From a fundamental perspective, the debt-ceiling remains a fiscal and psychological drag on the stock market until the political and economic self-harming ends, but for now the spending can continue thanks to the Treasury cash balance (TCB) and the “extraordinary measures” available to the Treasury. In this piece, we are…

No matter what the semantic arguments are (QE, not QE, reverse QT…), the hard reality is that $400B of encumbered assets were added to the Fed’s books at par, and an equal amount of unencumbered money (liquidity) was released into the economy. This was not money-printing. This was not a…

Liquidity Breakout and the Restart of QE $300B addition to the Fed’s balance sheet (SOMA). The biggest and most sudden QE since the pandemic. This increase in liquidity is bullish.

Money is what releases real resources like labour and commodities, and government spending is how money is added to the economy (private sector bank accounts). Treasury budget-deficits represent the money that was left in the economy (i.e., not taxed back and cancelled). FEDERAL GOVERNMENT DEFICITS = PRIVATE SECTOR SURPLUSES Treasury budget-deficits are good for the economy, yet nearly everyone on this planet has it backwards!

Fear of impending recession, coming out of the Fed’s announced tightening cycle, has driven the herd out of the stock market. We take a look at the state of the US economy by checking on the tightness of the “screws” that hold the economy together in order to assess the…

The class of reserves referred to as “other” are used to pay the quarterly Treasury interest on bonds. $40B — $50B is paid mid-quarter (August 15). In August of 2021, the SPX fell around the interest payment but rallied right after. This year, the same pattern could be developing. We might see a drop in the SPX over the next 2–3 days and then a rally until the end of the month.

Corporate income taxes are a proxy for profits. Corporate income taxes, collected since since mid-April, are up 7% yoy. Stocks are priced for lower Q2 earnings. We track corporate taxes as a way to measure earnings in close to real time. …

The market and the economy are “all about the money”; they are both fundamentally tied to the flow of funds — even though there are lag-times of variable length. That is why we pay more attention to fiscal policy than we do to monetary policy. …

“We need to recognize that we’ve got an overheated economy that we are going to need to cool off,”… Larry Summers said on Friday (Wall Street Week) There he goes again, the prima-donna inflationista spouting off. “Overheated” economy? Why does he think that? Because prices are rising and the hospitality…