June 2024 DDD

[ducati916]

So let's start with this:



Full: https://www.cbsnews.com/news/lindse...rolina-face-the-nation-transcript-06-09-2024/

Rather indicates what the war is 'actually' about.

Now with USD hegemony intact, the US can just print USD to exchange for that mineral wealth.

Mr Putin on increasing NATO/US involvement:



Full: http://en.kremlin.ru/events/president/news/74223



Trucking is a big deal, as we saw in the exit stages of covid.



Nothing really major in earnings.



Manufacturing data and PMI data are the only important stuff.

Back to the UST markets:



So essentially Yellen has no choice in issuing Bills as opposed to Notes or Bonds. There is no more demand for Notes or Bonds. What demand there was, she issued.

Any excess issue would result in higher interest rates (more supply than demand = falling price and increased yield) which immediately pushes USD higher which crashes everything except gold.

So as low interest debt rolls off it is replaced with largely high interest short term Bills. Which obviously need to be rolled over far more quickly. So the Fed's 'higher for longer' really hurts the US Treasury whose interest payments are now exceeding $1Trillion.

Over the next few years, a further $17 Trillion of longer term maturing low interest debt needs to be refinanced.

At what rate? The Fed's 'higher for longer'?

Powell is absolutely killing Yellen.

So you just know that at some point, Powell will politically be forced to cave in and lower rates. The Fed is independent you say? LOL.

Then we have Senator Graham warmongering for the US to go full Vietnam in the Ukraine:

Really? Remember this chart:



Already the interest expense exceeds US military spending. The Senator wants to ramp the war up? With what? And has anyone actually told him that China actually manufactures the US weapons and munitions?



The US is in twilight.

It can be turned around over time. But not with the current f*ckwits in charge.

The roots of this crisis lie in the Obama administration back in 2014.

If another broad European hot war breaks out, that will undoubtably trigger a hot WWIII. The US and Europe seem intent on so doing. Particularly the French and British. Unbelievable.


*Note
I will change that XLE trade to a 'No Trade'. Just reviewing the charts, still not looking that great.



GLD will also be a PUT @ $214-$210

TLT



CALL @ $93-$95


So just a word on entering trades: I can enter Option spread trades conditionally. Buy $93 Call, sell $95 Call, IF price trades at $XX. So this means I can automate the positions over the w/e, enter them for Monday's trading and some, all or none will actually trade based on price. Further I can require that trades only be executed after say 10am, which avoids the early morning volatility.


jog on
duc

 

[ducati916]

Insider trading the legal way:

Hot Corner Live Event | Stock Market TV

www.stockmarkettv.com

jog on
duc

 

[ducati916]

Nice work with your option trades last week. Who knew that XLK would spike as high as it did?
NVDA and the Apple AI news pulling the US index higher. Market breadth is dreadfully thin. Bear market thin but it's going up.

WTI oil back into it's neutral trading range. I'll buy again when it dips down to $73.

Good to see the 20% copper smelters closing for seasonal maintenance. May stop price drifting lower next week.

Possible "peak gold" production eh? They'll be looking at the recent lava flows then for gold once they cool down.

Uranium:



Full: https://www.bloomberg.com/news/feat...9.uYb8xBocSIBi752xP4MhWb02OGYGxzILrLu6a5Gqrws

jog on
duc

 

[Sean K]

Does this add to your USD, OIl and Gold thesis @ducati916 ?

Saudi Arabia ends petrodollar agreement: What it means for the USD, Bitcoin, and gold

The Kitco News Team brings you the latest news, videos, analysis and opinions regarding Precious Metals, Crypto, Mining, World Markets and Global Economy.

www.kitco.com

 

[divs4ever]

since the Ukraine has allegedly ( don't remember a lot of drilling in the Ukraine in the last 10 years ) has 12 Trillion in rare minerals will the outcome be 12 times worse than Afghanistan ( which only had $1 Trillion in rare minerals )

just asking 'cos there is a LOT of fighting and not much exploring

 

[ducati916]

Does this add to your USD, OIl and Gold thesis @ducati916 ?

View attachment 178794

Saudi Arabia ends petrodollar agreement: What it means for the USD, Bitcoin, and gold

The Kitco News Team brings you the latest news, videos, analysis and opinions regarding Precious Metals, Crypto, Mining, World Markets and Global Economy.

www.kitco.com

Yes it does.

The key is that profits would be invested into UST. This (has) allowed the US to run low interest rates for 40yrs and fund deficits at those low rates. That is now over.









Using the IMF figures:

7% of US GDP fiscal deficit with at/near full employment = $1.9T deficit.
Global GDP in 2024 is estimated at $110T (World Bank).
Global GDP growth in 2024 is estimated at 3.2% (real); let’s say nominal GDP growth is closer to 6%.
6% nominal GDP growth x $110T GDP = $6.6T global GDP growth.
US deficit/global GDP growth = $1.9T/$6.6.T = 29% of GDP growth needed to finance US deficits.

Now factor in POO and Permian Basin output figures (falling due to lower prices) which will then pressure prices higher on OPEC oil and the resulting inflationary pressures on top of the ratcheting higher deficits.

Meanwhile BRICS and OPEC transition to gold as the reserve asset that settles deficits after trade is balanced.



So there could well be funding issues in the Eurodollar markets due to French issues.



Meanwhile:



Sectors are rallying today:



Bounce or bottomed?

I think bounce. Obviously we wait and see.






Bill Gates going nuclear:

Full: https://www.npr.org/2024/06/14/nx-s1-5002007/bill-gates-nuclear-power-artificial-intelligence


jog on
duc

 

[ducati916]

Does this add to your USD, OIl and Gold thesis @ducati916 ?

View attachment 178794

Saudi Arabia ends petrodollar agreement: What it means for the USD, Bitcoin, and gold

The Kitco News Team brings you the latest news, videos, analysis and opinions regarding Precious Metals, Crypto, Mining, World Markets and Global Economy.

www.kitco.com

An alternative take from Mr Rickards:

There’s been a lot of talk over the past several days that Saudi Arabia is ending the petrodollar deal it’s had with the U.S. for 50 years. This story has been highly exaggerated. Today I want to address the misinformation you’re seeing right now, and show you what really happened. News services of dubious accuracy reported that Saudi Arabia had ended the petrodollar deal on June 9, after 50 years. This report was quickly followed by claims that oil would now be priced in everything from Chinese yuan to Indian rupees, Russian rubles and other currencies without strong claims to being reserve currencies. The implication of these stories was that the U.S. dollar’s long reign as the leading global reserve currency was over. New reserve currencies would come to the fore, most prominently the BRICS planned currency. The crypto crowd wasn’t far behind shouting that the demise of the dollar proved that cryptocurrencies were the way of the future. The internet was on fire with these and other histrionic claims. Don’t Buy It In fact, almost everything you just read is nonsense. There have been some very important developments in international finance and monetary policy in recent days but they’re far more nuanced and ultimately more important than stories grabbing the headlines. As the saying goes, it’s complicated. Let’s deconstruct what’s actually going on. The petrodollar deal was concluded in June 1974 under the Nixon administration. It was a tense time following the 1973 Yom Kippur War and the Saudi oil embargo of exports to the U.S. I played a role in the run-up to the deal when I went to the White House to meet with Helmut Sonnenfeldt, Henry Kissinger’s most trusted aide. We discussed a plan to invade Saudi Arabia in case the Saudis didn’t agree to what the Nixon administration had put on the table. The deal had four main parts. The Petrodollar Deal Saudi Arabia would price oil in U.S. dollars. Saudi Arabia would take the dollars it earned through oil sales and invest them in U.S. Treasury securities or in large bank CDs. The Treasury and the banks would lend those dollars to developing economies that would purchase equipment and agricultural products from the U.S. Finally, the U.S. offered Saudi Arabia military protections against the Soviets and regional rivals. The security agreements and the financial agreements were put into writing but have never been revealed. The petrodollar deal was a win-win for the participants and the world. The U.S. found a reliable prop for the dollar’s reserve currency status (since other countries would need dollars to buy their own oil) and Saudi Arabia enhanced its national security. ​

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Recycling the Saudi dollars to developing country buyers was a boost to world trade and commodity prices and helped pull the world out of the severe 1974 recession. At the Saudi’s request, the U.S. kept a veil of secrecy over the exact amount of Treasuries owned by Saudi Arabia; their holdings were lumped in with other OPEC members from the region and were not reported separately. Did the Saudis just end the petrodollar deal as reported? Not exactly. Less Than Meets the Eye The deal was never a formal treaty ratified by the Senate, which would rise to the level of law. It was a non-binding executive agreement; not much more than a written handshake. It contained annual renewal provisions and could be terminated at any time by either party. The Saudis held up their end by pricing oil in dollars and buying U.S. Treasuries. The U.S. held up its end by sending troops and repelling Iraq’s invasion of Kuwait in Operations Desert Shield and Desert Storm in 1990–91. The agreement suited both sides and so it continued. The agreement never had an explicit “expiration date” so reports that the deal has expired are overstated. The Saudis have notified the U.S. that they’re not extending the deal, but that decision has to be put in the context of other U.S.-Saudi discussions. The U.S. and Saudi Arabia are currently in negotiations on a new financial and security arrangement that would supersede the old petrodollar deal. The new agreement will provide that Saudi Arabia will recognize Israel as part of the broader Abraham Accords initiated during the Trump administration. The U.S. will continue to offer security protections to the Saudis, but those will be expanded to include uranium enrichment technology. Ostensibly this technology would be used to fuel nuclear reactors but might later be used to build nuclear weapons. Saudi Arabia wants this technology because it feels threatened by Iran’s own uranium enrichment capability. Not Much Is Different On the financial side, Saudi Arabia would continue to price oil in dollars but could agree to be paid in other currencies, primarily euros, as is the case today. The Saudis would continue to purchase Treasury securities alongside its holdings of gold. In short, not much would change from the current petrodollar deal except for the enhanced security guarantees. The reason Saudi Arabia allowed the existing deal to lapse was to gain leverage in the new negotiations and because the old deal would be replaced by the new deal in all events. The new deal will not be completed for six months, perhaps longer. It’ll be handed off from the Biden administration to the new Trump administration in January 2025 if Trump wins the election, which I believe he will. The reason for the delay is that Saudi Arabia cannot recognize Israel until the Gaza War is over. That’ll take a few more months at least. There’s an irony there because the Trump administration created the Abraham Accords and may be the one to complete the process by including Saudi Arabia under that umbrella. That’s a summary of what’s going on. Here’s what’s not going on… Not a Dollar Death Blow Oil will not be priced in rupees, rubles, yuan or other emerging-market currencies except in very small quantities. About 20% of oil purchases today are in euros and that can be expected to continue. The new arrangement between Saudi Arabia and the U.S. doesn’t mark the end of the dollar as the world’s leading reserve currency. It doesn’t imply the collapse of the global market in U.S. Treasury securities, which a lot of people have been claiming in recent days. The oil and dollar markets will be business as usual. Ties between the Saudis and the U.S. will be even closer because of the nuclear enrichment aspect of the new deal. None of which is to say that there have not been important developments in international financial and monetary markets away from the Saudi situation. There have. In particular, there were major policy initiatives announced at the St. Petersburg International Economic Forum (SPIEF) hosted by Vladimir Putin from June 5–8.​

jog on
duc

 

[ducati916]

Oil News:

Oil markets were eagerly anticipating the start of peak driving season in the summer, but gasoline demand so far has been mostly disappointing, with US consumption some 2% lower year-over-year.

- Asia has been the first continent where gasoline weakness led to refinery run cuts, as a glut of light distillate supply has pushed Singapore gasoline cracks below the $5 per barrel mark.

- While US gasoline cracks are notably higher than elsewhere, currently around $22 per barrel, the high US refinery utilization rates create a lot of downside for gasoline, especially as gasoline stocks are the highest since 2021 for this time of the year.

- The pressure on gasoline might increase further down the line as this year’s two main refinery newbuilds, Nigeria’s Dangote and Mexico’s Olmeca, are both delayed and will not start up in time for the summer season.

Market Movers

- US refiner Phillips 66 (NYSESX) agreed to sell its 25% stake in the Rockies Express Pipeline for some $1.28 billion including debt to privately owned Tallgrass Energy which owns the remaining 75% stake.

- Commodity trading giant Trafigura has agreed to pay a $55 million fine to settle charges of fraud and manipulation from the US Commodity Futures Trading Commission, having traded misappropriated Mexican gasoline.

- French oil major TotalEnergies (NYSE:TTE) sold its Brunei upstream business to Malaysian exploration firm Hibiscus Petroleum for $260 million, using those funds for further Namibia drilling.

Tuesday, June 18, 2024

Oil prices have gradually recouped all their losses following the OPEC+ meeting and ICE Brent has silently moved back to $84-85 per barrel, without there being any notable change in fundamentals. Macroeconomics are starting to feel better, however, and should the U.S. Fed comments this week persuade the market that things will get better soon, the strength in oil could be maintained for longer.

Chinese Refinery Runs Disappoint Again. Chinese refinery output slid 1.8% year-over-year in May to 14.25 million b/d, driven lower by maintenance overhauls and shaky refining margins, with throughput in 2024 to date staying flat compared to the 2023 average of 14.48 million b/d.

Tensions Fly High in West Africa. Niger has shut off oil exports via the 1,240-mile pipeline connecting it to Benin’s coast, having loaded only one cargo since its launch, after Benin arrested five Niger nationals for allegedly entering the Seme loading terminal under false pretenses.

US States Defy White House’s Decommissioning Rules. The states of Texas, Louisiana, and Mississippi sued the US government to block the Biden administration’s proposed rules that require offshore producers without sufficient reserves to provide some $7 billion in decommissioning funds.

Russia Becomes Europe’s Largest Gas Supplier Again. Overtaking the United States, Russia has become the largest supplier of natural gas to Europe despite having curbed pipeline deliveries to a trickle, accounting for 14% of the continent’s imports in May.

Serbia Makes U-Turn on Lithium Mine. According to media reports, Serbian President Aleksandar Vucic is readying to approve the development of Europe’s largest lithium mine at the Jadar site in the west of the country, two years after Belgrade called off Rio Tinto’s (ASX:RIO) megaproject.

Saudi Arabia Hunts for Mining Deals in Chile. Saudi Arabia’s mining minister Bandar al-Khorayef is expected to travel to Chile in July, as the Middle Eastern kingdom is nearing deals to source lithium abroad and potentially enter Chile’s mining sector.

Singapore Offers Rebates for Oil Refiners. As Singapore is preparing to launch its carbon tax scheme, with costs estimated at around $1 per barrel of crude or a quarter of current refining margins, the city-state is offering refiners rebates of up to 76% in 2024-2025 to remain competitive.

Chinese Solar Producers Beg for Government Intervention. Chinese manufacturers of solar panels have asked Beijing for immediate government intervention to halt a plunge in prices of solar cells and modules amidst rampant overcapacity, having already plunged 50% last year.

UAE Eyes Rapid LNG Growth. Abu Dhabi’s state oil firm ADNOC has taken a final investment decision on its 9.6 mtpa liquefaction terminal in Ruwais, having already signed three 15-year term supply deals with Germany’s SEFE and EnBW as well as China’s ENN Natural Gas.

Strikes Rattle Argentina’s Upstream Industry. Sending shockwaves across Argentina’s prolific Vaca Muerta shale play, the Latin American country’s oil union has called for strikes this week to demand higher salaries just as production in the country rose to multi-year highs of 680,000 b/d.

Copper Prices Keep on Sliding Lower. As metals markets were disappointed by China’s slowdown in industrial production growth, as attested by May statistics published this week, copper prices traded on LME fell to their lowest in eight weeks at $9,630 per metric tonne.

ExxonMobil One Step Closer to Nigeria Exit. Nigerian upstream firm Seplat Energy announced that its agreed $1.28 billion purchase of ExxonMobil’s (NYSE:XOM) shallow water assets in the country is no longer blocked by the state oil producer NNPC, bringing closer the US major’s exit.

Shell Bets Big on LNG Expansion. UK-based energy major Shell (LON:SHEL) agreed to purchase Singaporean LNG firm Pavilion Energy from investment firm Temasek, taking over its 6.5 mtpa portfolio of long-term supply contracts and fortifying its position as the world’s top gas trader.




The theme de jour is 'concentration' and/or lack of breadth:



For the month to date:



Some takeaways:

On the stock buybacks: what is the equivalent data on stock Options issue to management?

NVDA

First total shares:



Insider Option grants and sales:



It goes on a lot more. LOL.

I have seen this movie before. Spoiler alert: it didn't end well.

Two from Mr fff:



I have had a post on 'passive flows' and how that works previously. For the moment, it drives the mega-caps higher in a positive feed forward loop. If (when) that reverses, you will engage the negative feed forward loop.

So SOXX. I have run out of my 12 chart limit.

I am thinking about opening a position. Ahem, short. Obviously it would be an Option LEAPS position, if the bubble is only partially inflated it could essentially blow up the account.

Very exciting stuff.

I may have to do a pg. 2




Full: https://thehill.com/opinion/finance...stand-a-chance-against-the-us-in-a-trade-war/

China has built trading partners throughout the globe. I have had charts demonstrating this previously. China will emerge the victor in an out and out trade war, which is already well under way.

jog on
duc

 

[ducati916]

SOXX:



Same 3mths for Taiwan Semi.:



None of my longer term charts indicate a 'top' or turning point. This is more just a 'gut' trade. Of course between now and tomorrow I may come to my senses.

jog on
duc

 

[ducati916]

 

[peter2]

Excerpts from my Pre-market notes; Typed from my handwritten notes so you can read it.

Swing Trade Opps: gold, silver, copper opening gap up, Li still weak, ALB tumbling, no demand.
COPX, SLV let them ride.
SOXL take profit on open, close it asap.
TQQQ close it at yesterday's low, 75.75/70

Day Trade Opps:
Duc is sniffing out a short on Semi's, agree, certainly overbought due for temporary weakness.
TQQQ opening near highs, NVDA gap up - possible short with wider stop or SOXL short if available ignore SOXS-long

Watch for short TQQQ if available or short NVDA with 2.50 stop.



Was able to short NVDA with a $2 stop, twice. Good result for day (+3.5R).

Similar chart on TQQQ and shorts were available but I prefer to fade the opening gaps when they align with my daily bias.

Both swing trades in SOXL and TQQQ were closed for good results. COPX and SLV in profit now, hoping metals rally more.
Can end week here. No need to trade Friday unless there's a standout opp or swing trade setup. More shorts?

@ducati916 Le Duc's nose on the money with SOXX weakness (Too high priced for me). Thanks for the tip.

 

[peter2]

I'm not a fan nor user of intraday pivot points, but I do like to see the prior days High and Low levels on my intraday charts.

Look how today's price action respected yesterdays High and Low level. It wouldn't surprise me if todays Low ends near the Low from two days ago.

 

[ducati916]

The indices are having an off day courtesy of NVDA/AAPL/MSFT

Lack of institutional short sellers:



And I had a look at SOXX



I want the $255 PUT. Look at the spread. Almost $10. That puts you $1000 underwater/contract immediately.

Even SMH





Probably because the vol. ramped up.

Oil



War




Mr fff



Mr fff was obviously all over the trade.

jog on
duc

 

[ducati916]

Oil News:

Friday, June 21, 2024

The onset of hurricane season in the US, improving demand figures that are corroborated by shrinking crude and product inventories, and more visible Chinese buying have come together to lift oil prices to their highest since early May. The market was also reminded of the dysfunctional Red Sea navigation with the Houthis sinking another bulker this week, adding upward pressure to oil prices.

Chevron-Hess Merger Stalled by Arbitrage Delays. Even though three months have passed since the case for a contract arbitration panel on Chevron’s planned takeover of Hess’ Guyana assets was filed, there is still no final arbitrator selected, delaying the $53 billion merger.

Alberto Becomes the New Scare for the Gulf. A storm system has made landfall in Mexico’s northeast regions, becoming the first named tropical storm of the 2024 Atlantic hurricane season, with Tropical Storm Alberto bringing heavy rains that disrupted lightering operations in Corpus Christi and Beaumont.

Here Comes the New PE-Backed Gas Giant. US private equity giant Carlyle Group (NASDAQ:CG) will form a new Mediterranean-focused oil and gas company after purchasing Energean’s (LON:ENOG) assets in Italy, Croatia, and Egypt for $945 million, naming former BP boss Tony Hayward as its new CEO.

Europe Approves 14th Russia Sanctions Package. The European Union approved a 14th package of sanctions against Russia that bans re-exports of Russian LNG in the EU, however steering clear of banning LNG imports per se, whilst also blocking any financing for Russia’s planned Arctic and Baltic LNG terminals.

Iran Boasts of Ever-Increasing Oil Production. Iran’s oil minister Javad Owji stated that the country’s crude output reached 3.6 million b/d, the highest level since the 2018 reimposition of US sanctions, with some 1.5 million b/d allocated for exports that still mostly revolve around Chinese buyers.

Italian Major to Farm Out Ivory Coast Finds. Italy’s oil major ENI (BIT:ENI) is reported to be looking into a partial divestment of its offshore exploration activities in Ivory Coast, seeking to sell up to 30% of its holding to garner some $1.1 billion from the emerging frontier, home to the largest oil find of 2021 (Baleine).

Oil Leaks Jeopardize Nigeria’s Supply. Nigerian upstream firm Aiteo was forced to shut down all oil production at its 50,000 b/d Nembe Creek facility, the largest of 11 fields operated by the company in Bayelsa state, after detecting a leak in the pipeline feeding the Bonny oil export terminal.

China’s Spike in Hydro Helps Non-Fossil Generation. Heavy rains across spring months have led to a notable resurgence in Chinese hydropower generation, skyrocketing to 115 billion KWh last month, up 40% year-on-year and potentially rising even higher as monsoon season promises to be above average.

European M&A Doesn’t Really Work. Protracted negotiations between the Dutch and German governments over the sale of the German arm of grid operator TenneT have collapsed after the two sides failed to agree on a price, estimated to be around $20-25 billion.

Chevron Eyes New Angola Opportunities. US oil major Chevron (NYSE:CVX) signed two risk service contracts with Angola for offshore blocks 49 and 50, located in proximity to its existing Cabinda concessions, pledging to undertake seismic surveys in the previously untapped area.

China Tames Its Coal Ambition. China’s coal production growth tapered off after rapid growth in 2022-2023, with Chinese miners producing 1,858 million tonnes of coal in January-May, down 3% year-over-year as Beijing sees the country’s energy supply as more comfortable.

Suriname Dreams of Repeating Guyana Success. The South American country of Suriname expects to produce 400,000 b/d of oil equivalent from its offshore fields by 2030, led by TotalEnergies’ fields in Block 58 that are expected to start producing in 2028 and account for at least half of that growth.

Mexico Refuses to Give Up on Dos Bocas. Chief executive of Mexico’s state oil firm Pemex Octavio Romero reiterated his promise to launch crude processing at Mexico’s new Olmeca refinery by end-2024 despite being almost three years overdue, eyeing a ramp-up to 163,000 b/d.



So while (for the moment) I have missed the SMH trade, I got short SNAP. LOL.

I'll return later with a roundup of the week and accounting for this week's trades via sector ETFs.

jog on
duc

 

[ducati916]

So last week:



So you can probably work out for yourself the results.


jog on
duc

 

[ducati916]

Duc's:

XLB Bear PUT $89/$87
XLC Bear PUT $84/$81
XLE Bear PUT $89/$86
XLRE BULL CALL $38/$40
XLF BEAR PUT $41/$40
XLK BULL CALL $229/$239
XLI BEAR PUT $122/$120
XLP BEAR PUT $77/$75
XLV BULL CALL $146/$148
XLU BEAR PUT $69/$67

jog on
duc

 

[ducati916]

The 'bubble' is in US debt.

That bubble needs a high and constantly rising stock market to just try to break even on tax receipts vs debt interest.

This imbalance in the SPY of NVDA/MSFT/AAPL/AMZN/GOOG will, if it goes into reverse, collapse the SPY/QQQ/DIA

Liquidity is ALWAYS the issue. Liquidity being low currently, places a significant risk of high market volatility. The Fed or Treasury will need to sort this (latest) liquidity issue out before it bleeds into all other asset classes.

There is a major Japanese bank backwards on interest rates that needs to raise capital urgently. A capital raise sucks in liquidity removing it from the wider market. Is this bank 'systemic'? Who really knows until after the fact. Bear Stearns wasn't, Lehman was.

These constant crises of liquidity: in a strong economy?

jog on
duc

 

[ducati916]

Duc's:

XLB Bear PUT $89/$87
XLC Bear PUT $84/$81
XLE Bear PUT $89/$86
XLRE BULL CALL $38/$40
XLF BEAR PUT $41/$40
XLK BULL CALL $229/$239
XLI BEAR PUT $122/$120
XLP BEAR PUT $77/$75
XLV BULL CALL $146/$148
XLU BEAR PUT $69/$67



jog on
duc

 

[ducati916]

US Government funds: $7.1 trillion. Held by various US government pension funds and by the Social Security Trust Fund (we discussed the SS Trust Fund holdings, income, and outgo here). These Treasury securities are not traded in the market, but are purchased directly by the funds from the Treasury Department, and at maturity are redeemed at face value. They’re called, “held internally,” and are not subject to the yield-whims of the markets.

The remainder amounts to $27.6 trillion currently, they’re the securities “held by the public.”

A small portion of these $27.6 trillion in securities cannot be traded, such as savings bonds (including the popular I bonds), and some other bond issues.

The remainder are Treasury bills, notes, and bonds, plus Treasury Inflation Protected Securities (TIPS), and Floating Rate Notes (FRN). These securities are traded (“marketable”). At the end of Q1 – that’s the timeframe we look at below), there were $26.9 trillion of these securities outstanding.

Foreign holders: $8.0 trillion. Includes private sector holdings, and official holdings, such as by central banks. China, Brazil and other countries have been reducing their holdings for years. European countries, the big financial centers, Canada, India and other countries have been loading up. In total, foreign holdings rose to an all-time high in March and dipped a little in April, which was still the second highest ever. While foreign holders in aggregate have increased their holdings in dollar terms over the years, their share of the total debt outstanding has plunged from 33% a decade ago, to 22.9% now because they have not kept up with the rapid increase of the US debt (we discussed the details of those foreign holders here).

The rest is in the hands of US Holders.​

The Securities Industry and Financial Markets Association (SIFMA) just released its Quarterly Fixed Income Report for Q1. It doesn’t spell out the dollar amounts, but the percentage of Treasury bills, notes, bonds, TIPS, and FRNs outstanding. As of March, there were $26.9 trillion of these Treasury securities outstanding. And they were held by:

US mutual funds: 18.0% of Treasury securities outstanding (about $4.8 trillion). They include bond mutual funds that hold Treasury securities, and the T-bill holdings at money market mutual funds.

Federal Reserve: 16.9% of Treasury securities outstanding (about $4.6 trillion in March). Under its QT program, the Fed has already shed $1.31 trillion of its Treasury securities since the peak in June 2022 (our latest update on the Fed’s QT).

US Individuals: 9.8% of Treasury securities outstanding (about $2.6 trillion). These are people who hold them in their accounts in the US.

Banks: 8.1% of Treasury securities outstanding (about $2.2 trillion). We saw in March 2023, banks hold a lot of long-term Treasury securities and MBS that lost a lot of market value due to the rise in yields, and as depositors saw this and got scared and yanked their money out, some banks collapsed. According to FDIC data, the total amount of all types of securities held by banks – Treasury securities, MBS, and other securities – was $5.5 trillion at the end of Q1, with cumulative unrealized losses on all their securities rising to $517 billion. The $2.2 trillion are just Treasury securities.

State and local governments: 6.3% of Treasury securities outstanding (about $1.7 trillion).

Pension funds: 4.3% of Treasury securities outstanding (about $1.2 trillion).

Insurance companies: 1.9% of Treasury securities outstanding (about $510 billion). Warren Buffett’s insurance conglomerate, Berkshire Hathaway, has increased its holdings of T-bills to $153 billion.

Other: 1.5% of Treasury securities outstanding (about $400 billion).

This shows just how far and wide Treasury securities are spread. If these investors lose interest at current yields and demand at current yield vanishes, yields have to rise until sufficient demand materializes. And that can happen all of a sudden, which we saw happen when the 10-year yield briefly pierced 5% in October, unleashing a torrent of demand that bid up prices, and so the yield plunged again. Currently, amid blistering demand, the 10-year yield is back down to 4.25%, even though T-bill yields are close to 5.5%.

To what extent are interest payments eating up the national income, and how long can this continue? See… Spiking Interest Payments on the Ballooning US Government Debt v. Tax Receipts and Inflation: Q1 Update


So who will sell easily and who will hold through drawdowns or outright losses?

1. Foreign buyers are increasingly sellers.
2. Individuals (although some hold and hope)
3. Banks (will hold) but require bailouts BTFP etc.

Liquidity is draining (increased selling or falling demand). Which means the Fed will need to increase their holdings (print and buy).





Now from Mr Dot.Com:

US drones attack Sevastopol

If true, this is a further escalation.

pg. 2

 

[ducati916]

NVDA completes its stock split:





So the indices lower, most ETF sectors higher.



I suppose the question is: if the indices continue to sell-off will the sectors continue to move higher? Mr Green's passive flow theory would then move into reverse with regard to the mega-caps. Would that cash spigot redirect into smaller caps and thereby ETFs?

Of course BTC:



Correlated with Tech., the QQQ and therefore NVDA, having a torrid time of it.

jog on
duc