50 bips it is from The Fed.

There's a problem: Immediately -- literally, within seconds -- the IRX, or 13 week bill continuous contract rate, moved to 4.6% maintaining a spread below Fed Funds.

In other words the market moved first and now the market is leading Powell around by the nose demanding even more.

I don't care what Powell says, I care what the market does.  Further, the long end came up slightly -- but by no means anywhere near as much as the IRX went the other way.  The IRX/TNX spread remains deeply negative -- where it should be positive because time always has value, and an inverted relationship is a declaration that time has negative value.

The prime tool Powell has is his mouth, followed closely by the behind-the-scenes transactions run out of the NY Fed desk at their direction.  That's pretty-much it, and the latter can make huge losses if the market calls "BS!" on the former.  The Fed, unlike a private firm, can't go "bankrupt" but losses are directly negative to Treasury because normally The Fed remits all of its income, less its operating expenses, to Treasury.  When it makes losses it remits nothing until the loss it has on the books is recovered, and the greater the loss the longer that will be.  That is, said losses are in fact additive to the deficit albeit not on a direct and immediate basis.

My first-blush read: Instability between The Fed and markets, in a marketplace where large, established firms are running at four to five times sane Price:Sales ratios, is exactly the sort of situation that sets up extraordinarily large draw-downs (aka a "crash") when (not if) a triggering event occurs.  Like, perhaps, realization that a negative ROI in a business doesn't become a positive one with a rate cut, and if the problem is price (and it is) cutting borrowing costs not only don't resolve the problem doing that makes it worse.

"In this week’s episode of RLA Radio, host Dennis Tubbergen interviews Karl Denninger, a prominent economic and political commentator. They discuss the unsustainable trajectory of the U.S. national debt, which has surpassed $35 trillion, and the alarming fact that a significant portion of personal income tax revenues is now used to pay interest on this debt. Denninger highlights the role of Medicare and Medicaid in driving this debt and criticizes the government's strategy of rolling maturing Treasury debt into shorter durations, which has exacerbated the problem."

This last month's MTS was especially alarming, and with 11 of 12 months now in the book the trajectory is clear (and pretty-much impossible to change.)  While this month was particularly bad, the underlying problem continues apace -- corruption and unserious claims of "analysis" of all types, which are clear just from the facts: You can't multiply health care spending by five times yet go from a few percent of adult Americans with a chronic condition to over half and be doing it right.

Come check it out at https://retirementlifestyleadvocates.com/podcast/episode/1/2024-09-15-retirement-lifestyle-advocates-radio-w-karl-denninger 

Not so fast.....

First there is no un-inversion happening in the curve between the 13 week bill and 10 year.  There should be if the economy is stabilizing -- that is, a "soft landing."  That's not happening despite the repeated recovery from dips (and quickly too) in the equity markets.

Second, the CPI continues to show triple the so-called "target" in housing costs, which is extremely bad from a consumer point of view and quadruple the target for transportation services.  Yes, last month was very cool -- last month.  But car insurance continues with an annualized rate of 16.5% and last month was 0.4%, which again annualizes out to triple the target, more or less.

What kept a cap on things was energy prices, specifically fuel oil (diesel) and gasoline.  That spread has been contracting for the last year or so and its bad, not good, because it indicates slack demand on the transportation side.

One month does ot a trend make but the Trade and Transportation sub-indices in the PPI report do not indicate a strongly-growing economy.  In fact, they indicate weakness and have all year.  This is when the ramp-up should be starting for the holiday season -- and there is no evidence of it.

If you believe that a bunch of "AI will make everything double in the market!" realize that if you're right it will also mean the lower half of wage-earners will now make zero and the result will be a collapse of tax receipts and consumer spending.  Oh, it may take six months or a year beyond when that claim proves to be true for it to happen, but it will happen.

If you're wrong then all that air comes out of the market, the economy does not collapse nor do government revenues but your stock portfolio does.

Incidentally the current MTS is out and its ugly.  $307 billion was collected in revenue last month by Treasury but they spent more than double that, $687 billion. We are currently, with one month left to go, running a 30% fiscal deficit for the fiscal year which is directly levitating asset prices and providing a false belief that the economy is actually reasonably healthy when it clearly is not.

How fast do you go broke when you spend 223% as much as you make, and how well-off do you appear to someone looking at you from the outside without knowing your financial condition when you spend more than twice what you earn?  You're drinking Blanton's Special Reserve when you can't even afford a bottle of Mad Dog 20/20.

Want to know why the stock market is holding up?  That's the reason and yet if you think that can continue on a permanent forward basis whatever you're smoking its not legal anywhere in the United States.

Good Lord we're screwed.

Who lost?  The American people.

Harris didn't answer anything.  She took questions and then immediately pivoted to going after Trump, throwing chum in the water.  Trump, for his part, hit the hook in the chum and thus negated his capacity to point out actual policy -- and that she had evaded and didn't answer the question.

The moderators were wildly biased and failed to enforce the rules, specifically related to any sort of containment of the two of them going back and forth and the alleged muting of the mics.

None of what Harris proposed she had a way to pay for.  Zero.  $25,000 for a house sounds nice, but it will simply make the price of houses go up -- by $25,000.  The problem isn't down payments its that prices are too high.  You can't wish supply into existence which means dealing with demand is the only option.  How do you deal with demand?  Well I can tell you what you don't do: Put 10,000 new people you fly into the United States into a town of 60,000 all of whom have $1,000 a month government checks and will live 10 to an apartment, which is what's happening in Ohio and elsewhere!  All that does is force the existing residents out because they can't afford that escalation in cost -- and thus makes the problem worse.

Did Trump key up on this?  No, and if he had he could have mopped the floor with Harris since that is explicitly her position that these Haitians are "good" and in fact she supported bringing 100,000 of them in directly, in her own words.  Leave the cat situation alone because you don't have to go there -- you can win on pure economics and its irrefutable.

Trump was right about foreign policy; nobody attacked anyone when he was President.  When Biden and Harris came into office both the Ukraine and Israeli conflicts occurred.  These are facts and may I remind you that Reagan, for all of his flaws, did get "caught" on an open mic during a mic check saying "I've just signed legislation to eliminate the USSR; the bombing starts in 10 minutes."  No, it wasn't policy but if you think the Kremlin didn't know about that within 30 seconds you're not very smart and like it or not there is real value in Foreign Policy with having the other guys out there who have designs on things you don't want to happen wondering if you might be just crazy enough to push the button.  There's an art to that; you never want them to be convinced you're nuts because then they have to shoot but at the same time the last thing you want is for them to believe you'll send money, guns, ammunition and planes in drips and drabs to someone fighting but under no circumstances will you personally blow them up.

That, by the way, is why we have two wars going on right now that we're funding and arming.  Both sides of both conflicts are utterly convinced we will not come and blow anyone up -- while at the same time we keep demonstrating that perhaps we can't  even if we changed our mind to the degree we've put forward through bravado for oh so long (and not without cause, until the last 20 or so years.)  May I remind you that we can't even manage to build a pier that will withstand utterly common weather conditions to offload supplies anymore -- and we proved it at Gaza.

There was much more but this was more than enough.

We had two unserious people on stage and a pair of "moderators" who weren't.

I could spend an hour or more on a 20 page analysis but honestly its not worth the digital ink to do so.