Lee AdlerMacro Liquidity Indicators and extreme leverage continue to suggest that the stock market is in a topping phase.
Withholding tax collections are up 8.5% year-over-year, part of a persistent pattern this year. That’s actual real time data, not statistical guesswork. It directly contradicts the mainstream story of slowing jobs and moderate inflation.
This report shows you the real data, and shows why the consensus is wrong about everything, and suggests the best investment strategy for dealing with the false narrative.
Primary dealers are propping up record Treasury issuance with no cash cushion left. Every new purchase is repo-financed. Hedge funds are pressing shorts. Net exposures look balanced, but leverage is surging toward the danger zone. Stability here is an illusion — and when it cracks, it will happen fast.
Macro Liquidity Indicators and extreme leverage continue to suggest that the stock market is in a topping phase.
The Treasury’s funding needs, combined with the end of the Fed’s RRP market support fund, stagnant repo activity, and extreme margin leverage, create a setup that looks like a late-stage bull market. The markets are holding for now, but the pillars are stretched, and the risk of a sharp reversal is rising.
Withholding growth is steady, but nominal strength masks a weaker inflation-adjusted picture. The surge in tariff revenue is already being undermined by plunging corporate tax collections. Outlays are seeing huge increases resulting in larger deficits and more Treasury supply ahead.
This report summarizes and charts the data and tells what to expect in the months ahead.
The wall was at the top of the liquidity cliff. He dared the market to jump. Today it did. When the market is ready, a catalyst appears. The tariffs, and a weak jobs report lit the match.
Will it have a great fall, or levitate once more?
The wall was at the top of the liquidity cliff. He dared the market to jump. Today it did. When the market is ready, a catalyst appears. The tariffs, and a weak jobs report lit the match.
Will it have a great fall, or levitate once more?
A little oopsie. RRP slush fund falls $57 billion today as counterparties withdraw funds to buy the flood of T-bill issuance. The slush fund should be bone dry in about 10 days.
This is impressive. With today’s T-bill announcement of a mammoth $245 billion in gross issuance and $60 billion in net new paper, the Treasury is issuing $127 billion in net new T-bills this week. And the markets are yawning.
Something will break, soon. See this week’s Liquidity Trader Macro Liquidity update for details on what to expect.
The liquidity cliff is here. But nothing has changed. Stocks have been rallying. Bonds are rangebound.
We’re now at a critical fork.
The liquidity cliff has been delayed as the US Treasury has not moved with its usual speed when the debt ceiling is lifted. It must restore accounts that it has raided under “extraordinary measures” to stay under the previous debt limit. And it normally moves to rebuild the Treasury account (TGA) to its target level, announced at the quarterly refunding announcement. In this case that’s $850 billion.