Lee AdlerThe federal budget deficit is running far ahead of the CBO’s $1.7 trillion fiscal 2026 forecast, driven by collapsing corporate tax receipts, court-ordered tariff refunds, and a surge in outlays that official war cost figures cannot explain. Treasury supply is already at record levels and the market’s capacity to absorb what’s coming will be severely tested. So will Fed Chairman Warsh’s stated goal of reducing the Fed’s market footprint. This report has the details, and implications for professional investors.
The S&P meltup holds within all uptrend channels with the path of least resistance still up. Longer cycle projections have pulled back and cyclical breadth momentum is weakening. The advance is aging but there’s no sign of top formation other than in momentum, and that alone is insufficient to signal top formation.
The US Treasury prints money via the intercession of the Lord, whose name is Repo. That mechanism is on the cusp of breaking. Repo growth has stalled and is testing a critical uptrend line. Hedge funds are again unwinding basis trades. Dealers are forced to absorb massive supply with institutional buyers constrained to a fraction of issuance. The ever-rising sea of money needed to keep the Treasury market and stocks afloat on rising levels, has stopped rising. Crash risk is elevated and proximate.
This report shows why, how long we have, and what to look for in the data.
Cycles remain in gear to the downside, with a new 13-week cycle projection pointing to xxxx, with a low due from late June to late July.
The S&P meltup remains solidly within its uptrend channels with the path of least resistance still pointing higher. But the 13-week cycle is in a down phase, manifesting only as a slowing in momentum, due to bottom around xxxxxx. 6-month cycle new signals have flipped to the sell side for an early warning of an approaching high. The question is when, and at what level.
In this brief update bulletin: The Treasury’s bill issuance just swung $124 billion in a single week versus year-ago. The repo market isn’t keeping pace, and foreign central banks are walking away. The crunch is here.
The unprecedented level of supply will lead to an unprecedented outcome.
The two remaining picks on the list have an average gain of 47.1% on an average holding period of 34 calendar days. They remain a hold, without stops, at least until the next review next week. I am still adding no new picks.
The market enters a pivotal week where bullish cycle structures at the short and intermediate levels must contend with intensifying geopolitical pressure. Whether the S&P 500 can clear immediate resistance to reach targets near xxxx will determine if technical cycle phases can override external fundamental shocks.
Cycles are in gear to the downside, except for the 4 week cycle, which has extended beyond its ideal bottom window. The 6-7 week cycle projection of xxxx is an outlier for now, but if projected channel support around xxxx breaks, this could turn into a steep, fast decline to much lower levels. The next support area is around xxxx.
Sell in May and go away is coming early this year.
Supply Tsunami, Arriving Early War spending blew a $142 billion hole in the usual April budget surplus. T-bill paydowns ended weeks before they normally do. The market must now absorb supply that dwarfs anything seen in comparable prior periods. Are you ready? This report replaces what the TBAC formerly published for us. It shows the bi monthly supply schedule of net coupon issuance and an estimate of the gargantuan T-bill supply that lies ahead.
The unprecedented level of supply will lead to an unprecedented outcome.
The market enters a pivotal week where bullish cycle structures at the short and intermediate levels must contend with intensifying geopolitical pressure. Whether the S&P 500 can clear immediate resistance to reach targets near xxxx will determine if technical cycle phases can override external fundamental shocks.
The two remaining picks on the list have an average gain of 47.1% on an average holding period of 34 calendar days. They remain a hold, without stops, at least until the next review next week. I am still adding no new picks.