89.1 Jay Powell Sees Safe-Asset Demand Surge; Why?

———Ep 89.1 Summary———
Jay Powell has confirmed a surging Fed program (RRP) is partly the result of safe-asset demand. But he plays it off as a monetary technicality, mere arcana. Nope! Safe-asset scarcity is step one along a well-trod path towards a malfunctioning economy. Here’s what happens next.

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———Ep 89.1 Topics———

02:08 Mr. Snider AGREES with the Fed on the surge in inflation being “transitory”. End times?
04:23 Mr. Snider AGREES with the Fed on the surge in RRP being “safe asset demand”. End times?
08:09 Powell says the RRP surge is a technicality, not a warning of a collateral shortage.
12:12 Since 2007 we have witnessed collateral shocks as part of a sequence towards disorder.
14:31 A review of the “event” and “landmine” sequence in Eurodollar #2a and #2b (2010-12).
17:43 August 9, 2007, then May 6, 2010, and March 16, 2011 but what about November 20, 2013?
19:01 October 15, 2014 witnessed an utter collapse in US Treasury bond yields. Why? A break.
20:58 Collateral scarcity leads to a break then to a landmine then to an economic malfunction.
22:40 May 29, 2018 delivered a shocking collapse in US Treasury and German Bund yields.
24:49 September 17, 2019 was a confirmation of the monetary shortage in progress.
25:40 February 24, 2021 was a warning that central bank liquidity was insufficient.

———Ep 89.1 References———

Powell Admits RRP and Collateral Scarcity, Still Unaware Of What It Means: https://bit.ly/3hK2dP9
To This Day, the World Still Thinks It Was About QE: https://bit.ly/3zbSS8V
The China of Today Seeks Nothing But Its Own Terms: https://bit.ly/3ks2qII
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7


Jeff Snider, Head of Global Investment Research for Alhambra Investments and Emil Kalinowski. Art by David Parkins.