Trillion-Dollar Liquidity Drain Imminent | Joseph Wang & Alex Etra

On today's episode of Forward Guidance, Alex Etra Senior Macro Strategist at Exante Data & Joseph Wang CIO at Monetary Macro join the show for a discussion on the path ahead for H2 2023.

Reflecting on the record bond losses in 2022, Alex shares his outlook on what to expect in the second half of 2023 as bond fund managers experience inflows and tech related equities continue surging higher despite the bearish sentiment in the broader market.

We then move on to some of the monetary plumbing implications amidst the debt ceiling resolution and what impact it could have on markets as the U.S Treasury looks to re fill is dwindling Treasury General Account. To hear all this & more. you'll have to tune in!
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Referenced In The Show:

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Timestamps:

00:00 Preparing For June FOMC
05:23 Will The Fed Hike, Skip Or Cut?
07:25 Back To 2019
10:35 Permissionless
11:13 The Mechanics of The Treasury Cash-Futures Basis Trade
19:07 The Path Ahead In H2 2023
25:47 Reflecting On The Bond Markets Performance In 2022
34:21 Will A New Investor Class Replace Japanese Investors?
38:31 Equity Flows
43:46 Blockworks Research
44:46 Why Are Equity Markets Performing So Well In 2023?
51:51 The Mechanics of The U.S. Treasury, General Account
01:01:04 Quantitative Tightening: Is The Reverse Repo Heading Higher?
01:05:32 How Alex Tracks Market Flows
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[Aziz__]

Times are weird. The US dollar is losing purchasing power due to inflation while strengthening against other currencies and assets. The stock market, real estate, crypto AND precious metals are down because people are fleeing to the "safety" of the dollar. where else can we put our investment money? I can't afford to see my savings of around $320, 000 turn to dust in front of my eyes.

[nousernameforus]

I felt like a potato listening those smart people. I think I will go through this interview few more times. Thanks for the rich content

[stephencuskley]

I heard this lady in Washington say that raising rates would kill her, and she's not being quiet about it. She's absolutely yellin'!!!

[sedrickemery]

Much appreciated for giving us the abbreviation definitions.
Great show

[jwat]

Perhaps Joseph could comment on this question; Is there or isn't there global liquidity expansion? People like Michael Howell seem to say the liquidity is expanding. The argument for liquidity expansion goes something like this: the combination of interest paid by the Fed to banks which parked money in RRP and IORB + interest paid on Treasuries, outweighs the tightening. Is this true?

[jcgoogle]

Good discussion on the impact of the Tbill sells on liquidity starting at 52:15.

There's a debate on the youtube sphere on whether it will either 1. reduce liquidity, 2. have no impact or 3. expand it stangely enough.

I'm in the reduce camp. Good walk throuh on the mechanics by Joseph as usual. He's a fav youtube macro video guest.

With the Fed probably going to raise again next week based on the (cooked) unemployment data on Friday and Yellen sellen a large portion of the Tbills by the end of June, ... It seems the 20 & 30 year bond yields should peak about the end of this month. Then load up(?) or at least wading in slowly to minimize risk.

[bigredfan]

Really enjoyed hearing the flow info from Alex Etra. Very informative!

[mattanderson]

Thank you so much gentlemen!!
Fantastic analysis!

[taccntb]

I wish you would have shown the gym at the Base.

[felipeford]

I love this show! The insight is mind-blowing!

[carter]

The media is currently barraged with a lot of economic data right now. It takes a lot to see beyond the whole ocean of news on focus on what is important, which is that no matter how low stocks go, they always bounce back. I really ignore all the news and keep investing. I recently allocated about $121k to put in the market as we anticipate a crash. Any recommendations?

[buzzcrushtrendkill]

Since the advent of QE, there is no historical precedent for our current era. Completely uncharted territory.

[davidfrankel]

A bit above me. Any books someone could recommend on the terminology and concepts illustrated here?

[-]

Haha love that when the fed spokespeople come and sell us a bill of goods, you have to interrupt the interview to actually tell us the truth to save your credibility haha.

[wealthness]

"Inflows into equities" still confuses me. Money flows to the seller and away from the buyer every time a share is traded. If "funds are having inflows" there has to be equal outflows from other funds or individuals. All "flows" should net out at the aggregate level. Similar to Andy's "every short has a long". I wish you'd ask to clarify that next time you have a flows person on.

[Youtubeuseritis]

No hike - bull market rolls on, crash next summer! Mark my words.

[lvculo]

Max Keiser and others in the Rumbling Buffon Baloney Gang 15 Years Ago 600 $ Silver or 50000 $ Gold Lost Beyond Pluto

[williamandrews]

You can fool some of the people all the time. It is survival of the fittest

[howardglenmartinez]

I vote for Alex Etra to be our next President of the United States of America, Joseph Wang to be the next Vice-President of the United States of America, and Jack Farley to be the next Chairman of the Federal Reserve of the United States of America.

[KabbalahredemptionBlogspot]

Global capital flows, so chocolatey...