FOMC Week + Elon Says US Govt "Magic Money CPUs"

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Source: YouTube Verdict Ted Cruz Podcast

Elon was on Ted Cruz’s podcast Verdict and boy he didn’t disappoint. He said computers within the government can just “send money out of nothing”, stating he has found about 14 “Magic Money Computers.” The reality of what he said is that this is true, but what isn’t true is his statement “out of nothing.” The government accounts that are debited are reflected in the total US debt pile, which as of today is $36.6 Trillion. Just to put our debt into perspective, in 2020 the total was $25.9 Trillion. So in 5 years, the US debt has grown by $10.7 Trillion or 41.3% this is massive.

So what we want you guys to understand is:

1. Very little oversight exists on the govt payments systems and Elon has made this very obvious.

2. The real losers within all of this is the American populace that is inundated with this debt which hinders the governments ability to actually allocate funds to infrastructure and or other public works or social programs that could tackle some of our most debilitating problems.

3. Interest costs continue to destroy the balance sheet and its one of the reasons we believe rates will eventually return to ZIRP (Zero Interest Rates Program)

Speaking of interest rate costs, and as this chart points out, you can see that if the FOMC cuts rates, this directly reduces the total interest costs directly.

Here is another take on federal spending from the Peterson Foundation which shows interest taking over second place in regards of largest expenditure:

If you want to listen to the whole interview, here is the link, Elon on Verdict w Ted Cruz

Ok the FOMC is on tap this week and its widely accepted that they will leave rates on hold. Although we will suspect they will continue to be “data dependent” but we know the fundamentals are weakening, we know the other global central banks are cutting and that this recent falter in equities may just open the doors for them to start accelerating their easing rhetoric. So although we also expect them to do nothing at this meeting, we are very interested in their short term outlook on the economy and whether or not JPowell will wear this concern on his sleeve. We suspect he will not be hawkish and that he will start paving the way for future cuts to transpire.

The data from today was abysmal as retail sales continues to weaken and Empire Manufacturing was also well below expectations. We expect the data to continue to exhibit weaker than expected and that this trend will eventually lead to opening the door for the FOMC to cut rates. As far as US government yields today, the 10Y is -2bp at 4.30% and our line in the sand remains above at 4.371%:

We will expect the equity markets to continue with their consolidative to higher mode here and we haven’t rolled the futures yet to June. The EminiSP500 range we target is 5555 to 5728 for this week with 5634 our pivot for now and longs in control now down here:

Another chart we are keeping an eye on is Gold, and last weeks sellers will be stopped out here above $3020 and we could see a renewed push higher to test $3100 if that transpires:

Ok we will be back with more let’s move to the subscribers only data, if you are interested in seeing all our data and receiving our daily insight which includes all the settlement and rolling changes of all the markets we follow, you get the Magnelibra CTA Sentiments indicator so you know the trends of the markets we cover, you get our exclusive look at our MEGA8s data which tracks the top market cap stocks and we offer unique ways to hedge static long only books like this and finally you get our StrategyB (formerly MicroStrategy) data which tracks a covered call strategy, their volatility and data that is important to valuing this stock and its Bitcoin strategy. Anyway we know the price is right and we know you will gain a unique perspective and develop a very keen mindset that will assist you in viewing financial trading markets and being successful in all of your endeavors!