The US government ran a deficit of about $2 trillion for the year, and investors are wondering what that means for the Fed and whether we are in fiscal dominance.
Educational. The BEA has just recently corrected their numbers on interest payments by US non-financial businesses (see Matt Klein Substack column The Overshoot, "Found: America's Missing Interest Income". The data was only corrected up to 2023 but represented an approximately $half Trillion increase up until that date. It is fair to assume this has only increased since 2023. How would this effect some of your conclusions if at all in terms of both fiscal dominance and investment flows to equities?
Great article today James, thanks. The S&P 500 just keeps going up inexorably. War, no problem. Tariffs in 2025, no problem. Fuel prices way up, no problem. Silicon Valley Bank and other bank runs, no problem. What I learned from this article today is about the extra juice all this interest money is giving to stocks, in addition to the passive bid that just keeps coming and coming. I knew of the interest payments juicing things, but I thought it was juicing the spending of recipients. If you look at a chart of the SPX going back twenty years, what stands out to me is the acceleration of the rate of return. If the "dumb" money ever slows down, well, look out below.
Another great explanation—thanks!
Good stuff as usual !!! When are u getting back on Macro Mondays ?? Not the same w out you on that show
Educational. The BEA has just recently corrected their numbers on interest payments by US non-financial businesses (see Matt Klein Substack column The Overshoot, "Found: America's Missing Interest Income". The data was only corrected up to 2023 but represented an approximately $half Trillion increase up until that date. It is fair to assume this has only increased since 2023. How would this effect some of your conclusions if at all in terms of both fiscal dominance and investment flows to equities?
Great article today James, thanks. The S&P 500 just keeps going up inexorably. War, no problem. Tariffs in 2025, no problem. Fuel prices way up, no problem. Silicon Valley Bank and other bank runs, no problem. What I learned from this article today is about the extra juice all this interest money is giving to stocks, in addition to the passive bid that just keeps coming and coming. I knew of the interest payments juicing things, but I thought it was juicing the spending of recipients. If you look at a chart of the SPX going back twenty years, what stands out to me is the acceleration of the rate of return. If the "dumb" money ever slows down, well, look out below.
Money market funds are the largest buyers of t-bills. How does that impact the stock market?