Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1. Fed drives major indices to new all-time highs
Chair Powell told us in his public statement on Wednesday (Sept 17, 2025) afternoon that “At today’s meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to four to four and a quarter% and to continue reducing the size of our balance sheet. “
What was the reaction?
- The Market Ear @themarketear – Gross goes parabolic. 20% higher than when the year started and now at 100th percentile on 1, 3 and 5 year look-back.
And why shouldn’t it if JP Morgan is correct?
- Seth Golden@SethCL – Sep 17 – JPM DESK: 100% of the time! “.. The Fed has cut rates with equity markets within 1% of all-time highs 16 times in its history. The $SPX was higher a year later every single time with an average return of nearly 15%.” $ES_F $SPY $QQQ $NVDA $AAPL $MSFT $NDX $NYA
Key points in Sentiment Trader email:
- The last hour indicator rose for nine straight sessions; Similar win streaks saw the S&P 500 rally 90% of the time over the next six months; – Technology displayed the most favorable outperformance trends
Speaking of tech:
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – Holy cow … positive Q3 guides in tech are crazy high vs all other sectors @FactSet @WallStHorizon
And,
- zerohedge@zerohedge – “US equities saw the largest net buying in 12 weeks, driven by long buys in Single Stocks and to a lesser extent short covers in Macro Products. 9 of 11 sectors were net bought, led by Info Tech/Financials/Consumer Disc/Health Care.” – GS Prime
But, interestingly:
- Seth Golden@SethCL – Interesting, very interesting! Bears trying to make a comeback? All of a sudden, a pretty massive spike in Nasdaq Put/Call Ratio. All prior 2024-2025 occurrences happened within a pullback and/or market correction (April). $SPX $NDX $QQQ $SPY $VIX $TQQQ $NVDA $AAPL
In that line of thought,
- The Market Ear @themarketear – Lower every time – The S&P 500’s RSI has stayed above 45, for 102 straight days — one of the longest streaks in history. In the past 60 years, the S&P was lower EVERY time 2 weeks later.
And then the famous indicator:
- The Market Ear @themarketear – Sell Rosh Hashanah, buy Yom Kippur – Dates are Sep 22nd i.e. this Monday and October 1st, respectively. It coincides also with post option expiry reversion effect the same week and Sep month end pension selling due to run up Sep MTD and start of buyback black-out.
Finally the best for the last. Always listen to one man for straight wisdom & opinion – David Tepper.
2. “The economy is more resilient than we all think it is“!
That is the title of the CNBC clip on Sept. 18 featuring Loretta Mester, former Cleveland Fed President & current Wharton professor. It has to be so, right? After all you have a Fed Governor and a CNBC anchor speaking about our semi-sacred economy. How could the economy not be more resilient than us plebeians think?
But then on Friday after the close, we heard the following from Ms. Ganapathi, Founder & CEO of Unicus Research. Read what she said on CNBC Fast Money after the initial EV discussion (at minute 1:30):
- “60% of our population are living from paycheck to paycheck & how they are managing is thanks to Buy Now & Pay Later; they are using it to bridge the gap & shockingly 25% of the consumers use Buy Now & Pay Later to pay for groceries & that is NOT a healthy economy; that’s a very can I make it today kind of economy; the way consumer credit comes into the picture is that when COVID pandemic happened, the stimulus checks started flying out to consumers & that kinda tainted what a prime credit score & what a subprime credit score is ….. some customers pay down the debt that boosted their credit availability; other consumers chose to buy things they otherwise couldn’t buy; … so auto loans originations spiked up and now we are on the other side of post-pandemic hangover so as to speak. And we are seeing consumer delinquencies spiking up. And what’s interesting is we are not seeing it on the equity side. We have been focusing on the asset backed securities for auto loan originations and we are seeing spike in chargeoffs, spikes in repossessions. And its amazing, None of this is impacting the equity side yet. You don’t see companies increasing their PCL provision for credit losses. So consumers are in a very very tight spot.”
Speaking of COVID stimulus payments, we read very recently that young borrowers had used the announcements of student-loan forgiveness by the Biden Administration to buy cars and/or houses. Now they are in trouble because of two payments they have to make – on student loans that actually were not forgiven & on new Car/house purchase payments.
Speaking of auto payments, repossessions, read the news of the bankruptcy of Tricolor that broke this week:
- A Texas-based auto dealer and lender that once billed itself as a financial lifeline for underserved buyers is now bankrupt, leaving thousands of customers with unanswered questions. Tricolor Holdings, which operated more than 60 dealerships across six states, filed for Chapter 7 bankruptcy in September. Court filings show the company listed more than $1 billion in liabilities and identified over 25,000 creditors.
Look at the quote below from yesterday’s clip from Steven Van Mitre,
- “ABS market participants are creating incredible demand for subprime auto loans and this is resulting in loose and sometimes even reckless underwriting ” said Peter Cechini, director of research at Axonic Capital, “while the Trocolor bankruptcy may seem isolated & idiosyncratic, one would be remiss not to ask whether or not it’s a canary in a coal mine for subprime auto lending“.
As the clip points out,
- ” … prices for the $2 billion of debt behind subprime auto-lender Tricolor Holdings suddenly collapsed yesterday leaving creditors scrambling …. “
Do we dare ask the question whether private credit portfolios have such subprime auto-loans? We ask because we saw a report this week that describes the woes of software companies-suppliers to the AI buildout that are a part of some private credit portfolios. We are clueless not only about private credit portfolios but even more so about such software suppliers in the AI buildout. If any one can shed any light on this, we would be obliged.
Allow us to remind readers that, way back on April 19, 25, Macro Viewpoints set up its TOR or Treasury Overnight Rate at 3.75% and reaffirmed it as Macro Viewpoints Overnight Rate at 3.75% the following week on April 27, 25. We didn’t know things were going to unravel as much as they seem to be doing now. But there were enough signs then &, as in flood economics, we thought it imperative to urge moving early & decisively before the plates under the economy begin slipping.
Our guess is that Chair Powell now understands but is powerless to move fast for fear the Fed-worshippers might lose faith in his Fed. You can see that in his facial expressions as he opened his presser.
If the above is not enough, below is another large consequence of Fed not cutting rates in April 2025.
3. A sighting of the Kindleberger Spiral?
A direct consequence of the Fed’s intransigence is that the 7-yr Treasury debt has barely budged from its 4.20% rate 5 months ago or 4.09% 2 weeks ago. What’s this about, you ask?
Well, that means the Chinese 7-yr rate at 1.75% is still 2.10% lower than the US 7-yr rate. At the same time, the dispute between President Trump & the Fed Chair is creating severe disquiet across the world. While CNBC’s Steve Liesman & the Fed’s coterie celebrates the struggle to maintain the independence of the Fed, much of the world is beating what Bloomberg terms as “the steepest retreat from Dollar Debt in a decade“.
- Kenya converted a multimillion dollar rail debt to Yuan,
- Nigeria’s central bank released data in August showing more than 20% of its FX reserves are now held in Yuan up from less than 5% five years ago; That dramatic change confirmed by IMF positions statistics shows how Africa’s largest economy is hedging against Dollar volatility;
- Hungary provides a different dimension; … China’s Ministry of Finance issued a $1 billion in offshore Yuan bonds in Hong Kong in September, yes this month;
- The Philippines, the country USA is working to protect from an attack by China, quietly joined the ship this September to enter Panda Bonds for the first time since 2019; according to the WSJ, the move was spurred by rising Dollar debt costs after US 10-yr yields touched 4.29% in early September; That puts Manila in towards a lender that has already become its largest trade partner;
And,
- In 2025, as IMF noted, 37% of bond issuance in emerging & frontier markets occurred in non-dollar currencies compared to 25% in the last decade vs. borrowing in US Treasuries at record high yields;
- Countries like Canada, Saudi Arabia & Israel each recorded declines of 29% to 37% in dollar denominated issuance according to Reuters data from May;
- by 2025, nearly 2 out of 5 loans in emerging markets are in other currencies;
And guess what they mean by “other currencies”?
- “Re inflows, the Institute of International Finance estimated that emerging market portfolios attracted nearly $45 billion in August 2025 of which nearly $39 billion went into China alone; that means global capital is concentrating around the Yuan retreating from both the Dollar & other local currencies“
And China is taking steps to made Yuan borrowing acceptable worldwide;
- China’s Ministry of Finance issued a $1 billion in offshore Yuan bonds in Hong Kong in September; a move designed to set global benchmark for global investors; By offering transparent pricing on foreign debt, Beijing signaled its intention to standardize Yuan borrowing worldwide; each of these steps adds to a cumulative shift; the pattern is unmistakable; governments & central Banks are imbedding the Renminbi into their financial systems;
Result:
- According to Reuters, dollar-denominated sovereign bond issuance by non-US countries in early 2025 fell to $86B down from $106 billion the year before, a 19% decline
What does this have to do with the Dollar being the world’s reserve currency? Dr. Lacy Hunt explains in a recent clip:
- If you view the world’s financial structure as this inverted pyramid, the balance sheet of the Federal Reserve is sitting at the neck of that pyramid.
- And currently what is happening is the Fed is still shrinking its balance sheet. (notice Powell’s statement quoted in section 1 about Fed to “continue reducing the size of our balance sheet) “
- The critical measure is what I call modernized world dollar liquidity, which is the sum of the system open market account of the Fed and also the foreign central bank holdings of treasuries.
- Like it or not, for the time being and in the current situation, the reserve currency of the world is the dollar, which means the Fed is the world central bank.
- And so they have to accelerate the growth in world dollar liquidity. Historically, world dollar liquidity has grown at 10% per annum in the last 6 or 7 decades. And currently, we’re still contracting at a 5% rate for the latest 12 months. The latest week, the Fed shrunk its balance sheet by about $14 billion. They’re not shrinking it as fast, but they’re shrinking it.
- And so, in my opinion, they’re going to have to reverse OR the liquidity drain will trigger the Kindleberger spiral. Let’s first of all end quantitative tightening, bring the Federal Funds rate down, and see whether or not this is enough to offset the endogenous shock to liquidity.
- But I think that the Federal Reserve is sitting on its hands at a time when it is ill advised to do so. I mean, I don’t question that the first round effect of instigating tariffs is inflationary. And Powell has emphasized this first round effect over and over again. But what he has failed to do is to acknowledge that the second, third, fourth, and fifth rounds are severely disinflationary.
- And so from my perspective, it’s better to look at the longer term consequence rather than the immediate term. and this dual mandate of the Federal Reserve may paralyze them at a time when they cannot afford to be paralyzed.
This is entirely within the Fed’s traditional responsibility. Sadly, in Either their ignorance, Or in their deep desire to keep demonstrating their independence, they are causing serious damage to the Dollar’s stature, the US economy and America’s traditional position as the dominant financial power.
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