G20 one week later...Does it really matter?
"Reality-TV" at its Best and the leading character President Tweet (T). The best soap opera in town...the Fed & Mr.T, they were made for each other! I have no clue what direction this thing will go between today and Monday 01July,19, but it will eventually go down, they always do! Up or Down, its Never a straight line!
NO Sustaining Macro to continue the momentum.
Unknown Unknowns: 1) Fed cuts immediately and start ; 2) Mr. T announces end of China TW G20 weekend...be prepared for Drama = Volatility!
It Doesn't Matter...DEBT CEILLING, NO ability to write UST's (Global Banking Liquidity), Government Spending STOPS (6-8 Weeks)...the battle lines are being drawn and NO ONE is talking about it! This is the single trigger that could start a recession and the incompetents do not understand any of it or the consequences...TBD! Keep a Reserve! Good Entry PT coming...
NOTHING would surprise me…Two words do not come out of my mouth, Never & Always! TBD!
By that he means the statement would drop the reference to “patience” (if they retain that it will be a disaster, by the way), by deploying the “insurance” language in the course of discussing the preparedness to act (Bernanke would call it “courage”), and by “dropping dots to neutral/towards EFFR and potentially bringing forward the end of QT even sooner.”
What would that entail for markets? Well, according to McElligott, it would mean this:
This above scenario—no “cut” but powerful “dovish” guidance—would likely see Rates and Equities initially impulse selloff, before stabilizing again thereafter, as markets realize that cuts are even a greater inevitability—thus, those future Fed cuts simply get pushed out into 2020 with calendar spreads inverting further negative.
Watch the Debt Ceiling...The battle of the incompetents!