The Price Objective remains 2.28%.
Beyond sewing the usual seeds of discontent, observe the Larger Monthly Indications.
The above Chart is of extreme importance, it demonstrates how Capital Stocks begin to
turn, Glacial at first, as Momentum builds, they begin to accelerate.
This will end up a 4 or 5 part series discussing the potential impacts.
_____________________________________________________________________________
Price has broken above 2 Key Downtrends. It is attempting to reach the 3rd, which has acted
as resistance for years.
This is a material change in the underlying Bond Market Note Structure. It is no longer the
conventional depository for Principal and Coupon as a great many believe.
______________________________________________________________________________
Capital Stocks are in need of review:
Real Estate - the Hybrid / Principal and Coupon (Rents) A Negative correlation to Higher Rates
with cascading effects to Higher Rates. A 70% increase in Conventional and Jumbo Mortgage
Rates would see a 18 to 24% drop in the Price of Residential Real Estate.
Equities - the Buyback / Prop where Corporate Debt is used for Buybacks
Increased borrowing Costs temper Buybacks, Inflows do not. This is a double
edged sword we will discuss in detail.
Bitcoin - The repository (Not Depository) for excess Liquidity. BTC has a Positive
correlation to rising Rates. BTC has a Price Objective near $137K at the extreme
extensions for Rates of the 10 Year Note Yield.
Bills / Notes / Bonds / - Debt instruments with attendant Hybrid function of Principal / Coupon.
______________________________________________________________________________
Bonds (prior to 2006) were traditionally a function of the Business Cycle which has been supplanted
by the Credit Cycle (no longer a Cycle by appearances).
Prior to 2008 Congress would pass a Bill in the Legislature, after speaking with the US Treasury to
determine how to "Finance" its Fiscal requirements. Once the Bill was passed and signed into Law,
the US Treasury would conduct operations with the Federal Reserve Central Bank in New York to
issue the increased Credit/Debt (The FED taking their statutory 6% issuance) to the US Government.
Bills, Note and Bonds would be placed with Primary Broker Dealers (Fed Member Banks) and offered
at "Auction" to the Public, Institutions, exogenous Central Banks, Funds, Swaps and overnight Swaps
for shorter duration T-Bills sweeps.
This funding mechanism for DEBT no longer exists.
FASB 56 - took the Governments Budgets and Funding "Dark" as a "Matter of National Security". The
General Purpose Federal Financial Reports are Classified Documents.
The material Facts of FASB 56 - files.fasab.gov/pdff...andbook_sffas_56.pdf
13 Short Pages well worth educating one's self as to how the Government conducts itself.
TARP/TALF were undisclosed Operations which maintained their Shadow Financing for years.
94% of Americans were against Commercial Bank Bailouts. Privatizing Gains while publicly
subsidizing losses was viewed with extreme displeasure.
___________________________________________________________________________________
Over the past 14 Year, we see the outcome(s) - Interventions in Auctions by the Federal Reserve,
Yield Curve Control, the Outright Purchase of RMBS/MBS again (this began in 2004 in size as the
Federal Reserve's concerns over Real Estate began to mount).
The FED has become the buyer of Last Resort - currently @ $8.758 Trillion in Assets of which
$8.296 are "Securities" - this excludes "Shadow Operations" of FASB 56.
In less than 2 years, the Federal Reserves Balance Sheet rose from $4.212 Trillion to more than
Double that amount (NET of Shadow Operations)
I estimate Shadow Operation under FASB 56 to be in excess of $3.8 Trillion - this excludes the
Trillions missing from the Federal Coffers @ DOD, HUD and a great many other Agencies.
_________________________________________________________________________________
Follow - On commentary will begin breaking down the Trends and discuss the potent outcomes
and timeframes for each Capital Stock.
There is a large amount of information to be discussed, requiring a methodical analysis of
all points on the outcome curve.
More to follow - HK
Beyond sewing the usual seeds of discontent, observe the Larger Monthly Indications.
The above Chart is of extreme importance, it demonstrates how Capital Stocks begin to
turn, Glacial at first, as Momentum builds, they begin to accelerate.
This will end up a 4 or 5 part series discussing the potential impacts.
_____________________________________________________________________________
Price has broken above 2 Key Downtrends. It is attempting to reach the 3rd, which has acted
as resistance for years.
This is a material change in the underlying Bond Market Note Structure. It is no longer the
conventional depository for Principal and Coupon as a great many believe.
______________________________________________________________________________
Capital Stocks are in need of review:
Real Estate - the Hybrid / Principal and Coupon (Rents) A Negative correlation to Higher Rates
with cascading effects to Higher Rates. A 70% increase in Conventional and Jumbo Mortgage
Rates would see a 18 to 24% drop in the Price of Residential Real Estate.
Equities - the Buyback / Prop where Corporate Debt is used for Buybacks
Increased borrowing Costs temper Buybacks, Inflows do not. This is a double
edged sword we will discuss in detail.
Bitcoin - The repository (Not Depository) for excess Liquidity. BTC has a Positive
correlation to rising Rates. BTC has a Price Objective near $137K at the extreme
extensions for Rates of the 10 Year Note Yield.
Bills / Notes / Bonds / - Debt instruments with attendant Hybrid function of Principal / Coupon.
______________________________________________________________________________
Bonds (prior to 2006) were traditionally a function of the Business Cycle which has been supplanted
by the Credit Cycle (no longer a Cycle by appearances).
Prior to 2008 Congress would pass a Bill in the Legislature, after speaking with the US Treasury to
determine how to "Finance" its Fiscal requirements. Once the Bill was passed and signed into Law,
the US Treasury would conduct operations with the Federal Reserve Central Bank in New York to
issue the increased Credit/Debt (The FED taking their statutory 6% issuance) to the US Government.
Bills, Note and Bonds would be placed with Primary Broker Dealers (Fed Member Banks) and offered
at "Auction" to the Public, Institutions, exogenous Central Banks, Funds, Swaps and overnight Swaps
for shorter duration T-Bills sweeps.
This funding mechanism for DEBT no longer exists.
FASB 56 - took the Governments Budgets and Funding "Dark" as a "Matter of National Security". The
General Purpose Federal Financial Reports are Classified Documents.
The material Facts of FASB 56 - files.fasab.gov/pdff...andbook_sffas_56.pdf
13 Short Pages well worth educating one's self as to how the Government conducts itself.
TARP/TALF were undisclosed Operations which maintained their Shadow Financing for years.
94% of Americans were against Commercial Bank Bailouts. Privatizing Gains while publicly
subsidizing losses was viewed with extreme displeasure.
___________________________________________________________________________________
Over the past 14 Year, we see the outcome(s) - Interventions in Auctions by the Federal Reserve,
Yield Curve Control, the Outright Purchase of RMBS/MBS again (this began in 2004 in size as the
Federal Reserve's concerns over Real Estate began to mount).
The FED has become the buyer of Last Resort - currently @ $8.758 Trillion in Assets of which
$8.296 are "Securities" - this excludes "Shadow Operations" of FASB 56.
In less than 2 years, the Federal Reserves Balance Sheet rose from $4.212 Trillion to more than
Double that amount (NET of Shadow Operations)
I estimate Shadow Operation under FASB 56 to be in excess of $3.8 Trillion - this excludes the
Trillions missing from the Federal Coffers @ DOD, HUD and a great many other Agencies.
_________________________________________________________________________________
Follow - On commentary will begin breaking down the Trends and discuss the potent outcomes
and timeframes for each Capital Stock.
There is a large amount of information to be discussed, requiring a methodical analysis of
all points on the outcome curve.
More to follow - HK