YouSaid · the spoken record

John Comiskey

lines on the record: 98
first: 2024-01-29
most recent: 2024-01-29
sittings or episodes: 1
sources: podcast

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“The authors of the paper, and it's a phenomenal look into what happened. And the core thesis, which is interesting, but then it gets into a lot of complicated math, which many folks won't really be able to keep up with. But don't go read the paper just for the introduction and the background and the context, because that gives you an enormous enormous understanding. And then go read everything, all the global money knows from Zalton. I mean, those things were absolute gold.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“You can get it from the Fed. I mean, the Fed details their holdings, not just at a broad level, like if you go to the Soma, the Soma page, but you can see the actual MBS that they hold. Yeah, there's all this detail that's out there that's available. So I guess if you want to, I mean, look, if you want to understand how it works at a broad level, well, then, you know, I mean, you're in the realm of reading, reading folks like Joseph Wang's Central Banking 101 or read papers that are out there that have been written economic papers, not so much for what they're like trying to prove or not prove, but just because of the background that they gave you. Like there's an amazing paper out there where reserves ample enough, I think, is the name of it. Daryl Duffy was one of the.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I mean, the starting point is every day they release all the spending and the taxes that they collected the day before or the business day before in any event. And they also reflect all of the debt that they issued. I mean, basically, you can see the treasuries kind of daily ledger of what they're doing in the daily treasury statement. So to me, that's kind of the key. That's the starting point. Go look at it, see what the treasury is spending money on. And then once you start to get a sense of what that is and how that works. And unfortunately, this gets into skill sets, right? Like in one's ability to go take in large sum, you know, large amounts of data and then slice and dice it. But if you had that capability, if you've got capability to work with databases and the data that's inside of them, you can go get all this data from Treasury themselves.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and a lot is mechanical. Some is discretionary, though. And when there is a discretionary move. So I guess for treasury that comes from Congress about the size of the deficit, what treasury comes is how to fund it. Federal Reserve can do whatever it wants, but it only kind of pulls plays an audible in a crisis. It does like to be orderly and follow a rule and have the market see that it's following the rule.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Like when you, when Michael Green talks about the underlying mechanical flows of passive investing and what that actually does with respect to like index funds and whatnot, those mechanical flows matter, matter a lot. And I think that there's a lot of value in being able to understand at a detailed level what those flows are. So that to me is probably been the, I don't know, I guess key principle that I've taken from this journey over the last couple of years to try to model it myself, right?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Think what's resonated with me, and maybe it resonates with me because at my core, I'm an engineer, right? But what resonates with me is that there's a lot that's out there that's mechanical. There's value in understanding what those mechanics are. You look at what's happening in the stock market day to day. the options and like the option Greeks and the need for dealers to hedge positions etc that that creates that creates flows right and that's all mechanical like i don't understand those mechanics like i understand the treasury mechanics but you know some people likely do i mean there there's some folks that that seem to right that out in out in and fintuate but those those are mechanical flows”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So, my last question What are your overall broad learnings? You've learned a lot about incredibly in the weed stuff on the treasury's funding cycle, but your overall quest to learn more about finance in general. What are some broad principles, some very general macro bird's eye learnings that you can share with our audience as we reach a close?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and like, I think it would be a lot harder for there to be a British UK guilt crisis in the US just because the dollar is the world reserve currency. But even if there were, you know, number one, the Fed can step in. And also, I think there's a mechanism where, okay, the Treasury, the fiscal agent sells a bunch of paper of bonds. The supply goes up, so price down, yield up, and then yields sufficiently high yields, then slow the economy. And then there's more demand for debt. So it's kind of this self-regulating mechanism, which can get out of control, but it hasn't yet.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“The Treasury debt will always be bought. Yeah, they have to pay more for it, but the Treasury will be fine. The private sector players may not be.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“No, I don't. Not an informed one. I mean, I think interest expense, I mean, Congress could always tax, right? And if they taxed, then you take back some of the money that you're putting into the economy with that interest expense, right? Because you're paying interest to somebody and you could kind of tax some of that back. I guess in theory, they could increase the amount of tax that they put or that they levy on treasure interest income, right? I mean, now it's just general income and whatever, but there's nothing that prohibits, I don't think. I mean, well, not, I don't think. There's nothing that prohibits them from creating it. I mean, not anything Congress would, right? Like the tax code for as much of a mess as it is now, I don't think that they're going to do that to it. But so in terms of...”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Guess Sarge, what I'm asking you is do you have a view on whether the current deficit is sustainable with interest rates at five and a half percent or is 4%, 3%, or even zero percent necessary for this spirals out of control?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So, you're talking about the change in the deficit this year versus last, a small percent of that is the change, the increased interest expense, is that what the question is? Yeah, I mean, it's not massive, right? I mean, it is, there definitely is more interest expense this year versus last.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“I'm going to ask you a question that it's impossible to answer, but just put your guessing hat on. This is a podcast. And I know that, okay, interest expense is higher because interest rates are higher and the treasury rolled its debt up. And I also understand that as a result, the deficit is higher. And I can understand those two things can spiral. However, it's not like your model is telling you, like, John, like, you know, the financial system is crashing. Interest rates, the only way this works is if interest rates go back to zero, right? Like it's a small percentage of the deficit increase is the fiscal interest expense, right?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“A function of the projection of what I think taxes are going to be. Structurally speaking, the high points in the minimum prescribed policy level are higher now than they were than they would have been back then. So when you combine that they have to end March with a higher level of TGA than they would have back then. You combine that with the flows that are going to come in in April. And that's where it goes. But if I got taxes wrong, like if there's less taxes that show up in April, well, then it won't be that much. So would it be, I mean, it just depends on how much error I ultimately had in the tax projections. But if they project, as I think that they will, then yeah, I think we're going to get to 1.1 trillion. before it will train down through the rest of.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Very interesting, and of course the elephant in the room is no one really knows the true lowest comfortable level of reserves. The monetary system we live in is like, what, 16 years old after quantitative using before, you know, reserves didn't pay basically a tiny fraction of the reserve there are now so no one knows. So you said when the repo crisis, I think you said the reserves are 1.4 trillion. Now they're well roughly four trillion or more if you include RRP. Why did you say the Treasury General account will get to 1.1 trillion? That seems like a lot. It seems it's bigger than any time since 2021, right?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Of GDP. And it doesn't kind of, to me, pass the SNP test of, well, it kind of went crazy at one point four. Yeah, I mean, there's been substantial deposit growth since then, but 1.4 to 3.7 being or it just doesn't, it doesn't really gel in my mind. And that doesn't really add up. So I think they'll be able to run QT before it becomes a reserves problem for quite a bit longer. But it depends on what that LCLR is. And the repo rates will eventually tell us that story, I think.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“From somewhere, it's going to pull from either bank reserves. Some of it might come in from ultimately from RRP, right? Because corporations typically have a lot of money that they're going to remit on the 15th. They've got that in MMFs. And then they liquidate it the day before making the payment to the Treasury. So you could say those funds kind of source from the RP. In any event, back to the original point of why isn't it going to be why do I just don't think that I don't think that they'll need to do it. But even if they do taper it, I don't think we're anywhere mechanically near the lowest comfortable level of reserves. I mean, if RRP is zero on June 30th, then bank reserves is going to be around 3.7 trillion. And it just doesn't gel with what the Fed has said. And as a percentage.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“It would be considerably higher now. And of course, the Fed is going to be more cautious with that, right? And I think President Logan's remarks a week or two. Ishnet bills to issue, assuming all of those ended up with money MMFs, then there would still be 200 billion that MMFs would be putting into RP. And then as I talked about earlier, the flows change. And the bill issuance goes negative. So all things equal, that actually kind of pushes up. The reserves that need to pay taxes and where they come from, because I mean, realize the TGA is going to spike from like 700 in early April to about 1.1 trillion is what my model projects in the four, five, six days after the 15th of May. In late-ish, May, you know, when the TGA is at its peak, when all the tax flows have kind of finally materialized in, the TGA is going to be pretty high. And temporarily, that's going to pull.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Up RRP and bank reserves. And I forget where it exactly is now, it's probably like 4.2 ish, but it's way, way higher than it was at 1.4. Now, granted, the Fed's more cautious. And, you know, there's been much more deposit growth in the system than 2019. So it stands to reason that today the snap level of reserves.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“When the Fed had to step in, there just weren't enough reserves in the system back then. But that was like 1.4 trillion in aggregate reserves, bank reserves in the system back in September 2019. And now we are way beyond that. And when I say reserves, I'm not just saying bank reserves as you would see on like the H4, but really bank reserves plus RRP because that's the better metric. Because the RRP can quickly turn into, can quickly turn into reserves if the money market funds have a better place to go, if somebody will give them somebody in repo, will give them more than RRP, or if the Treasury will pay them more than RRP, then the RRP can kind of quickly train change to research. But if you add.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“The doubts are purely mechanically based, right? And they amount to, I just don't think they need to do it from a reserve perspective. So I guess starting from the perspective of like the Fed does not want to have a September 2019 style repo blow up, right? And legit back in September of 2019, there were not enough reserves to both meet what banks felt that they needed intraday in order to meet their resolution liquidity that's required, right? That's required by the regulators and also kind of shift reserves to people who need those reserves in repo, right? And when they stopped meeting that need, the repo rates went through the roof.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“The new output, including as part of that, I'll have to likely tinker with the debt issuance, the bill issuance really, because that's how they account for kind of the daily shifts in the funding need. That's their, I guess, their high frequency way to either increase the amount of money coming in or decrease it. The issuance that I expect between now and the end of fiscal year 24 for bills, which I project in the article that I, on my most recent article, well, then that won't come to pass, you know, if they need more money, then they're going to have to not decrease bill issuance as much as I expect in April. And then that'll be that. And then the model will reach different conclusions. But that's kind of the process and how I deal with the evolving. And it's unfortunately, well, or maybe fortunately, it's just a never-ending battle in order to keep it, keep the model up to date.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“How do I deal with that in the model? And the answer is I just have to wait. I mean, A, it's not a thing certain. B, honestly, I'm skeptical it will pass. And then even if it does pass, well, what are the timeframes in which it's going to pass? Because if that actually passed in mid-April, well, then the depreciation that's retroactive, that will significantly reduce their tax bill probably won't see that in their April return. Probably have to wait until the next corporate tax payment is due in June. And then we would see it there. And that would have a big impact. So if it passes, then what I'll do is I'll reconfigure slash code how a flow needs to work within the model. And then I'll rerun it and it'll generate all the new.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“The date for that. And the net on that for, I think like the Warden School of Business does a projection. And I think the net on that for 24 would be something to the tune of like $100 billion less that comes in, right? Because in an effect on the flows, like the corporate tax flows that my model is expecting in April will be less because those corporations are going to take advantage of the depreciation that they otherwise couldn't, which means they're going to pay less in taxes in April than they would have to if that legislation does not pass. And then eventually in later years, they'll have to pay more, but up front and for a model run out to the end of fiscal year 24, I really only care about the impact on 24. So to your question of”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, exactly. So I think, so my understanding, I think of what you were describing is there's, and I forget exactly the sponsors on it was like wide and hide, something like that in any event. But there is a house bill that was introduced recently that would, it would do a couple of things. It would increase the earned income tax credit and then it would also reinstate some depreciation that businesses can take over like bonuses. And I think R&D, et cetera. And if it becomes law, and that also has something to do with the, they were going to partly pay for it by stopping the ERC claims.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, that distinction, I think, a little bit, but the, well, and they don't want to tax, right? They don't want to correspondingly tax to meet the financing requirement.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“They had a busy year last year. So, what looking in Congress, and I don't know if you're watching C-SPAN, but what are you seeing that you think could be the new programs that could make the deficit bigger or smaller? One thing that just I saw in the news is so the employee retention credits, which is in the process of expiring, that is going to be replaced. They said, okay, this was worth $40 billion or $80 billion. We're actually going to make a new tax credit that will fill that hole for small businesses and workers, which perhaps that's a better use of it. But are you then putting that into the model? And I just chose that example. What else are you seeing in Congress? Because there's a narrative that Congress only wants to spend, spend, spend.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Makes a projection and moves on. And it's really only the larger ones where I start to intervene as well and research to make sure that there's not some sort of hiccup, which of course becomes problematic occasionally with things like with like FDIC, right? Over the last year where normally that's a pretty quiet flow where they collect, you know, they collect in and FDIC deposits in relatively low. There's not a lot withdrawals. So that would probably normally be a category that would be fall into my generalized technique. But FDIC, of course, you've got to deal with a little differently because of what's been happening with it. Sometimes huge daily flows into or out of it that relates to the FDIC resolving the receiverships and whatnot.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“And the answer is it depends. It depends on the particular categories. So honestly, for the vast majority of the categories, it's pretty much all the model with maybe a multiplier and they're a small multiplier to increase the magnitude of either the deposit or the withdrawal flows because most, like if you go look at the daily treasury statement, it's like two pages worth of withdrawal categories and deposit categories in a really small print, right? Like, I mean 60, 70, 100, 120 different categories on each side of that. The vast majority of them are so small that it doesn't really move the needle. And for those, it's entirely the model. I have a generalized technique to go in and look at how within a month how that money was either spent or deposited and then it does the”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“And so you said your model is looking at past models. So there's a financial model of, oh, most of the time, you know, when the VIX is at 13, it tends to go to 12. That works except when it doesn't. And you get blown up. But then you can actually use your actual brain to say, oh, this seasonal force is going to affect it. So actually, I think volatility is going to go up. So how much of the model is you doing the thinking of, hey, model, look at this, look at this versus just the model says what the model says. And, you know, I'm walking down with my stone tablet and we got to listen to what the model is.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“I don't want to say a lot of that, right? I mean, it was probably 75 to 100 billion. I'm kind of napkining that. So it's not, I mean, it's not the lion's share by any stretch, but then if you take that, let's say it's 100 and you flip that, oh, that's going to create less deficit in 24. I mean, it ends up being like a 200, you know, 200 magnitude swing between the two years, which again is not nothing, but it's one of those individual flows that you have to take into account. And if you don't, then, you know, you're going to have problematic projections. And it really matters at the collection points when those taxes get collected. So what was deferred to like October, normally there's almost no corporate income taxes that come in. And yet in October of this year, they flooded in because that was when the deadline was delayed.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Okay, oh, okay. I didn't know that. So I'm looking on Fred.com of the U.S. deficit 2022, you know, a whopping 3.1 trillion dollars 2021 $2.77 trillion. The deficit got smaller, 22, 1.3.4 trillion dollars. And last year, the deficit increased to $1.7 trillion. You're saying a lot of that was because taxes weren't coming in until fiscal year 2024, even though it actually was 2023.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Have been collected in fiscal year 23 because that's the normal time when it would have come in. So we just shifted that, which will also have the effect of making the actual fiscal year 24 deficit be less than it otherwise would be because we just shifted part of the deficit from one fiscal year to the next.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yes. Yeah. And sorry, you have to think these things through because it actually makes a big difference, right? And it's why like when you look at where the market ended last year, I think it's a reasonable inference that capital gains are going to overperform versus where they were last year. Henceforth, more taxes that are going to come in April, which then filters through to they need to issue less bills. But the California thing is the California thing is a good. It's a good thing to bear in mind, right? Because it had a number, it had a number of different effects. It both made the deficit in fiscal year 23 look worse than it actually was. We did collect that money. We just didn't collect it until October or November. So it collected in fiscal year 24, but really it should.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“There was a huge bull market in 2021, and there was a bear market in 2022. There was a bull market in stocks in 2021, and that caused capital gains taxes to be high for the year of 2022. It's a year ahead of me. And then the bear market was in 2022. That causes lower taxes in 2023. I'm a year behind you. Taxes are a year ahead of the market.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and that's, but that's another great example. That's another great example of, you know, folks saw the taxes last year around April and they're like, wow, these things are super light. And they were definitely light relative to 2022, even if you take out the whole California thing. The capital gains taxes last year, which largely hit in the mid-April when people do their tax returns. They did not hit nearly as strong as they did in 2022. But a big chunk of...”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Have to study what were the expenditures last year, but then you also have to put that into the context of what was the legislation that authorized it and is that legislation expiring? Are there spending provisions expiring? And I'm 100% certain I didn't get all these things right. you know, tons and tons of them. But for all the big categories, that's the process is to go through and to try to dig it. And then in terms of trying to reach the day, like how do I know that on?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Well, yeah, you did. You had that, and all of that influences spending flows. But some of those are stopping, right? Like you may have had spending that was authorized and intended to be spent last year, but was a one-time, was like a one-time thing for a particular agency. Like I think there was a good example of that flow is the pension, pension benefit, I forget the exact category, but there were there was spending that was kind of specifically authorized to go help pension plans, right? But that spending is now largely done. So while if you just looked at that particular withdrawal category for last year and said, oh, well, that's going to grow at 2% or 1% or whatever you might want to throw in there, well, you're going to be very wrong because that spending flow is going to be dramatically different next year due to the one-time spending.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“It puts equal importance on both. Now, and being kind of transparent about the way that some of those things are modeled, the model doesn't go look at prospective agency budgets, right? Honestly, you might actually be able to do that with generative AI that might be something that's possible. But right now, that AI is me. I go through and dig through agency budgets proposed for fiscal year 24, et cetera, in order to help inform using also what did they spend last year and whatnot for some of the spending categories in order to reach a conclusion. Because you have to be careful, right? There were, as you mentioned, you had the inflation reduction act. You had cares, right? I think it's ARP, which was another one of the COVID.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“You know what the future receipts and what the future spending will be, although not going back to a level of 2019. There's not really a lot of information in 2019 that helps other than establishing the patterns of seasonality of when the flows hit, right? Taxes hit at a certain point in time when you're talking about like non-withheld income or when you're talking about corporate income taxes. They don't come in in a uniformish manner like withholding does throughout the year. And being able to understand exactly what the historical norms are for the percentage of, say, corporate income taxes that come in, say, June versus May versus January versus September, right? There's the historical information the model uses that in order to help it form the daily level projections of what”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“But of course, that makes the apples to apples comparison a little more challenging on some of the categories because if they previously reported spending in an unclassified category and now they've broken it out into five categories that are classified, well, you can't really do an apples-to-apples comparison on what the now broken out category is to what it was back then. Not using the treasury data. There are other data sources out there where I may be able to do that. I think it's usa spending.gov, et cetera, but I have not had, I haven't had a chance to go try to input that data set and see where that takes it. But so back to the point of does the model know, well, the model knows what the spending was and it knows what the taxes were. And to a degree, it is using that as an input in terms of projecting what”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So, you got higher interest charges that come in. Beyond that, when it comes to the spending, of course, I only run the model in a forward, in a forward projection mode. It uses, it takes as one of its input all the historical spending information, right? Because the treasurer makes that makes that available, right? You can get the detailed spending in all of those withdrawal categories that we see on the daily treasury statements or the receipts and the deposit side of that you can see that going back a decade plus it's changed over time like they've recategorized what this you know what some of these categories are in a general sense that's been a great thing because they're making it more granular it's a little a little easier to see or it's it's more granular right you just have more information”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So that's one, right? One, we have higher interest expense now. I mean, A, we have considerably more debt in total than we did back in 2019. And the Treasury for new issuance, right? Because, of course, the stuff that was issued in 2019, we're still paying interest on it, but that was issued at 2019 rates. But all the new issuance is we're paying considerably higher interest on. And of course, that matters a lot when you've shifted your issuance to the front part of the curve, right? Because with the bills, there's not a Treasury bill that's out there that has a remnant or a holdover from a lower interest rate time. They're all somewhere between four and five and a half percent, depending on when they were issued.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Right, but so all of those factors, though, I think were in play in 2019 and for my entire life, and probably your entire life, obviously, if there's a war, you spend more and that's discretionary. But when you look at the deficit now compared to 2019, it's a lot larger. Okay, in 2020 and 2021, we had stimulus checks. We had enhanced unemployment. We had a child tax credit, enhanced child tax credit. What right now, the deficit is so big last year? You compare that to 2019, what is it so why is it so big and how has it gotten bigger? I guess maybe one thing is inflation reduction act has incentivized a lot of production. So incentivize code for lower taxes.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Have cohorts of recipients and it's roughly a quarter. It's not exactly, and that's changing just a little bit, but one cohort goes out on the third of the month, another cohort goes out on the second Wednesday and then so forth and so on for the third and the fourth Wednesday. But so you've got payments too. You got the Social Security benefits payments. That's the number one expense. You've got payments into the healthcare trust funds, right? And then spending like payments to the states for Medicaid. That's another particularly large category. So the Medicare, right? When I say the healthcare trust funds, that's really kind of code for Medicare.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, in a literal sense, it's so big because they're spending more than they take in, right? But where does that break? Where does that spending break down? The top spending category has Social Security, Social Security benefit checks that go out four times four times a month on the third of the month. And then the second, third, and fourth Wednesday. I wasn't where they get to.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“And so we talked a lot about the Treasury funding itself by basically filling the hole left by the negative balance by the government spending more than it takes in. So we talked about the taking in, the taxes. I mean, and that must be tough because, you know, in a hot economy with a hot stock market, capital gains taxes are pretty hot. Whereas in a recession, spending goes up and taxes go down. And that's not a government choice. That's just part of automatic stabilizers. But let's talk about the spending and discretionary spending. When you review the US fiscal deficit and what the US government is spending its money on, start with the biggest items and then we'll get down. I imagine Social Security is in there. But basically, why is the US deficit so big?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Trying to balance, right? They don't want to issuance rates to be as volatile as the flows indicate they could be, right, in order to still maintain that TGA minimum level. So again, long way of saying that I don't think there is, I don't think that there's an effective ban to it, more so than they don't want the TGA to run hot, if you will, more like way more than the minimum prescribed level for longer than is necessary, but they're balancing that against gradual and predictable bill issuance while still needing to navigate over those points in time where the week ahead gross debt plus the week ahead net fiscal is high and they got to have enough there and then they want to have gradual issuance to kind of smooth it out between those high points.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Other thing though that Treasury is trying to manage because what they could do is like at the very beginning of April after they crest the high minimum level required for the TGA at the end of March, knowing that the tax receipts are fixing to flood in, they could dial back bill auctions, right? And to a degree, they will, right? That's why they're going to get to negative 300-ish bill issuance in Q2, but they're not going to slam on the brakes. They're not going to go from issuing $90 billion for four-week bills every Tuesday to issuing $50 billion four-week bills. Or at least they've not done that in the past and they've specified that having kind of predictable and more gradual changes to the issuance is one of the things that they're”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“I don't think that there technically is one because intramonth it varies a great deal. And when you get into a month like April, it varies even more, right? Because you have just an absolute flood of tax receipts that come in right around the middle to just after it in the month. What treasuries, what I think Treasury is doing there, right, is more is more a matter of, well, A, it's managing the high, like the minimum level that's prescribed. And that minimum level varies very significantly again intramont. And for anybody who's interested in seeing like literally what that policy level would be, I actually detailed it in my latest sub stack. You kind of have to squint in the images of it. Sorry, but they're all there between now and the end of September. So the...”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT