1/ Monetary and Fiscal outlook for Sept 2020.

continued tailwind from deficit spending.

Fed B/S increase slowly with big vol. (but probably does not matter)

2/ the Fed continues to add $80Bn UST and $40Bn MBS to its balance sheet in Sept. but BoJ/ECB/MAS will retire $48Bn dollar swap line in Sept.

And there are a few days with $40-80Bn one-day swing for Fed B/S. Maybe we will see some fun days.

3/ Treasury continues to do deficit spending at a rate of $40Bn per week. (half the speed of June).

TGA will be pretty much flat for Sept. with an EoM balance around $1618Bn.

No it will not end up at $800Bn at all.

mid-month corporate tax day will be a non-event, unlike 2019

4/ CARES act spending is dwindling down to mostly tax breaks.

SBA is not sending out money. Unemployment is still cut in half.

orange curves are 5D SMA

We are back to the old regime, where most of the deficit is from DoD spending, boomer spending (70% of the outflow).

5/ in Sept, Treasury will sell $224Bn worth of coupon UST, with the Fed buying about $76Bn coupon (1Y-30Y). I think you know what that means for bonds and various sectors.

6/ where is the liquidity coming from for non-billionaires?

partly from mortgages. 80% of the Fannie and Freddy MBS are now funding refinanced loans. and Fed is buying >50% of that chunk in 2020.

That's your non-billionaire bailout at 3% APR.

SP500 companies get loans from the Fed at 1-1.5% APR, plus $600Bn of the said loan will be forgiven sometime in the future...

How much would TSLA be worth, if Elon can dump most of his debt to the Fed?

8/ the Fed has bought >$350Bn of 30Y mortgage at 2-2.5% APR.

if you are paying more than 2.5% APR on your 30Y mortgage, you are overpaying.

9/ now once your neighbors are all doing cash-out refi to pile into TQQQ at $500, that would be the time to call it a blow-off top.