Republic Risk: The Bond Issuance Explosion

The Treasury Department's drunken shenanigans are astounding. It's obvious to anyone who isn't trying to protect their jobs in Washington                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Republic Risk: The Bond Issuance Explosion]( The Treasury Department's drunken shenanigans are astounding. It's obvious to anyone who isn't trying to protect their jobs in Washington [Garrett {NAME}]( Nov 1   [READ IN APP](   RED on the S&P 500 and RED on the Russell 2000 Each morning, we assess the total flows of the market by measuring statistical metrics on a very specific number of stocks to determine broader sentiment and the momentum trend. When these readings turn red, we focus on cash, trade positive sectors, or take inverse positions against indices. We’ve seen some improvement across the S&P 500 in the last two days after very little buying strength last week. We’ll look for the markets to flutter into the 2 p.m. period, but expect a sharp reaction as always, [around 2:35 p.m. to 2:37 p.m](. when Federal Reserve Chairman Jerome Powell speaks. --------------------------------------------------------------- Key Takeaways - The Bank of Japan initiated an unscheduled bond-buying operation to counter rising yields after easing its yield curve control. Yet, the 10-year Japanese Government Bond remains near decade highs, and the yen’s price against the dollar falls to levels not seen since the 1990s.  - The Federal Reserve meets today to discuss monetary policy and the fed funds rate. The odds of a rate hike are less than 1%, and the recent climb in long-duration bonds will act like a central bank rate hike. - Today's Treasury refunding saw the offering of $112 billion in securities to refund about $102.2 billion of maturing notes, raising approximately $9.8 billion in new cash from private investors while gradually increasing coupon auction sizes through the end of the year - November is historically a positive month for the equity markets. --------------------------------------------------------------- Dear Fellow Expat: The numbers are just insane. The U.S. Treasury Department will start jacking up its bond auctions. Wall Street is paying attention. With government bond yields at their highest levels since 2007, everyone except Washington bureaucrats sees the problems ahead with high borrowing costs and their impact on the U.S. debt load. Does anyone understand that it’s very backward that bonds from Greece (the basket case of Europe for the last 20 years) are paying lower yields than debt in the United States? It doesn’t matter if you have a printing press. That’s just insane. The Treasury Department will auction $112 billion in debt next week. That will cover more than $100 billion in debt that matures on November 15. And then, they’re going to do it… again… and again… and again. About $7.6 trillion needs to be refinanced in the next two years, plus whatever the deficit will be next year to avoid a recession. So, let’s call that $1.5 trillion. Stanley Druckenmiller offered a much-needed call for fiscal sanity this morning. Once again, we all see it. We’re all preaching to the choir. Insider Buying and Selling in Net Dollar Amount Insider buying remains strong compared to other periods of the last 12 months. But we’ve largely seen these executives' purchases around closed-end funds and nibbling in smaller cap arenas. With all sectors still negative, we’ll wait this one out. What are the Insiders Buying? Activity remains muted on a dollar amount. However, there were a few more moves than Monday. - Boaz Weinstein took another opportunity to add to his Saba Capital Management portfolio. This time spending roughly $17m on six funds; EMO, ECAT, CEM, BCAT, BIGZ, and the BlackRock Health Sciences Trust BMEZ.  - A director with Delta Airlines (DAL) purchased over $300k in stock.  - Jeffrey Tengel, CEO of Independent Bank Corp (INDB), purchased 2100 shares for $48.58.  - 3 Directors purchased between $100k - $150k in Luxfer Holdings (LXFR), TransUnion (TRU), and Simmons First National (SFNC).  - Chief Financial Officer Jonathan Douyard of Shyft Group (SHYF) bought 9060 shares at $11.10. - A portfolio manager with Carlyle Credit Income Fund (CCIF) bought 13,300 shares totaling $101k.   Source: Edgar Out of this list, [we are still advocates of the Warren Buffett trade]( as his recent purchase offers a new floor for Occidental (OXY). Equity Sector Strength  Our Equity Sector Strength (ESS) signals are negative in nine sectors, but we are seeing some recovery today in communications and technology. We’re still largely on the sidelines in cash, but we are now starting to see a floor emerge in the energy sector. That puts some names like Permian Resources (PR) and Occidental Petroleum (OXY) back in play. And Finally This is a very difficult market to navigate, and I am listening to the words of Stanley Druckenmiller this morning. He said it will be a very difficult market for the next decade. I firmly agree with this - unless (of course) the Federal Reserve decides to drop another $6 trillion from the sky in the next 24 months. Let’s assume that the Fed and its cavalry aren’t coming to the rescue now. Let’s assume that the U.S. government is running trillion-dollar interest payments. Let’s assume that a generation of traders and investors grapple with the prospect of much higher interest rates that can’t be cut to zero once again. Yes, it will be tough for the road ahead. But there are important things that you can do to protect yourself and thrive. We will focus on companies and opportunities with strong financial discipline and improving financial metrics. We will use our Equity Indicators to measure the flows of the markets and sectors. We won’t speculate on garbage companies with awful metrics and stretched valuations. And we’ll dig into great businesses that make great products for any economic situation. We will likely see valuation compression in this era of higher interest rates. Be patient, and remember that there is always money in the midstream of the energy supply chain. Stay positive, Garrett {NAME} You're currently a free subscriber to [Florida Republic Capital](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()