All Macro-Thematic Trend Reports:

Mr. X: “The SLR exemption isn’t needed if the Fed is going to flex its balance sheet up as needed.” (FFTT, 3/25/21)

I think we may be witnessing an unannounced Fed policy change going live in February and March – it appears that we are going from a regime where the US banking system quietly helps the Fed finance US government deficits, to a system where even more of the burden of financing the US government’s deficits falls on the Fed’s shoulders.– “Mr. X”, 3/25/21  Key points:   In our view, the non-extension of the Fed’s SLR

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 3/19/21)

“We expect the GDP output gap to close by year-end and approach decade highs by the end of next” (page 2) The most likely outcome, in two charts… (page 4) Ray Dalio: “Why in the world would you want to own bonds when…” (page 5) “Foreigners are on a UST buyer’s strike…” (page 6) “S&P 500 price/revenue ratio is easily the most extreme level in history” (page 8) “This is what hyperinflation looks like.” (page

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FFTT thoughts on Bitcoin: A differentiated view (3/18/21)

If I was working for the US government and they said, “Luke, what would you do to combat what China and Russia are doing with gold?” It’s simple – I’d let Bitcoin run. I would have a harder reserve asset than gold and I would let it run. I would let it be and I would just stand aside, benevolent neglect. And I would let Bitcoin run. The way you win is you say, “Okay,

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 3/12/21)

“Hard-money advocates & fiscal hawks, please take note – the 1920s was the decade from hell for the UK” (page 2) “We need the government – Biden stimulus shows new era of politics” (page 4) “Biden’s next stimulus package could be far pricier than the COVID bill – as much as $3T in new spending…” (page 6) Atlanta Fed estimates US GDP is running up 10% y/y (page 7) “When the stock boom turns to

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When domestic politics conflict with the interests of bondholders: An instructional historical episode (FFTT, 3/11/21)

“The politically-practicable and the economically possible were at war”, a contemporary observer aptly summarized the tragedy unfolding between 1919 and 1931. “The struggle was like some long drawn-out conflict on a hillside, where political forces endeavored repeatedly to advance uphill, and on occasion even succeeded in doing so for a time, while the prevailing economic factors drove them steadily downhill.”-Tobias Straumann “1931 – Debt, Crisis, and the Rise of Hitler”, page xxiv A government that

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 3/5/21)

“Stock market sell-off accelerates, bond yields rise sharply after Fed Chair Powell’s comments” (page 2) “Home Purchase Mortgage Applications fall to 9-month lows” (page 4) “Income and consumption continue to rise, but nearly entirely due to large stimulus and transfer payments” (page 5) Fed balance sheet quietly rose $180 billion in February, 50% above minimum growth targets (page 9) “Foreigners continue to show apathy toward UST bonds/notes, even as issuance has gone parabolic” (page 10)

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