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TGA on lows, next-up ..restock / UBS, KRE / UST yields, USDollar firmer, CNH 7.05 / AI mania



  • McCarthy and Biden would appear ''to agree to come close together because there is no alternative''

  • Debt ceiling deal is coming is the new "China trade deal is coming."...it was a sell the news event and this will be (very most likely) the same after this debt ceiling episode.. >>> the reality will be, that the US govt has to restock its checking account at higher interest rates (pressure deficit, lower tax receipts most likely on slower economy in H2 2023) >>> this will drain liquidity and remove this stock tailwind we've had last 2months

  • The Greens in Germany are currently experiencing a decline in voter favor b/c they are being blamed for the chaos in energy policy. They would currently just get 15% of the vote and have thus fallen behind the radical right-wing AfD

  • Goldman Sachs says A.I. could push S&P 500 profits up by 30% in the next decade >>> first the benefits, which are quite clear, efficiency etc...then the cost, which the world will have to figure out, AI stuff is nuts, great, worrying, unchecked, wonderful... all at the same time. so much about it these days - see Threads below

  • ECB balance sheet has risen again last week as more bonds were bought than matured. Total assets rose by €11.6bn, most since Jan. ECB Balance sheet now at €7,728.6bn, equal to 59% of Eurozone's GDP vs Fed's 32%, SNB's 113% and BoJ's 130%

  • ECB’s De Guindos: Inflation in services is most worrying for ECB

  • Bank of England Governor Andrew Bailey said in a Wednesday speech that U.K. inflation was being fueled by “second-round effects” that would prove sticky

  • UBS multi billion 'windfall' in CS takeover

 

Markets :
  • TGA run down (liquidity add), now will need to restock at more expensive levels (liquidity drain) is all that matters over summer/going into Q3

  • USDollar stay firm(er) as yields pick up again. USD yields firmer, anticipating TGA restock. USDZAR all time highs 19.50 or so, USDCNH 7.05, do watch out, a resurgence of the USD will not be welcome by markets (eventually)

  • Equity markets pushing higher, not anticipating TGA restock - yet ? DAX not too far from all time highs! SPX500 4150-4200 top end of range, but pain trade remains higher in short-term with NQ leading still (megacaps mainly, breath not great etc) >>> would use this short-covering rally and TP on some, look for a lower low if you want to turn bearish (on TGA restocking overtime etc)

 

Craig Shapiro on Twitter: "After a modest pickup in cash at TGA yesterday (reported today), expect the TGA to fall to a new low sub $70bn when reported at the close tomorrow as Treasury continues to deplete its cash hoard while paying more out in interest expenses and receiving less in tax receipts. While…" / Twitter well worth a read, we often talked about it with you on the phone over the last couple of months., this has been a major liquidity add during this debt ceiling negotiations (thus helped supported Eq markets, NQ mainly and megacaps)... this will change/reverse during Q3..




Is the world falling for this again ? :

-Altman, CEO of OpenAI calls for US to regulate artificial intelligence (BBC) May '23

-Zuckerberg, We need a more active role for governments and regulators Oct. '20

-Facebook COO Sandberg calls for government regulation (CNN) June '19








If any problem, issue more debt..


Worth a look ! #UBSG


Former British Prime Minister Liz Truss warns of China threats during Taiwan visit - ABC News (go.com) irrespective of what anyone thinks of China (India above), what on earth was she doing there!?.. many countries would be a whole lot better for looking after their own matters.. without stirring rubbish elsewhere in the world


Great story



have wonderful day

team PVM







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