YouSaid · the spoken record

George Robertson

lines on the record: 144
first: 2024-08-12
most recent: 2024-08-12
sittings or episodes: 1
sources: podcast

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“They're actually putting themselves into an isolated fort, if you will, that makes them more irrelevant. Rather than more important. U.S. treasuries are big. They're very big. But if you look at like how much are foreign identities, like what Pettis was talking about, if you look at how much is asset liability management, they will buy 10 years no matter what happens. If you're met life or calpers, if you look at how much is autopilot basically passes before Mike Green started talking about passive. And if you look at what actually is the tradable 10 years, it's a very small amount. Considering the amount of issuance and the amount of Float that's out there if there is such a thing. The Fed, if let me put it to you. And I'll probably keep talking anyway. But if the Fed can control Fed funds,”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“If anything, it reinforces my view because if the Fed, for whatever reasons, For whatever reasons, divorce the U.S. Treasury tenure. Let's just take the 10 year from what's going on in the economy, then they're even isolating themselves more and making them more ineffective. A non-sequitur in terms of like, you know, what's going on with Fisco and the economy.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Fights. That's a risk free rate. You know, they can say, you know, Fed funds now at three, we're now making it six. So it makes sense that if they have the same amount of trading interaction, not so much demand supply, but interaction, they can actually meet in a room and say, this is where we want the 10 years. And I think that's what's happened right from first in a clumsy probably, you know, oh, look at that way. But by January 2022, they really fine-tuned it. And the yield curve is set. U.S. Treasury 10-year is set. It has nothing to do with demand supply. It has nothing to do with like T-bills or salong bonds and all this sort of stuff. It's got to do with the fact that the Fed, some bright guys sit down and say, we think we don't want the 10-year much higher than 5%. And away they go.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“How much accelerant, how much growth is being priced into the market, first because the term premium is rather stable. As you know, the curve goes up and goes down and has various shapes, but the church premium is rather constant or stable once you get past like two years, three years. But I'm not cheating. I'll still stick that NGDP is reflected in the end, you know, in the end we're all dead, but in the end to U.S. Treasury rates, but for when the Fed has gotten its mind to increase its balance sheet from like $800 billion to $8 trillion, that's a lot of bonds trading. And the Fed has clearly shown, you know, since the decree was created, that they can set Fed.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“I'm going to stick with always. And the reason I will is, first of all, I can't make sense of anything unless I say always. And I mean in terms of late 80s, 90s, the odds, 2000 after GFC, nothing makes sense unless you understand this risk-free rate is reflective of NGDP expectations. Second, when I say it's out to the three years, five years, what's more important is the curve. The curve should be perceived once you adjust it for duration risk and various other bond mechanics of its math. It's how much acceleration is going on in the economy. So if the term premium, which is perhaps a much more important way to talk about curve and rather than outright yield, the term premium shows”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Would disagree with that, and this is why now I'm going to dive back into the real rabbit hole like everyone else. In 8182, it was obvious that there was a punitive level of Fed funds being applied, which Taylor later codified, but not until like 10 years later, to just bring inflation out of the economy. And it was an experiment. They were a little rough edges to it. So what you're seeing was not the expectations for NGDP in terms of like the economies growing. Clearly it was below it, but there are expectations for what the Fed's response was going to be given the inflation, which was showing very little response to this, you know, trying to wring its neck that Voker was applying. I think a more obvious illustration of what I'm saying.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“And rather just say, you know, I think two years of trend is sort of like challenging everything I believe about U.S. Treasuries and the economy. You know, certain bright folks who are pragmatic, guys that are very expert, like you've talked to them. Starting to say maybe we don't quite have this right or they're just moving on and dropping all the macro guys with their inputs. So where does this leave us is that I think we're going to get a resounding return of what I call orthodoxy and doxology, but there's going to be a very bitter battle at the Federal Reserve to maintain the current status quo. So I don't know if that I tend to wonder, come on, Jack, do your job and keep me in line. I know I do tend to wander.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Because what it does is it destroys price discovery. It divorced the U.S. Treasury rates and curve now from what is going on with NGDP. It forces many, many people to fly blind, if not make a really crass air, and they keep making it. You know, they say, oh my gosh, what's the New York Fed model doing on recession probability? Still like 40% chance of having a recession. So who am I to say the New York Feds wrong? I'm going to stick with it. It's a recession probably. This is just rather than people just say like, good gosh, we've been wrong for two years now. Not just sort of wrong. I mean, just laughably wrong. And we're still at it. We're still looking for secret sauce in terms of like labor's dropped off like various people or this or that or that or everything trying to figure out why the asteroid's going to hit Detroit.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“As expectations for NGDP. And, you know, if you want to really dig into it, you've got to let me run away and I'll come back with my bodyguards, arrow, canes. I got a pretty tough squad that will protect me. But from January of 2022, and I think it came from the New York Fed, and I think it came from Williams and this crowd, they're on the battlements. They're out there to defend this Neil Wicksell as long as it goes, extended the idea of the natural rate. And again, this gets more complex, not just from Fed funds out to, like, say, three months or so, which is the past, they sent it right out to 30 years. They went into yield curve control. And Bernaki mentions this when he talked to Japan in 2002 and then later right to 2004. So it makes sense that this is how they think. Huge air.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Pricing in the future. Now, if the popular, if not any of the popular, if the expectations are that, holy cow, we're going to get it and get it good, that COVID-2 is coming. I know there's all sorts of various reasons as to why NGDP, despite its current growth, is going to just fall on its ass. And that will be reflected in the curve. However, when people have three or four years or even decades of NGDP trend, which is not really, which is probably very difficult to say that it's only going to fall on its ass because I can't find the event, I can't find the cause for that. So why not what's happened for the last 50 years carry on, then U.S. treasuries until January 2022 were one in the same past the three years to like say 10 years and 30 years.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“That's why the two years really moving in an interesting way now versus Fed funds and bills, despite this idea that bills are created. Anyway, I won't get into that. That has to be priced in. But once you get past the two years or let's say the three years, the curve and the US Treasury rate until January of 2022 was always one and the same with NGDP expectations. So expectations.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so I don't get to dig into earnings. That's another one of my favorite canaries. Okay, but treasuries, it's just, as I said again, it's dogma. It's orthodox. And be it far from me to be bright enough to figure out why Keynes and Arrow and that, you know, I just go on with a list of people are wrong and I'm right saying that that is not the relationship now. I can't nullify it. I'll pop or anything like that. U.S. Treasuries and the curve always reflects or is not priced by NGDP. Now, there was this since Volcker, there's this curveball, which is like, what the hell's the Fed going to do? Tighten loose and all that stuff, which does show up into the curve out to about three years at most, but usually it stops at about two years.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“So, I definitely grant you that a lot of folks who've been calling for recession since 2022 or even 2021 will isolate data points that make their case look stronger and say, oh, I actually was right about this. I was right about that. However, I'm not sure that the real GDP, you know, people are looking at who would be calling for a recession and it hasn't happened or pointing to real GDP because actually what's been falling is nominal GDP growth because inflation has fallen. What's been really bullish is real GDP has gone up. Real GDP slowed to almost zero in 2022 because inflation was so high again. Real is inflation adjusted for our audience. But as inflation has fallen and not all GDP fell way less, real GDP spiked up. So you're having a bit of a boom. But George, I just want to get on the timeline of the connection between the 10-year treasury, the five-year treasury, the third year treasury, pick wherever you want on the curve.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“The thing is that real only counts when you're assuming that the Fed funds has power such that it can rein in excessive nominal add to real. If the Fed can't do that, then it's almost a waste of time to look at real.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“If not having treasuries in the end being priced by nominal GDP. Now, nominal GDP is all that counts. Real doesn't count. Real has been used for the last three years or so as a rabbit hole to escape when you're wrong. You know, like I'm looking for a recession, but I was right about real. I'm looking for a laborers to come off, but I was right about real. And they carry on. They're still doing it. Real is only applicable for people making policy in terms of their concerns with productivity. And it won't count until JP Morgan starts paying earnings based on real. Like, okay, here's your dividend and it's the real dividend. Ignore the rest. Or if earnings are starting to be real. Like, you know, don't worry about our shortfall. Real earnings were actually up this year. It doesn't happen.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“We had at the time 10 years, 20 years, 30 year, then zeros, then strips. It can't be otherwise. Because if you think about it, if NGDP is going on at, say, and it's reasonable expected to carry on with a 5% clip, then how is it possible that the cost of funding for the U.S. Treasury is like 4%? It's not possible. Or if the cost of funding for the U.S. Treasury would be 8%, it's not possible. This explains the very long bull market and bonds, the so-called since the 1982 peaks to just recently before we start to go up again, it just defies common sense that they would not be at least in sync and if not.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Saying actually that the expectations of the short rate to a reasonable point, I don't know, four years, five years, and then a well understood curvature going back to price, both the convexity option that's in treasuries and also it's It's duration risk add on will occur. Why will simply it's because it always has. But from Jan 2022, it's not happening. And yes, if you just look at, and perhaps it's a pretty messy chart, but if you just look at NGDP since Volcker, actually go back till Eccles NGDP and long treasuries when we had them do reflect each other.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“they weren't behaving as they had in the previous 40 years of my career as of Jan 22. But letting that aside, the risk-free curve of the United States is always pricing and reflecting NGDP and what its expectations are. And if you think about the 27 to become $28 trillion GDP, if you think of the dollar block, if you think of the hegemon that the US is, What that means is that, of course, the risk-free rate will reflect NGDP's expectations. It can't be otherwise. So I don't think interest rates are stimulative. I don't think they're tightening. I think they're just a pricing of the current status and a reasonable expectations of the status going forward.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“I'm in the middle, but noting serious flaws in Fed policy, specifically interest on reserve balances and a few other things. I'm not going to debate with Mosler. By God, that guy's five times prior to me. And he's made a fortune. And I don't know what he's doing for fun, but I'm not going to debate him. I do think he goes too far, but that's another show probably. What I would do is, again, I would take a pedestal's point of view or Ricardo wanna view is saying that as far as risk free goes, and there we might, as you know, I have, at first, I was very confused as to why U.S. treasuries are not behaving as for orthodoxy and as for doxology of economics formed together, you know, formed since the turn of the 19th century.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“So you're seeing that money go into the system. It's another form of, I believe, stimulus. And so these higher rates that people say are restrictive, they're not actually being restrictive. And I don't think we've seen a massive slowdown because we're not actually in some sort of a highly restrictive phase right now.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“I think there might be a slight difference. I think, as I mentioned, I think they matter primarily as kind of a signal and they matter in the tone they're setting for risk appetite, animal spirits, things of that nature. In reality, what they're doing with these higher rates, since 2008, the financial crisis, they now paying interest on reserves to the banks. And so, you know, you look at how the financial sector and the big banks have been doing how their equity prices have been doing in the last six or 12 months. They've been doing fantastic JPMorgan Citigroup companies like this. And they're getting a massive basically stimulus check from the Federal Reserve where they're borrowing from the people at 0.5% in people's checking accounts. And then they're getting over 5% from the Federal Reserve.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Those are in the numbers. And so we have a strong economy. We have strong fiscal stimulus coming in the form of interest payments, front-end quantitative eating. You had a great show with NeuroRabini and his colleague talking about ATI active treasury issuance. So we're seeing all of these things feed the asset bubble crescendo that I see. And I think along with all the other things I've talked about with automatic flows from payroll disbursements, government stimulus, we're also seeing people that are in the treasury market start to squeeze out of that treasury market into other asset classes, whether it's Bitcoin, gold up over 2,400 announced again, stock market indexes. And so we're just seeing this massive.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Do with the job market in the US, although they'll ostensibly say that's why they need to remove restraint. I think you could argue, as George does, the Fed doesn't even matter. There isn't really any restraint. This is all kind of a shell game at this point. And so what impact will it have for the Fed to lower rates? Well, it does send a signal. It sends a signal kind of the lights go off and money managers like don't fight the Fed buy equities, buy small caps. And I think that what you're seeing is kind of these Pavlovian responses to perceived rate cutting cycle. And so I think the economy is on strong footing. You're not seeing massive spikes in initial claims. As I mentioned, I think the unemployment report is reflecting a lot of increase in labor supply rather than an actual increase in unemployment of native born.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Redo everything. I'm obviously out to lunch, something I'm missing. And I redo all these programs which breed like rabbits overnight, I think. And I come up the same nope, it's still the same massive GDP growing. It's still the massive, very significant inflation still at 3%. There's still very significant labor force that matters that's resulting and still very significant wage growth, all of it uninterrupted. all of it showing not the slightest you know as you say rate of change that would matter certainly in 2019 parlance but but even now it's just common sense i think everyone's got to like take a breath and just look at the data and say this is boom now you're 1946 recession was actually about a million servicemen coming home all in a very short order so maybe”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“And also, I don't think you're representing correctly how huge it was. It actually went on for three years. So there's your rate of change discussion. At least it gets me out to like 2023 or 2022 for certainly, if not the first half of 2023. And then I think even now phase two of these industrial policies is very large. So there hasn't been a flagging or a change and it's showing up with, you know, just the Atlanta Fed GDP now to the monthly personal consumption expenditures, which we'll get this Friday and various other metrics. GDP is booming. I don't think I don't know how people can say otherwise. In fact, I listened to the popular views and I say, oh, I.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“First, I'd like to correct you that it wasn't just a one month recession. It was clearly looking into the abyss of a depression if we hadn't had this emergency fiscal spend and even monetary policy, but it was a bad liquidity rescue type of policy, not all the agreement.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“at least not even counting any sort of leverage in that. And that means risky assets will also increase about $6 trillion as the debt is increasing. This time it's in the public sector. So there's really no secret sauce detailed spiel. It's like a forget about as broad as a barn door. It's like the barn fell on you. It's massive. And I'm actually very confused as to why I'm called a contrarian and why people look at it that way when I'm looking to say, you know, like I'm going like, didn't you see the three trillion spend? Now, didn't you see that where it went? Don't you see what's going on with personal consumption expenditure or disposable personal income or even net farm payrolls? How can you go on and on with nuance?”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Do a trash feticord of 1951 phase two, the trege feta cord of night 2025 or so. And the Fed, I think, is quite happy to take a back seat here, not so much for monetary economic reasons, but just because they don't want to be holding the bag when this stuff falls apart. So they're trying to shy away. And that means that this is a wartime spend that it would actually be unreasonable to think it does not show up in risky assets. So it's not necessarily a spend that is just a one-sided equation. It's a dual-sided balance sheet Ricardo type of identities. And if you spend, let's say cumulative, like $6 trillion now, you're going to get 6 trillion increase in NGD.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Gave it over to at first Trump, but then Biden, save us, spend since this existential, spend any amount that you think is required. And we'll take a back seat and just deal with the consequences later. Congress has yet to reclaim their constitutional role and control the purse strings. It's still very much in the administration hands. And there's no sign of a stoppage of the spend. Where this ends up with risky assets is that I think it's important to understand that the Fed was sidelined in World War II. Makes sense. That was the previous existentialist threat. And it wasn't until the 1951 treasure Fed Accord that they came back into independence and started to have, we're going to take the punch pull away when the party gets too weird. Well, the Fed is still yet.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“I think now we're getting towards more of a net number as industrial policy is replacing these COVID emergency remedies. But I don't see it as just a net flow and a spree from Congress. So if you consider that redistribution and you consider just the sheer size of the money even not taking account the redistribution of wealth that it was. And if you look at just say the industrial policy spending that's going on now, we have not had a government spend like this since we're World War II. And it makes sense because for whether right or wrong, COVID was deemed an existential threat to the United States. So therefore Congress suspended its usual ways and means its rules about mandatory discretion.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“So you had what was basically the largest redistribution of wealth. If you take into account that the Ford value of tax receipts can be put into a present value type footing, so therefore you got the present value of the actual payouts. And that is a redistribution of wealth. And it was massive. In fact, the gross amount was about $6 trillion. So if you get away from this idea of net and look at the actual distribution, there was just a massive redistribution of wealth and just an almost a panic pump priming, which is what it was, to get consumption back up from the Hoi Poloi to go out and buy McDonald's hamburgers and spend some money at Walmart. It worked. So it was probably a mistake to see it as a net number.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Same with the federal government. If the government has a program and COVID was interesting because most of that money spent was immediate. And it was helicopter money. I think Bernacci was just chopping at the bit to actually have helicopter money enacted. It was ironic that it shows up with the federal government. And that went to the lowest cohorts. It went to the Shmos who really need the unemployment insurance. They really needed that 600 bucks a week that came through. And the upper cohort didn't receive it. They got some PPP loans and such, but they really didn't receive the majority of the immediate COVID remedy as far as labor goes. But the upper cohorts were the ones who paid the tax bill. It's well known that the top 20% paid like, I don't know, 80% of the tax.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“George, explain that. Let's just pull back how money where money comes from the banking system. It used to be that there was a K multiple. Like, you know, you decreased reserves, then they would multiply that out and that would create money. Now I think everyone agrees that the loan is the start of the money creation, not the other way around. Or they happen at the same time. You know, if JP Morgan increases its commercial loans by 500 million, it'll be JP Morgan being the credit it is can either receive through deposits or in the interbank market 500 million to cover that increase in loans and that is an increase of 500 million”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Our payroll does drop, but it has clearly momentum. And I think it's worth your while to figure out why is non-farm payrolls a runaway freight train. Why is it styming all these people who are coming up with saying there's labor weakness, including the Fed, when in fact there's just no sign of it? And it shows up in terms of wages, which are still onwards and upwards. And as you pointed out, consumer spending. personal consumption expenditure. I'd like to add that I don't think it's the government is just on some crazy ass spend spray. There's two sides to it. Now, I almost feel I got to stand up and home reach. I'm about to, you know, slight Michael Pennis, but there's a Ricardo identity that's always present, whether you're talking about the Fed, monetary policy or international trade flows or in terms of the U.S. domestic economy. The deficit does.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Well, first touch very quickly on the Fed. I think that's an explanation trying to give them a reason to do something. It's a political point of view, and I think it's just shy, if not propaganda. The reality is what Mel said, we've had a massive inflow of illegals. I figure it's about a 3 million increase in the labor force. You can just see if you graph it out that the household has gone down to pretty well flat growth year over year rolling. Well, non-farm payrolls are just maintaining a very strong two and a half, 3% rate. It is basically impossible to have weakness in the labor market if you're having non-farm payrolls at this clip. Now, something might happen. I don't know, my asteroid falls on Detroit. I don't know where the non-”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“In foreign born men unemployment rate, and that rate has gone up, not because jobs have gone down, but because the absolute number of foreign-born workers available has gone up from 17.5 million to 18.3 million. So we've had an increase in the foreign-born workforce, which has led to an increase in the unemployment rate. And that's really why you're seeing the jobs numbers strong. Unemployment rate is simply going up because of an increase in foreign-born worker supply.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Yes, exactly. And just one quick thing on the unemployment rate, which I think some people are pointing to as a sign of weakness. While it has gone up slightly, I think when you dig into those numbers under the hood, you see it's actually gone up much less than the headline number would indicate. So if you look at, I believe it's table A7 in the household data, which is foreign born versus natural born. For example, natural born male unemployment in the last year has gone from 4% to 4.2%. The big jump is in foreign-born men. So foreign-born men has gone from 2.7% last year. That was the unemployment rate for foreign-born men. It's now 4.2%. So most of that increase in the unemployment rate has actually been an increase.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Know just waiting and looming out there, no matter what happens to come into the market and start purchasing. And so what we're seeing is we're seeing almost an inevitable rise. And as people get more comfortable with that and continue to believe that even if there are three, five percent, seven percent corrections, whatever, those will get bought and be V-shaped, the chances of having those. And we're seeing asset classes that have underperformed, things like small caps, you know, those divergences start to resolve themselves not with a crashing S&P, but with the Russell kind of making up ground. And so I think that's kind of the pattern likely to continue forward”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Multiples given a given discount rate. I think a lot of that's being thrown out of the window because of fun flows. I think you've gotten recent reports out by Vanguard and I think T-Ro Price just showing the amounts of money that are now just automatically flowing into the stock market every single payroll period. very strong increases in recent years and automatic enrollments, company matches. You had Larry Fink from BlackRock put out his annual letter earlier this year talking about the only path to retirement and prosperity is essentially for all Americans to put any excess dollars they have into the S&P 500 for lack of a better term or into his funds and into financial markets. And so what you're seeing is even if there is a correction and it goes down two, three percent, Buyer, uh,”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think George's point on the fiscal deficits and the amount that that's juicing the economy is evident. I definitely agree with that. You also have seen with a lot of the debt being rolled over that the interest expense is skyrocketing. I was looking at the last monthly Treasury statement put out every month, fiscal year to date. We're getting close to 900 billion in interest payments by the Treasury last year at this time. It was around $650 billion. So you've got almost a one-third or somewhere in that neighborhood increase in interest payments, which is stimulative. I would also add other factors that I think are playing a major role and why in general I think old school analysis stuff I learned when I was in business school about discounting cash flows or what are appropriate price to earnings.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Where risky assets are going to go, like the SP 500. So, with that idea of the monetary policy, am I understanding the fiscal, which are very broad strokes? I mean, anybody with Fred could quickly stitch this together. It also makes that it's very, very hard to argue with me. Otherwise, I can't see any reasonable conclusion other than that the S&P 500 is going to continue.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Actually, it was pretty goofy. It's down this very simple, but I think very robust and useful understanding insists that I still have a very positive view on S&P 500. And the second part of this is that I don't really see any signs. Forget about like thesis and Neo Wick cell stuff, but just signs in terms of like, okay, what they said they're going to do and then what's happened over the next year, two, three years of a Fed monetary policy. It doesn't exist. And maybe someone can say otherwise, but I think that in three years they'll be able to look back and not be able to justify their views that they have now. There has been such a radical change in how the Fed formulates monetary policy, perhaps for the better, for the common good, but it has disconnected the Fed from any sort of input in terms of...”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Actually, what there's been is a really radical change in the monetary policy formulation, which if you do not realize, I think you're basically lost in terms of figuring out what the heck risky assets are going to do, especially the S&P 500. I think right now that everything's on track. It all goes back to understanding of the fiscal status, which is still very strong, even though it's abated a lot from the highs of COVID with the emergency COVID remedies. But we still have large industrial policy and various other programs. And also we're going into election with a chicken in every type of idea that will probably get heightened with Harris. And the fiscal spend is still pouring in. If we didn't have the COVID experience, you would say at record high and it's scary. But of course, we've had the COVID experience, and most people are starting to think that, well, it's coming off.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT
“Sure. I take a rather dogmatic point of view. And I know many people see me as contrarium, but it's anything but I'd be one of like many, many people prior to like 2014 in terms of my analysis of the market where the S&P 500 is going to go and also what's going on with U.S. treasuries. But since 2014, it's suddenly become very unique. Contrarian. And I think it's because there's a mistaken idea that A continuum from Volcker to to date.”
2024-08-12 · Forward Guidance · Deficit Spending Will Send S&P 500 To 6,000 And Beyond | George Robertson & Mel Mattison on the True Risk-Free Rate and The Fed's Control of The Treasury Market · IDENTIFIED FROM THE TRANSCRIPT