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On today’s show, we discuss:
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US financial conditions are the most accommodative they’ve been since the Fed started hiking rates last year, according to the Bloomberg US Financial Conditions index. pic.twitter.com/JKRcATr7Gv
— Lisa Abramowicz (@lisaabramowicz1) December 13, 2023
Traders are now pricing in 130bp of Fed rate cuts by the end of 2024. pic.twitter.com/wAzMs6P3jF
— Lisa Abramowicz (@lisaabramowicz1) December 13, 2023
With today’s moves the short rate market remains about 90bps lower than the Fed’s dots in Dec ‘24.
Sure the Fed shifted to be more dovish, but pricing move in parallel means either the market thinks the Fed will be ~3x as dovish with the same data or growth will collapse. pic.twitter.com/ecArUD5owf
— Bob Elliott (@BobEUnlimited) December 14, 2023
‘24 will be an important test of the Fed’s credibility given their policy indications vs market pricing.
While their moves yesterday clearly signaled a more dovish reaction function – with easier policy for roughly the same data – the short rate market says all-in on easing. pic.twitter.com/1qbZ9zicZe
— Bob Elliott (@BobEUnlimited) December 14, 2023
If the Fed is going to more structurally go soft on their inflation mandate, it’s a time to sell long bonds not buy them.
Fed’s own dots show no intention to bring core PCE down to at or below 2% til ’26 even under strong economic conditions (UE rate stable at 4.1% thru ’26): pic.twitter.com/2YdCriuAER
— Bob Elliott (@BobEUnlimited) December 14, 2023
The % of new ETF launches that are actively managed has reached a record 80%, which is wild. Active ETFs also taking in a quarter of the flows. Massive BYOA wave commencing. Top 5 ETF chart of year IMO from @SirYappityyapp pic.twitter.com/mQm2z96k3L
— Eric Balchunas (@EricBalchunas) December 11, 2023
Any hedge fund beta that can be turned into an ETF will be turned into an ETF.
At which point, institutions have to ask, “why am I paying hedge fund fees for this? Why do I want something that’s less liquid?”
I’m betting this trend accelerates. pic.twitter.com/eopDacanUc
— Corey Hoffstein 🏴☠️ (@choffstein) November 10, 2023
The great deposit flight risk of 2023… didn’t materialize despite high rates. Deposits have been pretty stable / up for months now.
And before I hear, “but large time deposits are surging,” recognize that the 400bln increase since SVB is *just ~2%* of the deposit base. pic.twitter.com/WQwoVfOs7k
— Bob Elliott (@BobEUnlimited) December 9, 2023
A common q I get these days is when the pile of cash added this year could head for stock and crypto markets
The answer: (potentially) when we get past recession worries
Since 1974, cash levels have started declining an average of 10 months after the first rate cut pic.twitter.com/au026I7B1T
— Callie Cox (@callieabost) December 11, 2023
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