The Fed Appears to Have Violated the Dodd-Frank Act in the Second Quarter of 2020, Giving $455 Billion in Loans to Citigroup

By Pam Martens and Russ Martens: September 8, 2022 ~

The Fed would appear to have violated both the spirit and the letter of the Dodd-Frank financial reform legislation in the second quarter of 2020, according to new repo loan data released by the New York Fed for the second quarter of 2020. The data shows that Citigroup received 96 percent of all repo loans made by the Fed between June 24, 2020 and June 30, 2020. Citigroup also dwarfed all other borrowers in the Fed’s repo loan program during the full second quarter of 2020. Citigroup borrowed a cumulative total of $454,751,000,000 from the Fed between April 1 and June 30, 2020. Of the 24 firms that borrowed during the second quarter of 2020 from the Fed’s repo loan program, Citigroup’s share amounted to more than the combined total of 19 firms. (See charts above and below.)

Recession Protection: Pay Me to Wait

The best mob movie of all time in my opinion is Goodfellas.

The movie isn’t for everyone (a lot of swearing and gruesome killing; rated R/18A). But Robert DeNiro, Joe Pesci, and Ray Liotta are great in the movie.

Here is the Goodfellas business mindset scene that sums up the movie…

Business bad? F*** you, pay me.

Oh, you had a fire? F*** you, pay me.

The place got hit by lighting? F*** you, pay me.

I believe there’s a substantial chance that this is a long, drawn-out recession. And in between superstar opportunities, I want to get paid to wait.

Mr. Market, Pay Me to Prepare & Profit

In the United States, there have been 2 quarters in a row of negative GDP growth.

Commodity prices have softened, which can temporarily ease cost inflation.

However, interest rate shocks take longer to work through the economy. It seems highly likely that we will see minimal economic growth over the coming quarters.

A recession can be crippling to the unprepared investor.

If you have no cash to deploy near the bottom of the market, it will be very difficult to ride the future waves higher.

Who Is to Blame for Rising Energy Costs?

By Nomi Prins, editor, Inside Wall Street with Nomi Prins

It doesn’t seem like much, I know.

But it’s the amount Amazon is increasing its fulfillment fee by.

From October 15, 2022 to January 14, 2023, it will cost, on average, 35 cents more to ship each item sold using Amazon’s fulfillment services in the U.S. and Canada.

Again, this might not sound like a lot. But Amazon ships about four billion items to American households each year.

So that could mean a total increase of $1.4 billion that Amazon retailers will have to shoulder in the coming holiday season.

And this isn’t the first price increase Amazon has hit its retailers with this year.

In April, it imposed a 5% “fuel and inflation” surcharge in response to rising gas costs and inflation.

Fuel is a key driver of Amazon’s costs.

US Job Growth Slowed in August; Bitcoin Gains

The U.S. added a robust 315,000 jobs in August, slightly more than expected but still revealing a slowdown in hiring amid rising interest rates and slowing economic growth.

Bitcoin (BTC) gained 0.8% in the minutes after the report was released. The weaker growth gives the Federal Reserve cover to refrain from more aggressive interest rate hikes at the U.S. central bank's next monetary policy meeting in September, relieving downward pressure on risky assets from stocks to cryptocurrencies.

“Obviously we’re looking at how the Fed may or may not change their reaction function based off of this number,” said Path Trading Partners chief market strategist Bob Iaccino on CoinDesk TV. With the CME FedWatch Tool now showing a 64% chance of a 75 basis point rate hike at the next meeting, “it’s a little easier for markets and for crypto,” he said.

Economists had forecast 300,000 added positions. But it's a stark decrease from the 528,000 jobs added by the U.S. economy in July.

Fed’s QT: Total Assets Drop by $139 Billion from Peak

It sticks to plan, QT like clockwork: What the Fed did in details and charts, and my super-geek extra-fun dive into the “To Be Announced” market for MBS.

By Wolf Richter for WOLF STREET.

The Federal Reserve’s quantitative tightening (QT) completed its three-month phase-in period on August 31. During the phase-in of QT, the plan called for the Fed to allow its holdings of Treasury securities to drop by up to $30 billion per month by letting them mature without replacement, and allow its mortgage-backed securities (MBS) to drop by up to $17.5 billion per month, mostly from pass-through principal payments.

In September, the pace of QT roughly doubles with the caps doubling to $60 billion per month for Treasury securities and to $35 billion for MBS. So how did it go in August?

World in the Process of Bankrupting – Bill Holter

Precious metals expert and financial writer Bill Holter says, “nothing is getting better” and points out the proof is everywhere that we are clearly headed for a financial calamity, the likes of which we have never seen before. Holter, who is also a precious metals broker, is seeing a big pick-up in business because big money is looking for a place to hide in the physical world. Holter explains, “We are getting more orders and larger orders. I think this is natural because I think people know something is wrong, and when something is wrong, you want to get defensive. I think people are finally making the connection the world is in the process of bankrupting, and you want your capital in something that cannot bankrupt. By definition, that is gold and silver.”

The Renewable-Energy Trend Is Reaching a Tipping Point

By Matt McCall

Do you know where your power comes from?

For decades, the answer has been fossil fuels and nuclear power. Those sources made up at least 80% of total U.S. electricity generation from 2010 to 2020. But that picture is starting to shift with the clean-energy revolution.

So today, I'm taking a look at that shift... as well as some companies that could thrive as the world adapts to new sources of power.

You might be skeptical. But as I'll show, renewable energy continues to take market share away from traditional energy – and now, this trend is beginning to accelerate...

Last year, fossil fuels – including natural gas, coal, and petroleum – made up 61% of U.S. electricity generation. Nuclear brought another 19% to the table. And renewables – wind, solar, hydro, and geothermal power – tacked on the remaining 20%.

Renewable energy has steadily eaten into traditional energy's share of electricity generation in the U.S. And according to the U.S. Energy Information Administration ("EIA"), that trend will continue over the next two years...

We Just Got the Green Light to Start Buying Crypto Again

By Teeka Tiwari

When I first started investing in cryptocurrency back in 2016, I lost three bank accounts.

They refused to tell me why they kicked me out of their banks… In hindsight, the answer was obvious. At some point, I had used each bank to move funds into my Coinbase account.

At least six banks have rejected my applications to open accounts because – get this – I write about cryptocurrency.

Longtime readers know I’ve been ridiculed and ostracized for recommending bitcoin.

But most people don’t know about the financial obstacles I’ve faced simply for conveying the idea of crypto as an asset class to my subscribers.

Over the years, I’ve been vindicated…

Some of the same banks that once rejected my accounts are now developing their own crypto products and services.

Higher Highs Ahead but Running Out of Steam

By David Brady

This week, we got the CPI and PPI numbers for the month of July. Both fell and were lower than expected on a year-over-year basis. The markets reacted positively to the news because it lowered expectations for the next rate and increased the likelihood of a Fed 180 sooner rather than later. But how reasonable is this expectation?

Inflation numbers may be falling but they remain sky high. The issue for the Fed is the need to get inflation down by lowering demand for goods and services in the economy and thereby lowering prices. But lowering demand causes the economy to slow to the point of recession and, ultimately, depression. Is the Fed willing to go that far to conquer inflation? Maybe, if they’re pulling another 1929.

China, Taiwan and the Boycott

Eleven Chinese missiles landed in Taiwan’s waters this past week.

Including 1 directly over Taipei, all while Chinese military exercises were conducted in six zones surrounding Taiwan.

The recent Chinese power demonstration is the largest cross-strait exercise in decades.

It is the most recent act of Chinese aggression in an ever-escalating tinder box of conflict.

  • Domestically, there are power struggles going on within China which are only ratcheting up the tension for the CCP even further.

It’s no secret that for the past few decades, China enjoyed world-leading economic growth.

However, double-digit economic growth can only go on for so long. A natural cooling of the economy is not unexpected or considered unhealthy.

Services Inflation Worst since 1982, Food Inflation Worst since 1979, Housing CPI Heats Up. But Energy Prices Plunge, Some Durable Goods Drop: Inflation Whack A Mole

Inflation in services is now where the action is, not commodities or durable goods.

By Wolf Richter for WOLF STREET.

Inflation as measured by the Consumer Price Index backed off a tad in July to a still ugly 8.5%, from the super-ugly 9.1% in June, as food prices continued to spike, but gasoline and natural gas prices fell sharply, and prices of durable goods backed off their crazy spike.

But inflation in services rose to 6.25%, the highest since 1982. The CPI for services is still below overall CPI and is still pulling down overall CPI. But it has been getting worse every month for 11 months, and as other price spikes back off, the services CPI pushes to the forefront. That’s how inflation works after it’s entrenched: it cycles from category to category and pops up in different places, while backing off for a while in other places.