Who Really CONTROLS The Markets!! Her Plans REVEALED!!

Summary

The video script discusses the role of the US Treasury, particularly under Secretary Janet Yellen, in controlling financial markets. It explains that while the Federal Reserve sets short-term interest rates, the Treasury influences long-term rates through the issuance of government debt. The script highlights how the Treasury's actions, such as issuing more short-term bonds, can affect market liquidity and interest rates, leading to market rallies. It also touches on the political implications of the Treasury's decisions, especially in an election year, and the potential risks of seizing Russian assets to fund Ukraine, which could impact US bond prices. The video concludes by emphasizing the importance of liquidity in markets and how the Treasury's upcoming bond buyback program and the Fed's balance sheet adjustments could inject money into the economy, potentially boosting stocks and affecting investment strategies.

Takeaways

• 🏛️ The US Treasury, not just the Federal Reserve, has significant control over the markets, particularly over the last two years.
• 💵 The Treasury manages taxes, government spending, and debt issuance, and is currently overseen by Janet Yellen, a former Federal Reserve Chair.
• 🌐 The Treasury has divisions that handle both domestic and international financial affairs, including sanctions through the Office of Foreign Assets Control (OFAC).
• 💸 The US government finances its spending through taxes, fees, and issuing debt, which is sold as bonds to investors.
• 📉 The price and yield of US bonds are influenced by supply and demand, with higher government spending potentially leading to lower bond prices and higher yields.
• 📈 US bonds set the benchmark for interest rates in the economy, with riskier debts priced based on bond yields plus a credit spread.
• 🌐 US bonds are a popular form of collateral globally, with around 25% of demand coming from overseas investors.
• 🔍 The actions of the Treasury and the Fed are closely watched by investors as they signal future economic policies and can influence market liquidity.
• 🕺 The dynamic between Janet Yellen and Jerome Powell, the Fed Chairman, involves a delicate balance between controlling inflation and promoting economic prosperity.
• 💼 The Treasury's open-ended mandate to promote economic prosperity and financial security can be influenced by political considerations, including upcoming elections.
• 🌳 The Treasury's recent announcement of a bond buyback program and the Fed's decision to buy more long-term US bonds can inject liquidity into the markets, potentially affecting asset prices.

Q & A

What is the role of the US Treasury Department in the financial system?

The US Treasury Department is the financial arm of the US government, handling taxes, government spending, financing, and overseeing the minting and printing of physical currency. It also has divisions dedicated to international financial affairs, including sanctions on enemies of the United States.

How does the US government finance its spending when taxes and fees are insufficient?

When taxes and fees are not enough to cover the costs, the US government issues debt, creating a deficit. This debt is sold to investors in the form of bonds, which are essentially pieces of paper promising to pay back the investors with interest in the future.

Why are US bonds an important factor in determining interest rates in the economy?

US bonds are considered the lowest risk form of interest, and their yields set a benchmark for other interest rates. Riskier debts are priced at bond yields plus a credit spread, making bond yields a critical factor in the economy's interest rate landscape.

What is the significance of the US Treasury's actions on the global financial system?

US bonds are used as the most popular form of collateral in the global financial system. Their assumed safety and the ability to be freely traded on the open market make them a significant factor in global liquidity and investment decisions.

How does the US Treasury's issuance of short-term bonds impact long-term interest rates?

The issuance of short-term bonds by the Treasury can reduce the supply of long-term bonds on a relative basis. When combined with the Fed's signaling of lower short-term rates, this can cause long-term interest rates to fall, leading to a market rally.

What is the relationship between the Federal Reserve and the US Treasury in controlling the markets?

The Federal Reserve adjusts interest rates to maintain a robust economy and moderate inflation, while the Treasury is responsible for financing government spending and promoting economic prosperity. Their actions and decisions often work in tandem, affecting the supply and demand of bonds and, consequently, market liquidity and interest rates.

Why is the US Treasury considering a bond buyback program?

The Treasury is considering a bond buyback program to manage the risk premium that could arise from seizing Russian assets and sending them to Ukraine. This action could cause US bond prices to drop and yields to rise, prompting the Treasury to buy back its own debt to stabilize the market.

How does the Fed's balance sheet policy affect market liquidity?

The Fed's balance sheet policy, which includes buying more US bonds each month, mainly longer-term ones, can increase market liquidity. This action can cause yields on those bonds to fall, along with interest rates, providing more funds in the market for investment.

What is the impact of the US Treasury's large cash reserve on the economy?

The US Treasury's large cash reserve, which has ballooned to over $800 billion, can be used to stimulate the economy and the markets. A portion of this reserve is likely to be spent before the election to boost the economy and reduce the risk of a recession.

How does the Fed's overnight reverse repo facility (RRP) help in managing bond yields?

The RRP allows investors to earn a yield similar to the short-term interest rate set by the Fed, helping to transmit its monetary policy. The Treasury can use the RRP to finance short-term bond issuance without raising yields on these bonds to attract money from other markets.

What is the potential impact of seizing Russian assets on the perception of US dollar assets?

Seizing Russian assets and sending them to Ukraine could create a risk premium for US bonds and similar assets. This might lead to a drop in their prices and a rise in yields as investors might lose confidence in the safety of US dollar assets, potentially leading them to move towards alternative assets like gold.

Outlines

00:00

📈 Understanding the Treasury's Control Over the Markets

This paragraph discusses the misconception that the US Federal Reserve solely controls the markets through interest rate decisions. It suggests that the US Treasury, under Secretary Janet Yellen, has been a significant influence on market movements for at least two years. The Treasury's role in managing taxes, government spending, and debt issuance is highlighted, along with its impact on bond prices and yields. The narrative also touches on the Treasury's international financial affairs and the secretary's influence due to her previous role as the chair of the Federal Reserve.

05:02

🕵️‍♂️ The Role of US Bonds in Determining Interest Rates

The second paragraph delves into the dynamics of US bonds and their effect on interest rates in the economy. It explains how bond prices and yields are interconnected and how the supply and demand for bonds influence these prices. The paragraph also discusses the role of US bonds as a determinant for interest rates on similar debt and as a popular form of collateral globally. It further illustrates how the Treasury, through Janet Yellen's leadership and strategic communication, has influenced market recoveries and interest rate adjustments.

10:05

💵 Treasury's Manipulation of Bond Markets and International Affairs

This section examines how the Treasury has been controlling interest rates and, by extension, the markets, through the use of the Fed's overnight reverse repo facility (RRP). It details the Treasury's strategy of issuing short-term bonds to manage long-term interest rates without causing market disruptions. The paragraph also explores the Treasury's open-ended mandate to promote economic prosperity and financial security, which is influenced by political considerations, particularly in the context of upcoming elections. Additionally, it discusses the Treasury's international strategies, including its approach to foreign allies and foes, and the impact of geopolitical decisions on the demand for US bonds.

15:05

🚨 Treasury's Upcoming Bond Buyback Program and Its Implications

The fourth paragraph outlines the Treasury's plan for its first bond buyback program in over 20 years, which is expected to start at the end of the month. This initiative is positioned as a response to the potential risk premium created by the seizure of Russian assets. The paragraph discusses the Treasury's strategy to manage bond market volatility and how it plans to use its financial resources, including an additional $400 billion, to stimulate the economy and markets before the election. The potential effects on liquidity and asset prices are also considered.

20:07

📉 Potential Market Volatility and Investment Opportunities

The final paragraph discusses the potential short-term market conditions, including the possibility of sluggish price action due to the Fed's delayed balance sheet adjustments and the Treasury's upcoming bond buybacks. It mentions the end of the blackout period for stock buybacks and highlights Apple's record buyback as a significant market tailwind. The paragraph also touches on the relationship between liquidity, economic activity, and asset prices, suggesting that any capital injected into the economy by the Treasury will eventually make its way into the markets, potentially boosting them. Lastly, it briefly addresses the concept of Universal Basic Income (UBI) and its potential impact on asset affordability.

Keywords

💡Central Banks

Central banks are national institutions that manage a country's monetary policy, including interest rates, to control inflation and promote economic stability. In the video, it is discussed that contrary to popular belief, the US Federal Reserve may not be the sole controller of the markets, with the US Treasury playing a significant role as well.

💡US Treasury

The US Treasury is the financial arm of the US government responsible for matters related to taxes, government spending, financing, and currency minting. The video emphasizes the Treasury's role in influencing the markets, particularly through the management of government debt and its impact on interest rates.

💡Janet Yellen

Janet Yellen, the Secretary of the Treasury, is highlighted as a key figure in the video due to her previous position as the chair of the Federal Reserve. Her in-depth knowledge of the Fed's operations and her alignment with the current administration are pivotal in shaping fiscal policies that affect the economy and markets.

💡US Bonds

US Bonds are debt instruments issued by the US government to finance its spending when tax revenue is insufficient. They come in various durations like bills, notes, and bonds, and are tradeable on the open market. The video explains how the supply and demand for these bonds, and their yields, directly influence interest rates and the economy.

💡Interest Rates

Interest rates are pivotal in the economy as they affect the cost of borrowing and thus influence economic activity. The video discusses how the Treasury and the Fed manipulate interest rates through bond issuance and policy decisions to manage inflation and unemployment.

💡Deficit Spending

Deficit spending occurs when a government's expenditures exceed its revenue, resulting in the issuance of debt to cover the shortfall. The video mentions a two trillion dollar deficit, indicating a large issuance of debt by the Treasury, which has implications for bond prices and market yields.

💡Overnight Lending

Overnight lending refers to the short-term loans that commercial banks extend to each other, often facilitated by the central bank. The video notes that the Fed adjusts the interest rate for such lending, which in turn affects short-term interest rates and broader economic conditions.

💡Forward Guidance

Forward guidance is a communication strategy used by central banks to signal future policy actions to the markets. The video points out that the Fed, through speeches like those by Jerome Powell, provides indications of future interest rate movements, which are closely watched by investors.

💡Liquidity

Liquidity refers to the ease with which assets can be converted into cash without affecting the asset's price. The video discusses how the actions of the Fed and the Treasury, such as bond buybacks and changes in the balance sheet, can increase liquidity in the market, influencing investment and trading opportunities.

💡RRP (Reverse Repo Facility)

The overnight reverse repo facility (RRP) is a program where investors deposit funds with the Fed, earning a return based on the Fed's interest rate policy. The video explains that the RRP has been used by the Treasury to finance short-term bond issuance without significantly affecting market yields.

💡Bond Buybacks

Bond buybacks refer to a government purchasing its own debt from the market. The video discusses a potential strategy by the US Treasury to buy back its bonds, which could affect bond prices, yields, and the overall market liquidity.

Highlights

The US Treasury Department, not the Federal Reserve, has been controlling the markets for at least the last two years.

The Treasury, headed by Secretary Janet Yellen, has an in-depth knowledge of the Federal Reserve and is closely aligned with the current administration.

US government spending and the Treasury's financing methods significantly influence bond prices and yields.

US bonds are a critical determinant of interest rates on similar durations of debt in the economy due to their perceived safety.

The Treasury's actions, such as issuing debt, directly affect the supply and demand of bonds, influencing market liquidity.

Janet Yellen's past role as the chair of the Federal Reserve gives her unique insight into the dynamics between fiscal and monetary policy.

The Treasury's issuance of short-term bonds has been used to control long-term interest rates without causing market crashes.

The Treasury's use of the Fed's overnight reverse repo facility (RRP) has allowed it to manage bond issuance without significantly impacting yields.

The Treasury's mandate is open-ended, focusing on promoting economic prosperity and ensuring financial security, which can be influenced by political considerations.

International dynamics, such as the US's response to the Russia-Ukraine conflict, have affected global demand for US bonds.

The Treasury is preparing to buy back its own debt, a move that could introduce volatility into the bond market.

The Treasury's bond buyback program and additional spending could inject significant liquidity into the markets before the US election.

The Fed's decision to begin buying more long-term US bonds will likely lead to a fall in yields and interest rates.

The balance between the Treasury's need to finance government spending and the Fed's goal of controlling inflation is a delicate dance.

The Treasury's actions, including potential seizures of foreign assets, could create a risk premium for US bonds, affecting their price and yield.

The Treasury's management of liquidity levels is a key factor in its ability to influence financial markets.

The Fed's balance sheet adjustments and the Treasury's financial maneuvers are expected to impact market dynamics in the coming months.

The analysis suggests that improved liquidity could lead to a rise in stock prices and a potential catch-up for cryptocurrencies later in the year.

Transcripts

over the last four years we've been

taught that central banks notably the US

Federal Reserve have been controlling

the markets with their interest rate

decisions well what if I told you that

this isn't true what did you say in fact

it appears that the US Treasury

Department has been in control for at

least the last 2 years this means that

if you want to make money in the markets

you need to know what the treasury is

doing and why that's why today we're

going to explain what the treasury is

how it's been controlling the markets

why it's been doing this and how you can

use this information to get an edge in

investing and

trading the United States Department of

the treasury whose acronym is ironically

usdt like the stable coin is basically

the financial arm of the US government

it handles everything related to taxes

government spending government financing

and even oversees the minting and

printing of physical currency more about

that rabbit hole in the description I

digress anyways the treasury doesn't

just deal with domestic financial

matters as you can see here it has two

divisions dedicated to International

financial affairs one of them includes

the infamous office of foreign assets

control or ofac which deals with

sanctions on enemies of the United

States keep this in mind for later now

the secretary of the treasury is Janet

yelen Janet is a fascinating character

because she used to be the chair of the

Federal Reserve this means that she has

an in-depth knowledge of how the Fed

works Janet is also partisan she is

closely aligned with the current

Democrat Administration this is

important to point out in part because

the treasury's influence over the

markets has its roots in government

spending you see when us politicians

vote to spend trillions of dollars on

stuff it's up to the treasury to figure

out how to finance it and it's up to

Janet to make sure this financing

happens as most of you will know there

are two ways the US government finances

its spending by collecting taxes and

fees and by issuing debt when taxes and

fees aren't enough to cover the costs

the US government will issue debt this

is called a deficit and last year the US

had a two trillion deficit in Practical

terms this means that the treasury had

to issue $2 trillion in debt now here is

where things get interesting but also a

bit complicated so pay close attention

when the treasury issues debt it

essentially sells pieces of paper to

investors containing a promise to pay

them back in the future with interest

these pieces of paper come in different

durations bills are issued for one year

or or less notes are issued for 2 to 10

years and bonds are issued for up to 30

years for the sake of Simplicity will

refer to all these pieces of paper as

bonds where we can anyhow us bonds can

be freely traded on the open market this

makes bonds interesting and that's for

three reasons the first is that the

yield on a bond depends on its price if

a Bond's price Falls its yield Rises and

VI Versa as with all assets the price of

bonds depends on supply and demand as

such the more the US government spends

the higher the supply in other words the

more the US government spends the more

bond prices fall and yields rise

assuming demand stays the same of course

and this ties into the second Reason Why

Us bonds are interesting and that's

because they determine interest rates on

similar durations of debt in the economy

this is because bond yields are seen as

the lowest risk form of Interest the

interest rates on riskier debts are

therefore priced at bond yields Plus

Credit spread this relates to the third

Reason Why Us bonds are interesting and

that's because their assumed safety

makes them the most popular form of

collateral in the Global Financial

system in plain English wealthy

individuals and institutions often use

us bonds as collateral to borrow even

more money or as Savings in other words

a large chunk of the demand for us bonds

comes from overseas around 25% in fact

obviously this demand fluctuates based

on many factors which we'll come back to

in a moment in the meantime if you've

already learned more here than your

teachers taught you in school be sure to

smash that like button to help others

learn and subscribe to the channel and

ping that notification Bell so you don't

miss the next lesson

so ma'am where exactly were you on the

night of the murder I was right here

detective all night long you got anyone

who can back that up you mean an alibi

yeah that's the one no I was all of my

lonesome and what exactly were you doing

all on your lonesome if you don't mind

me asking well keep it under your hat

detective but I was looking through the

coin bu deals page what's a coin Bureau

deals page when it's at home it's only

the place where you'll find the best

discounts and promos in all of crypto

what do you mean I mean trading fee

discounts of up to 60% and sign up

bonuses up to $60,000 on some of the

best exchanges holy smokes they got

discounts on Hardware wallets too by any

chance they sure do detective like you

wouldn't believe well that sure sounds

kind of swell lady but just you give me

one good reason why I should believe a

single word you say you don't have to

take my word for a detective take a look

at the link down below and see for

yourself she wasn't kidding those deals

really were something else turns out

that crypto ain't such a bad place after

all you just got to know your way

around okay now that we understand a bit

about the treasury Janet yelen and US

bonds we can start to unpack how and why

the treasury has been controlling the

markets over the last few years this

requires taking a closer look at the

Dynamics between the fed and the

treasury and and what drives them as all

of you will know the FED is tasked with

ensuring the US economy remains robust

and inflation stays moderate by

adjusting interest rates to be exact the

FED aims to ensure that unemployment the

percentage of people actively looking

for work stays at around 4% and that

inflation stays at around 2% for those

unaware raising interest rates causes

inflation to fall but causes

unemployment to rise as it lowers

economic activity by restricting lending

conversely lowering interest rates

causes inflation to rise and

unemployment to fall as it increases

economic activity by encouraging lending

news flash the entire economy runs on

debt but that's a topic for another time

anywh who the FED adjusts interest rates

in three ways by changing the interest

rate for overnight lending between

commercial Banks which affects

short-term interest rates by buying or

selling us bonds via the commercial

Banks which affects long-term interest

rates and through so-called forward

guidance forward guidance includes all

manner of comments and indications that

are meant to inform investors about what

the FED plans to do next the most famous

form of forward guidance is fed chairman

Jerome Powell's speeches which are given

after each interest rate decision these

are treated as gospel now this makes

sense because the markets are

forward-looking put simply the prices of

assets today reflect what investors

believe will happen tomorrow be it

related to interest rates or otherwise

by the time the Catalyst actually comes

the markets have fully priced it in

meaning it has a muted effect on markets

the thing is though that Jerome isn't

the only preacher that investors are

listening to Janet is another and she's

had just as much if not more of an

impact on the markets than Jerome for

example when markets crashed in October

2022 Janet said that Bond liquidity

needed to improve and the markets

recovered and when Banks started to

collapse in March 2023 Janet came out

and effectively said that the treasury

was ready to do whatever it takes to

bail them out the markets subsequently

recovered and in November last year when

interest rates were Rising Janet pushed

them back down with her words

specifically she made a speech saying

that interest rates were high enough and

it was about time they came down

referring directly to the FED shortly

after Jerome spoke after the fed's

meeting and announced that the central

bank was planning to cut rates a dovish

pivot signaling lower rates that duly

got priced in the treasury

simultaneously began issuing more

short-term bonds reducing the supply of

long-term bonds on a relative basis the

fed's signaling of lower short-term

rates and the treasury's issuance of

short-term bonds collectively caused

long-term interest rates to fall

resulting in a market rally on that note

the treasury had already been issuing a

large amount of short-term bonds to

ensure that long-term interest rates

didn't rise too much recall that the

deficit was two trillion dollar in

2023 such a large issuance of bonds

would have high yields to to attract

money from other markets causing them to

crash in this case however the treasury

was able to finance all this short-term

Bond issuance using the fed's overnight

reverse repo facility or

RRP now without getting too technical

the RRP allows investors to earn a yield

similar to the short-term interest rate

set by the fed this is to help transmit

its monetary policy Janet convinced the

investors in the RRP which held over 2

.2 trillion at its peak to invest most

of their Capital into the treasury's

short-term bonds which offered a similar

yield this eliminated the need for the

treasury to raise yields on these bonds

to attract money from other markets such

as stocks in some the treasury has also

been controlling interest rates and this

has been controlling the

markets so now that we understand a bit

about the Dynamics between the fed and

the treasury we can dig deeper into why

the treasury is doing what it's doing

whereas the fed's Mandate is to ensure

that unemployment and inflation remain

stable the treasury has an open-ended

mandate with no numbers according to its

website the treasury's Mandate is to be

quote responsible for promoting economic

prosperity and ensuring the Financial

Security of the United States what's

meant by economic prosperity and

Financial Security you may ask well it's

whatever it means to whoever is in power

now this is where politics comes in and

I'll kick it off with a fun factoid

according to Goldman Sachs quote

incumbent US presidents tend to win

elections except during recessions in

case you missed the memo there's going

to be an election in the US this

November and President Biden is the

incumbent given that Janet is on team

blue it's incumbent on her to ensure

that a recession does not occur before

the election in practice this means

making sure the current Administration

can spend as much as possible while

providing minimal disruption to the bond

markets namely limiting yields on bonds

at the same time though it's incumbent

on Jerome to make sure that inflation

doesn't get too high because of all this

government spending besides the fact

that it's his job to ensure that it

doesn't Jerome also seems to want to

leave a legacy he's also by the way a

republican though it's not clear if he's

partisan regardless the fact of the

matter is that the imperatives of the

treasury and the FED are at odds this

has resulted in a delicate dance that's

been LED mostly by Janet remember that

she used to run the Fed she knows which

levers Jerome needs to pull and it seems

he's been reluctantly pulling

them sorry I just accidentally

visualized Jerome and Janet

dancing in all seriousness it's easy to

forget that it's not just the domestic

issues that determine who will win an

election international issues also have

an effect I'll reiterate that the

treasury has two divisions dedicated to

International Affairs naturally one of

these deals with friends and the other

deals with foes on the friend side it's

believed that Janet has been trying to

convince countries such as China to

continue accumulating us Bonds in case

you forgot most most countries will

invest the US dollars they get from

international trade in US bonds China

and others have been reducing their bond

purchases as you've learned this

reduction of foreign bond purchases has

made it more difficult for the treasury

to issue bonds without raising yields

and raising interest rates by extension

the reason why foreign purchases of us

bonds have declined is because of what

the treasury has been doing on the foe

side when Russia invaded Ukraine in

February 2022 the US and its allies made

what many considered to be a

geopolitical mistake and that was

freezing the assets of various Russian

individuals and institutions this sent a

signal to the world that enemies of the

US and its allies could get similar

treatment in the future the result has

been that many countries have since

started moving away from us bonds and

other US dollar assets and accumulating

other internationally recognized assets

such as gold to be clear this had

already been happening prior to the

freezing of Russian assets but it seems

this accelerated the trend in any case

here's where politics and Janet come

back into the picture the Ukraine war

appears to be popular with Democrat

voters and it's geopolitically

imperative to the US regardless of what

voters think this has put pressure on

Janet to act accordingly and she may be

about to act in a big way back in

February Janet called on the US and its

allies to seize the Russian assets they

had Frozen and send them to Ukraine last

month us politicians passed a bill

giving the treasury the authority to do

this unlocking an estimated $6 billion

of Russian assets Frozen in the US

Financial system although this seizure

hasn't happened yet it's likely that it

will happen due to its popularity with

Democrats and the US government's own

geopolitical imperatives there's just

one problem and that's that this will be

an even bigger watershed moment for

anyone holding us bonds or indeed other

US dollar assets as many macro analysts

have pointed out seizing Russia's assets

and sending them to Ukraine or wherever

else would likely create a risk premium

for us bonds and similar assets put

differently it will likely cause their

prices to drop and yields to rise as

investors Run for the hills or rather to

Gold it seems the treasury is preparing

for this because it recently announced

its first Bond buyback program in over

20 years Yes you heard that right the US

government is going to buy back its own

debt these BuyBacks will start at the

end of this month so that's presumably

when we'll get bond market volatility

this brings me to the big question and

that's how you can use this information

to get an edge in investing and trading

the answer is one word liquidity that is

the amount of money in the markets the

reason why the fed and treasures actions

affect the markets is because they

change liquidity levels this is where

the fed's recent decisions come into

Focus while everyone was focused on the

fed's interest rate decision at its most

recent meeting the bigger news was the

change to its balance sheet in short it

would begin buying more us bonds each

month mainly longer term us bonds

logically this will cause the yields on

those bonds to fall along with interest

rates more importantly it will give

wiggle room for the treasury to issue

more long-term bonds at a time when the

fed's RRP is running out I'll remind you

that the RRP was where the treasury was

getting money from in recent months the

RP has flatlined at around $400 billion

meanwhile the amount of money in the

treasury general account or TGA the US

government's bank account has ballooned

to over 800 billion FYI the treasury has

historically kept around $400 billion in

the TGA for operational expenses what

this means is that the treasury has an

extra $400 billion sitting around that

it can use to juice the economy and the

markets a portion of this will likely go

towards the aforementioned Bond BuyBacks

it's not clear though where the

remainder will go but it doesn't really

matter that's because all this money

will eventually find its way into the

markets in the case of bond BuyBacks the

investors who have the bonds being

bought back will have money they can

spend elsewhere these investors will

either put their money into other assets

like stocks which will cause them to

rise or if they put the money back into

bonds instead stocks will still rise

because investing in other bonds will

cause their yields to fall which will

cause interest rates to fall and boost

economic activity this lowering in

yields will also make bonds less

attractive causing Capital outflow into

other assets with higher yields in the

case of any other spending the treasury

does into the economy this Capital will

likewise eventually find its way back

into the markets for example suppose it

gives a few billion to some Renewable

Energy company as part of the

administration's trillion dollar

ridiculously titled inflation reduction

act this will allow this Renewable

Energy company to hire workers these

workers will spend their money on goods

and services owned by publicly listed

companies these publicly listed

companies will take this capital and buy

back their own stocks or just hand the

money to their Executives who will buy

other stocks speaking of which this is

why Universal basic income or Ubi will

never work any money that's handed out

to people in need will be spent on goods

and services that means it gets funneled

right back to the top and that money

will be used by the rich to invest in

assets like real estate making said

assets ever more unaffordable but anyway

back to the topic at hand the key

takeaway here is that the treasury has

$400 billion in its back pocket that

will eventually find its way into the

markets this money will likely be spent

before the election to boost the economy

and reduce the risk of a recession

Janet's gift to Biden in the short term

However the fact that the FED isn't

lowering short-term rates and won't

begin its balance sheet Shenanigans

until June means that liquidity will

likely be neutral to negative until then

and don't forget that the treasury's

bond BuyBacks won't begin until later

this month either the consequence could

be a few weeks of sluggish price action

and some would say that we're already

seeing this the caveat though is that

the blackout period for stock BuyBacks

ended last Monday to bring you up to

speed the blackout period prevents stock

BuyBacks around weeks when quarterly

earnings come out as it so happens Apple

recently announced the largest stock

buyback in history a whopping $110

billion it's safe to say that this will

be a huge Tailwind for stocks and come

to think of it it could be why stocks

have been rallying while cryptos on the

other hand have been falling behind this

though should change as overall

liquidity improves according to macro

analyst Michael how crypto lags

liquidity by about 6 weeks which means

that it may not start to catch up until

sometime in Late July or even August

this assumes that there's no additional

liquid

coming from other sources because

someone somewhere is always printing

money and that's all for today's video

folks so if you found it informative

smash that like button to let us know if

you want to stay informed subscribe to

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Bell and if you want to help inform

others about what the treasury has been

up to be sure to share this video with

them and with all that said Thank thank

you so much for watching and I'll see

you in the next one this is guy over and

out

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