Withholding tax collections dropped sharply in May, reflecting the impact of the new tax law. But excise taxes were up sharply. Here’s what it means for the markets.
Deposit growth has turned very slow. Watch out for the next outright decline in deposits. There’s a high correlation between European deposit levels and US stock prices. That’s because European institutions are big players on Wall Street.
By the end of the year the Fed will have withdrawn $450 billion from the banking system. The annual bloodletting will then plateau at $600 billion per year until the balance sheet reaches a tight reserve position. But loan demand is increasing. Here’s why that’s bad news.
Treasury auction demand has risen along with supply recently but bond prices keep falling and yields keep rising. Why? Because buyers must liquidate bonds in the secondary market to raise the cash to buy new issues. That’s just one sign of the tightening liquidity noose that is strangling the markets. There are more. Here’s what…
Tax collections surged in April on a massive gain in individual non-withheld income taxes. On the other hand, social security taxes, which weren’t impacted by tax law changes, showed no gain on an inflation adjusted basis. Here’s what that means for your investments.
The macro liquidity picture shows you why this rally should be sold.
Withholding tax collections continued their decline in the month ended April 30, reflecting the impact of the new tax law. As a result, we should continue to expect increases in Treasury supply to pound the market every month. Here’s how this works and what it means for the market.
But it hasn’t done much. Things are about to get worse–a lot worse.
The CBO (Congressional Budget Office) confirmed it in a report issued April 9. It projects massive and growing deficits for the next 8 years. That’s stimulative for the economy but bad news for the stock market, which the Treasury just goosed to the tune of $114 billion. Here’s the story, and why it’s ultimately bearish.
The Fed is on course with its balance sheet shrinkage program that is designed to eventually “normalize” this size of its asset base at a tight reserve position. As expected, the effects are showing up in the markets. Here’s why it will get worse.