policies enacted by the Trump administration, which have been continued and expanded by the Biden administration.

• These policies have led to a "job-full recovery" from the Great Recession, in contrast to the slow and inadequate recovery under Obama.

• The Biden administration has also passed legislation that will invest in the next generation, through the Child Tax Credit.

• However, this credit has already expired after just one year, due to opposition from those who claim it is inflationary or will encourage parents to work less.

• There is still a long way to go in terms of righting past wrongs and ensuring that the economy works for all Americans.

• Nevertheless, the current policies are a step in the right direction and have already had a positive impact on many people's lives.

Newsletter: The Trader's Brief

Title: The Weekly Beat: 2 January 2023.
Link: https://capitalistpigcollective.substack.com/p/the-weekly-beat-2-january-2023

Here are the top takeaways:

• The yield curve in the United States could potentially right itself if market participants believe that further interest rate increases are coming, but at a slower rate.

• The Federal Reserve is short of its view on terminal rates and fears of recession abound, making it unlikely that a scenario could occur that justifies ten-year rates above five percent.

• The Bank of Japan is attempting to shape the entire yield curve, rather than simply setting anchors at the policy rate and ten-year maturity.

• The goal is to strengthen the yen and likely represents a new regime of competitive currency appreciations.

• The yield curve in the United Kingdom is laid out flat as bond markets watch the Bank of England for signs of a policy error.

• In Canada, the yield curve remains deeply inverted, despite getting some help from the Federal Reserve with long-term yields.

YouTube Channel: Mark Moss

Title: Warning - What Happened In California Is Coming To The US
Link: https://www.youtube.com/watch?v=m0zt6K0cMH0

Here are the top takeaways:

• California is in a dire financial situation, with a large budget deficit despite having had a surplus last year.

• The state is facing many challenges, including homelessness, a failing infrastructure, and high taxes.

• California is also leading the way in spending on illegal immigration, with the state spending 25 billion dollars a year on the issue.

• With asset prices crashing and no end to the spending in sight, California is a warning for the rest of the world about what could happen if we don't get our finances in order.

• The government is spending more money than it is bringing in, and it will eventually be forced to print more money.

• Charlie Munger has said that the big money is made in the waiting, not the buying and selling, so we should wait for the government to pivot before moving.

Newsletter: Fidenza Macro

Title: The Greatest Trade.
Link: https://fidenza.substack.com/p/the-greatest-trade

Here are the top takeaways:

• The global economy is facing a severe demand and supply shock due to the coronavirus pandemic, which will lead to a recession in many major economies.

• The stock market is vulnerable and has more downside to come as the true economic impact of the pandemic becomes evident.

• In order to stabilize the markets, the Fed will need to cut interest rates and take aggressive monetary action.

• Gold prices have dropped sharply as investors liquidate their holdings, but it may be a good time to buy the dip in the future.

• There is a possibility that a vaccine for covid19 could be developed in the next 1-2 years.

• By the time we come out of this crisis, monetary and fiscal authorities will have deployed stimulus on a scale similar or greater to what was seen during the 2008 financial crisis.

Newsletter: Stenos Signals

Title: Steno Signals #29 - Get ready for a historic EUR curve inversion .
Link: https://andreassteno.substack.com/p/steno-signals-26-get-ready-for-a

Here are the top takeaways:

• Germany is facing some headaches due to the high amount of subsidies allocated to tackle the energy crisis.

• ECB President Christine Lagarde is coming out more hawkish than ever, which could lead to an inverted EUR curve.

• The consensus trade of long EUR and short S&P is looking increasingly risky.

• A Chinese reopening may lead to a negative economic surprise in the near term, before a HUGE positive surprise 3-4 months later.

• Energy is still relevant as ever, with China set to return as a major consumer of energy and industrial metals.

Newsletter: Apricitas Economics

Title: What Does a Labor Shortage Mean?
Link: https://www.apricitas.io/p/what-does-a-labor-shortage-mean

Here are the top takeaways:

• The United States is currently experiencing a labor shortage due to strong job growth and wage growth.

• This has been especially beneficial for low-income workers, who have been able to move up the ladder to better-paying jobs.

• However, with inflation now above the Federal Reserve's 2% target, Fed Chair Jerome Powell has signaled that he is willing to let the labor market deteriorate in order to get inflation back under control.

• The question now is whether the Fed will be able to restrain inflation without triggering a recession.

• If the Fed is unable to control inflation, it could lead to a recession.

• Low-income workers would be especially hard hit by a recession, as they would likely lose their jobs and be unable to find new ones.

Newsletter: The Energy Cable

Title: The Energy Cable #1 - The leading energy newsletter from both sides of the pond!
Link: https://theenergycable.substack.com/p/the-energy-cable-1-the-leading-energy

Here are the top takeaways:

• The world has decided that hydrocarbons are a relic of the old economy, but this is beginning to change as traditional energy becomes more important.

• The Core Crude Oil Model uses a mix of fundamental and technical indicators to generate BUY, NEUTRAL, or SELL signals.

• Inventories are the balancing point for supply and demand and are the fundamental scoreboard for the oil market.

• The physical market component of the Core Crude Oil Model is currently bullish, but has been weakening for months.

Newsletter: The Macro Compass

Title: Push & Pull.
Link: https://themacrocompass.substack.com/p/push-and-pull

Here are the top takeaways:

• The next 5-10 years will be different, with faster swings in growth and inflation due to changing fiscal policy.

• Geopolitical uncertainty will bring volatility and alpha opportunities.

• The key to successful macro investing is understanding where the action is happening and putting the pieces of the puzzle together.

• China is embarking on a journey to fully reopen its economy, which will support global growth and inflation. However, a full reopening is never smooth and could lead to supply bottlenecks and inflationary pressure.

• A quantitative, data-driven macro process and proper risk management are essential for generating solid risk-adjusted returns.

Newsletter: BIG

Title: What's Coming in 2023 on the Monopoly Front?
Link: https://mattstoller.substack.com/p/whats-coming-in-2023-on-the-monopoly

Here are the top takeaways:

• The move for more antitrust enforcement is picking up steam, with Wall Street bonuses down and private equity firms pulling back from acquisitions.

• The Federal Trade Commission and Antitrust Division are soliciting public comments on new merger guidelines.

• State attorneys general are ramping up their role in antitrust enforcement, including delaying a private equity attempt to loot the Albertsons supermarket chain.

• Enforcers are revamping how merger policy works and are delaying a private equity attempt to loot the Albertsons supermarket chain.

• The overall number of mergers is declining, but the percentage of deals being challenged is increasing.

• The new legal regime will terrify Wall Street and the Republican establishment will start a war on antitrust enforcement.

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