Interesting TACs of the Week (November 10 – November 16, 2025) – “Depraved” Fed?

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.”Depraved” Fed?

The US economy is on the cusp of a major productivity boom. And before it starts, the Fed is about to derail that growth spurt. That is a precis of what Mohammed El-Erian said on Friday late morning on CNBC. It wasn’t clear whether the CNBC “hosts” understood the import of what he was saying. He also reminded the CNBC  “hosts” that he had publicly called the Fed to cut rates in July. 

We, ourselves, had publicly cut our own (ONR) MV-Over-Night-Rate on April 17 to 3.75% & then, again, on August 17 further cut it by 50 bps to 3.25% where it stands. This rate has met the test of volatility & the basic wisdom of keeping the Federal Funds Rate just a little below the 2-yr Treasury rate. The question is if  simple-minded folks like us can do the right thing & have the Treasury market validate it, why can’t the Fed do the same despite/with 600 Ph.D. economists & an army of sycophants in Fin TV & in various “financial” firms?

So allow us to make a public demand to President Trump, Secretary Bessent, the leaders in the House & Senate to force every financial institution to publicly declare their own equivalent of Fed Funds Rate. That will add to the debate raging inside the Fed right now AND hopefully enable a sensible decision from the Fed. This past week, a prior Fed member & currently a Vice Chairman at a major Wall Street Firm, came on CNBC to articulate why the Fed is divided now.  That raises the question whether the mega Wall Street institutions are also divided & why.

Wouldn’t every one be well served if Goldman Sachs, Morgan Stanley, BAC-Merrill Lynch, JPMorgan Chase, PIMCO, T. Rowe Price and most major firms publish their own Federal Fund like rates? After these firms have no trouble disagreeing with buy-stay-sell recommendations on stocks. If they did that for Fed Funds rate, then the Fed itself would be better served with the diversity of opinion. On the other hand, the Fed could lose political control on the real inside factors that makes them determine the Federal Funds rate. Now that would be consummation devoutly to be wished in our opinion. 

Let’s go back to the April-July period. It was the perfect time to cut rates. Inflation wasn’t an issue & the economy was slowing. But this is a gutless Fed, sorry for our honest adjective. This Fed can’t stand making a decision that might be proven wrong. So they did nothing. 

But the reason Fed gave for doing nothing was that they did not know how the Tariffs would end up impacting the economy. What a copout! That is because this Fed can’t stand making a public mistake. This week we saw the same thing. They think inflation is now a bigger risk than it was just a few weeks ago. But they don’t know for sure and so they would do nothing in the December FOMC meeting. 

Think a little. However little you think, it would be more & better than this “depraved” Fed does. US corporations are now laying off thousands of employees because of lack of demand & because of a slowdown in the economy.  It is now a fact that about 70% of Americans are in an economic hardship living from paycheck to paycheck. They simply can’t pay for what they need to buy. And in this environment, this “depraved” Fed is fighting inflation & making everyday purchases more expensive for the majority of Americans who can’t afford to buy now!!!

By the way, the “depraved” term for the Fed isn’t ours. We are not smart like Neal Dutta of Renaissance Macro who used it this weekend. The moderator said Dutta had a note to clients saying “cuts probably not going to happen in December and probably not going to happen in January“.  Below is Dutta’s response;

• Yeah. I mean, but they don’t feel but the consumer doesn’t feel very good. Um I mean I’ve been saying all sorts of crazy things about the Fed. I mean honestly I think the Hawks I mean I’m surprised that Trump hasn’t tweeted anything. I mean send the Hawks to prison going hawk hunting. I don’t know. I mean it’s sort of what they’ve been able to accomplish in terms of pushing the bounds of their view um is breathtaking in my opinion given the fact that the data is actually going further and further away from them …  the narrative around inflation has shifted multiple times over the last year like talk about goalpost moving like first it was well they’re going to firms are going to raise prices before they even do tariffs. And then it was, well, they’re going to draw down all the inventory first and then raise prices. And now the hawks are saying, well, wait till 2026. I mean, at some I mean, the statute of limitations, like give it a rest, you know. Um, so I find it shocking.
• And I  also find their their their reading of the labor market to be frankly uh depraved. Um, and you know, the the the truth is is that they want to sort of rationalize away the slowing in the jobs market because of immigration. If it were really about immigration enforcement, then real wages would be rising. Not the case. Companies would be in increasing their recruiting intensity because they feel like they need to find workers. Not the case. Job openings continue to come down. uh consumers unless you think every single consumer survey is just surveying like uh undocumenteds. I mean consumers are telling you that it’s getting more challenging to find work. So this is clearly a demand driven phenomenon. …
• He (Powell) went further and he said uh December is not a foregone conclusion. Far from it. So that was much stronger language for him. And now the hawks are ascended. You have every single regional Fed president telling you that they’re that’s voting this year. They’re lining up against a cut. You have people that were formally for um previously thinking that they would um be cutting next year now telling you that they’re not interested in doing so. Cash Carry is up there right on the list. he came out earlier uh this week. Um so I think it makes perfect sense that the markets are trading December as a coin flip and you know the scenarios are basically they don’t go in December or they go in December and they signal they’re not going for a while after that. And um you know it’s either a hawkish hold or a Labor markets without payroll data: ADP, layoffs, claims & shutdown gaps hawkish cut but the the outcome I think is on net hawkish and that’s why the markets are doing what they’ve been doing. But um I just think at a more foundational level, like it’s surprising to me how far the Hawks have been able to push their argument even though the data really hasn’t gone their way. Like yes, we have a government shutdown and yes, the uh public statistics represent the gold standard uh in terms of data, you know, comp compilation and analysis, but do you really need that those numbers to tell you like what’s going on in the job market? I mean, uh, ADP was weak, Rellio was negative. Um, you know, it’s interesting. Um, Powell mentioned initial jobless claims no fewer than six times in his, uh, in his last press conference, and he basically talked about how, well, we’re not seeing
  it in claims yet. Let me tell you something. Claims aren’t really a leading indicator. They’re just an indicator that happens to come out every week. When you have Amazon, Verizon, Target, Applied Materials, I mean, go down the list. They’re all laying people off. Like, where do you think claims are going to go? So, it’s just you’re just it’s just tempting fate. I just don’t like it when they tempt fate. And um I think they should not only be cutting in December, but they should be greenlighting a few more into 2026. The fact that they’re unwilling to go there uh is, you know,… tells me that they’re basically willing to tighten financial conditions and um they think they’ve achieved brisk management, which means they are willing to let the economy fall apart before they uh go again.

As an aside, can we persuade Neal Dutta to publish his own level of what the Federal Funds Rate should be? Does he & his institutional partners have that courage? Frankly, his views might be read more broadly if he does & he would be frequently invited on Fin TV as well!

Think what happened last week around Mamdani’s victory party! President Trump announced a $2,000 payment to un-rich Americans to help them cope with economic hardship. And presto! A number of Fed members switched to hawkish & anti-rate cut postures. Remember what their excuse was in the April-May time frame. They didn’t know how the tariffs would impact the economy & they wanted to wait until they found out. A sensible institution would have cut rates but explained that they would take that cut back if tariffs created inflation. This Fed doesn’t do that. They prefer to inflict damage on President Trump & they don’t care if the American economy gets damaged in the process. This week they instantly went hawkish once they found out President Trump was indeed going to send checks to un-wealthy Americans. 

We can’t help thinking back to early in 2025 when a luminary from a previous Fed regime openly said that, in his opinion, Powell’s No.1 job was to run monetary policy that would prevent President Trump’s chances of winning the midterms. Frankly, the hawks on this FOMC are speaking as if that is their 1st & foremost objective. 

 

2. Did the Fed really cut 25 bps last month?

Yes, nominally the Fed cut the Federal Funds rate by 25 bps on October 29! Before that remember what happened at September quarter end? Remember the demand for capital exploding at that quarter end? Then recall the historic $50 billion drawdown on Monday, November 3 with $20 billion drawn in the morning & then another $30 billion in the afternoon amounting to a historic demand of $50.2 billion in one day!!! 

That came after Powell announced the end of QT (Quantitative Tightening) as of December 1. But Monday November 3 scared the Fed and they injected $29.3 billion into the system on Tuesday, November 4. Since the crisis was averted, no one on Fin TV discussed this issue further despite segment after segment about what the FOMC members think about inflation!

If they had, they would have realized that the Fed did NOT effectively cut by 25 bps. Why do we say so? Actually we don’t but veteran Jim Bianco did:

• “Normally the triparty rate runs around 8.6 basis points below interest on reserves. Now it’s running six basis points above it. In other words, the funding markets have tightened up by about 13 to 15 basis points. Now why is that happening? because the bond market is too big and the Fed has done too much QT so that the funding markets are too small given the size of the bond market. So if you’ve got demand for funding because you’ve got a huge $38 trillion market, the funding is being supplied by banks that are getting their reserves being reduced constantly by the QT. the price the cost of money goes up. So what’s effectively happened is the Fed has cut by 50 basis points but 13 to 15 of that has been given back because of tightness in the funding market “

CNBC briefly covered the 10-yr & 30-yr Treasury auctions last week. But they only talk about the demand. They didn’t tell their viewers that these auctions SETTLE on November 17 (since Nov 15 was a Saturday). That means the buyers have to deposit cash to pay for the large auctions on Monday, November 17. So what might happen on Monday? Bianco said:

• “So the funding rates will spike on Monday. How much will they spike? Will they spike all the way to 50 basis points on October 31st? Will they spike all the way up there? Will they spike to 30? Will they spike to seven? That remains to be seen. But in these non funding settlement dates, we are still 13 to 15 basis points higher and in an uptrend. So the market is undoing the Fed rate cuts with this tight money.”

Bianco points out that the scale is stunning:

• ” The Fed sets the funds rate 86 billion traded in the funds market. The triparty repo market is $1.1 trillion. The overall secured overnight funding market is $3 trillion. Triparty repo is part of SOFR“. 

What is the fix? Bianco said:

• “Fix is simple. The Fed stops QT. They’re going to do that in three weeks. But will that be enough? Will we have to see them buy assets or inject liquidity into the market? Maybe.”

Remember the Fed did add $29 billion last Tuesday? What we don’t understand is why didn’t they stop QT on that day? And when do they begin QE? Look what Roberto Perli, Fed’s Manager of the System Open Market Account said on November 12 in his speech at the 2025 U.S. Treasury Market Conference at the NY Fed:

• “All else equal, demand for reserves is also likely to increase over time as the banking system expands. At some point, therefore, it will be appropriate to start increasing the size of the SOMA portfolio. The exact timing will depend on several factors, but, as President Williams said, given what we know today we probably won’t have to wait long.”

Then came the weirdly funny caveat from Mr. Perli that the above “absolutely does not represent a change in the underlying stance of monetary policy.” Right! So starting QE before long does NOT represent easing of monetary policy while keeping QT on for long for this long did demonstrate Fed’s dedication to curbing inflation!

The real concern is the instability of it all. The big problem is what Mamdani highlighted – Incomes are below what people need to pay for their living expenses. And as Bianco put it:

• ” We have a revolution in this country. They’re already angry enough that they think we already got the worst economy in 73 years with an all-time high in the stock market.”

That may be a solution for the hawks in the FOMC! They have to torch this stock market rally to get their way. A 20% fall in the S&P by Christmas would be just the ticket for the hawks in the FOMC and that might even sooth the majority of Americans who are about to gather &  shout “On est la” (“here we are”) like the French protestors are doing.

That comparison shows how stupid Mamdani was in his victory speech! Having won on affordability, he could have announced he was for all Americans & he would work with anybody to add income to the American people. He will work with NY Governor Hochul to get checks to all needy New Yorkers & he would work with President Trump to get checks sent to all needy Americans. Instead, he went semi-nuts in his victory speech! 

Seriously, how smart is President Trump! He has turned on a dime to meet the needs of the American people & he has done so one year before the midterms. Not only is President Trump distributing $2,000/- to needy Americans but he is also cutting tariffs on Food & necessities to lower the prices on essential necessities.

What about Bianco’s point about generating 150,000 jobs while we have no population growth? Did you read that President Trump is planning to allow 60,000 Chinese students into US Universities and he is also thinking about restarting the H-1B visas.  Yes, that might inflame Fox’s Laura Ingraham et al. But as President Trump told her on FOX that he created MAGA & he knows best what’s good for MAGA. 

For other gems, watch the Bianco clip:

 

After the heavy stuff above, how about eminently sensible positive views from a real investor! 

 

3. A treasured & sensible voice thru the years!

Many people know of David Rosenberg as an old-timer from Merrill Lynch. But even before Rosenberg, there was Charles Clough at Merrill Lynch. Only oldies like CNBC’s Joe Kernen can speak about him & his days at Merrill. The rest of us now have his views below:

 

• “I think the uh there are a lot of market and economic pressures on short-term interest rates. The market wants interest rates to be lower. If if we didn’t have a Fed, if the Fed wasn’t there, um short rates would be between one and two.“
• “And I would argue there are three reasons and they really haven’t changed. In fact they become more deflationary as we go into the 30s. The first the most important is demographics. Demographics are probably the the strongest reason why the yield curve is where it is. is for a simple reason. As societies age, they save more. People are concerned this baby boomers as they retire will uh will cut the labor force and interest rates will will shoot upward because of labor costs. And that leaves out part of the equation. When you retire, you stop spending. You don’t buy houses. You don’t buy cars. Uh older populations save more. Japan’s the best example of that. “

After discussing Germany & Italy, he says there are reasons about the US & they haven’t changed:

• ” right now there are $170 trillion dollars of financial assets in the United States and the economy is 30 trillion and it takes a lot of huffing and puffing for a $30 trillion economy to sustain high interest rates on $170 trillion dollars of financial assets. … if if you start to liquidate your liabilities, the price of a financial sector liability will will decline. …  I think that’s that’s a story that will start to unfold as we as we go and that will mean bullish on stocks I would say well it is positive for stocks and productivity and and it’s it says bond yields aren’t going to be high enough; “

He cites an observation from two Nobel Prize winners he says “describes the markets today”.

• ” They said you can’t change the value of the firm by changing the debt equity ratio. If debt goes up, equity values go down. If that goes down, equity values go up. And that’s kind of what’s happening today. I think what you’re going to see is a massive shift in the ownership of the corporate sector from the debt holder to the shareholder as that comes down. The cruise line industry is an excellent example of this. They were forced to leverage their balance sheet heavily during the Covid period. Now, as they liquidate it, the value of the equity is going to rise and that’s where the equity market is today. I I think it benefits enormously as this debt stock begins to unwind, equities clearly benefit. that’s really the story for this”

Then the coup de grace!

• “well I’ll tell you what’s already happened if you look at hours worked best way of measuring labor time uh they’re down about 2% from 2019; …  real GDP is up 13%. That’s a tremendous productivity  and we haven’t we haven’t even seen the real effect of AI yet, right? I mean, so remember productivity is profits.”

The same Mr. Clough focused on Mag 7 during his appearance on Bloomberg:

 

He points out that the companies that lived thru the dotcom bubble & thrived afterwards were companies that had the operating system and they made all the difference in the world because they could create the software that made the internet usable. And that was the distinction. Nobody else was able to do that.

 

4. Our basic stuff

• The Market Ear@TME – Tech darlings: cancel Christmas; US TMT momentum stocks normally do not do that well this time of the year.