Stimulus (UBI) In Bound
With Biden all but assured to sign the new stimulus “UBI” trial run bill into law tomorrow we can’t help but shudder in dismay how the monetarists continue to wreak havoc on traditional and sensible economics. Yes we know this is much needed and we know many will benefit, but we also know the real reason behind such antics. Its been the same story over and over and over again. DEBT DEBT and MORE DEBT.
Let’s be honest this isn’t a stimulus bill, this is a UBI soft trial run, although by now perhaps its a hard run because let’s be honest, this situation is a year in and ain’t going anywhere fast. We have taken a back seat to commenting to often, to be honest, there isn’t much left to say about what has transpired over the last year. To put it plainly Trillions of future earnings have been brought forward and at an expedient rate. So much value has been front loaded that its no wonder the Inflationistas are back in business and hell bent on opening Pandora’s box. However, here at Magnelibra we know better, we know fundamentally that debt growth is not organic economic growth, its a lipstick on a pig! And the US debt economy is a pig, no doubt.
Yes inflation has picked up, but let’s be honest we are going to talk about inflation and the need for stimulus in the same sentence? Hmm I question that but let’s look at this chart anyway that’s got all the inflationista’s giddy:
Yea all that debt since 2008 and this is barely where we can get back to? Yea you see my point, this isn’t inflation, this is a lost decade and the next decade will be no different because the debt pile only grows and with it comes interest and with interest comes a mega drag on Uncle Sams pocket book and do you honestly think the FED will let long term rates rise so the Eagle can pay homage to $1 Trillion plus interest payments per annum ad infinitum??? Doubt it!
So for us it’s no wonder that Tavi and the crew at Crescat posted this chart the other day:
Doesn’t surprise us, does it surprise you? It may surprise all the short selling fools paying negative vig in the US repo market but alas we remember the long carry days of collecting such fodder on overnight plays…free money in US Treasury basis land, sorry novices thats for pros only but rest assure, this kind of FED bond buying ain’t going no where, in fact we suspect it will continue unabated.
With all this, let’s take a look at the US Treasury Futures curves where we are starting to see the US 30yr paper finally starting to regain itself after the absolute drudging its taken not only vs the front end, but vs the ultra long end as well, talk about double whammy:
We like the 30Y paper here, but the US bond has always had a special place in our hearts! As far as the Bond vs the Ultra (BOB) Futures Chart, to all you prop trade types, your welcome:
Moving over to Equity futures land we wanted to share this Dax chart, where we see someone has opened the box finally, maybe the BUBA backstop is finally taking hold:
In our domestic futures spreads we can see that the Nasdaq is finally gaining back ground from the SP500:
The Nasdaq vs the 2x Russell 2k has also reached an inflection point and whether or not tech comes back here or not, seems like many are eyeing this location here and it wouldn’t surprise us considering this is the preCovid level breakout area:
Yes Tech is the flight to quality because concentration of wealth is key and only the best will do. When we look at the SP500 vs the Russell2k we can only say that this area has given the Russell some trouble and we have been magneting here for quite some time now:
Alright, we know its been awhile but let’s post our futures settlement page for today:
Alright everyone, we hope you have enjoyed today’s update. As we said we are holding our cards close to the sleeve hear awaiting the next tell. We know UBI is here, we know the FED backstop is well entrenched, none the less, the markets volatility seems especially troublesome and that to us means the one way freight train is ripe to run many over. Whipsaw, head fakes you name it all the tricks that the largest players use to get everyone one sided to then pull the rug out or jam it in your face, either way, just try to keep things simple…till next time.
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-Magnelibra Econemotions
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