In the end, cashflow is all what matters
Source: Compounding Quality, Chris Quinn
Fed QT accelerates. Fed balance sheet shrank $91bn in July, -$759bn from peak, biggest drop ever to $8.2tn, lowest level since July 2021
Fed has now shed 22.3% of the Treasury securities it bought during pandemic QE. Fed's total assets now equal to 30.6% of US's GDP vs ECB's 53%, BoJ's 130%. Source: HolgerZ, wolfstreet.com
The Citi US Economic Surprise Index is at the highest levels since early 2021
That being said, there has been some divergence recently between "hard" and "soft" data. Indeed, 'Hope' has been in charge of macro data recently with 'soft' survey data surging back in its mean-reverting manner as 'hard' real data has been fading (led down by industrial, personal finance, and housing data)... Source: Bloomberg, www.zerohedge.com
Before dumping your government bonds think twice
Over the past 40 years, US treasury yields have always declined six months after the last Fed hike. Source. Edward Jones
Which Countries Hold the Most U.S. Debt (which just got downgraded)?
With $1.1 trillion in Treasury holdings, #japan is the largest foreign holder of U.S. debt. Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years. the United Kingdom is the third highest holder, at over $655 billion in Treasuries. Across Europe, 13 countries are notable holders of these securities, the highest in any region, followed by Asia-Pacific at 11 different holders. A handful of small nations own a surprising amount of U.S. debt. With a population of 70,000, the Cayman Islands own a towering amount of Treasury bonds to the tune of $284 billion. There are more hedge funds domiciled in the Cayman Islands per capita than any other nation worldwide. In fact, the four smallest nations in the visualization above—Cayman Islands, Bermuda, Bahamas, and Luxembourg—have a combined population of just 1.2 million people, but own a staggering $741 billion in Treasuries. Source: Visual Capitalist
Another big week ahead for us earnings
$PLTR $DIS $BABA $RIVN $AMC $UPST $SMCI $UPS $LCID $LLY $TWLO $PLUG $MARA $TTD $NVO $DDOG $RBLX $NVTA $CELH $SOUN $IONQ $TSN $GOLD $SWKS $WYNN $LAZR $MGNI $APPS $CHGG $ARRY $SONY $DNA $BRK.B $MPW $TOST $PARA $LYFT $BROS $LI $SWAV $FIVN $CYBR $CPA $CGC $VTRS $PENN $RNG $NVEI $CLOV $OKE Source: Earnings Whispers
Last week was a painful one for multi-assets portfolios: it was the worst week in four for Treasuries, the worst for commodities since June and the worst for stocks since March
Over the week, the 2s10s curve steepened by 19 bps, a 2.3 standard deviation move. As a consequence, the sectors that slid the most were those that are most exposed to bond yields, ie the long-duration stocks (Communications & Tech despite earnings beats by Apple and Amazon but also Utilities). Energy gained as Saudi Arabia said it would extend production cuts to prop up prices. Source: Bloomberg, J-C Gand.
Congrats to Warren Buffett as Berkshire Hathaway $BRK.A closed at an all-time high today. Buffett's 15% ownership in the company is now worth $118 Billion.
Source: Barchart
