RRPs Drain To $155B, Election Riots Near, B52 Bombers Head To Israel

It all looks warm and fluffy. In a fiery, burning, inflationary way.

• Thoughts on whether tomorrow starts the End Game spiral due to probable election riots on both sides. And American carpet-bombing planes are in Israel now as Iran threatens again.

• RRPs down to $155B, we are in the home stretch.

• Basis trade short positions in Treasurys lurch higher still to yet new all time record highs.

• Private payrolls down for the first time since December 2020, strong sign of incoming recession.

Does Tomorrow Start the End Game Spiral?

I am just raising the possibility here. Of course I do not know for sure. Tomorrow is election day, and there are going to be riots on one side, or more likely both. Add to this another explicit threat from the Iranians to bomb us over here in Israel, plus US B52 bombers already in (or very near) Israel awaiting orders to do God knows what, and the picture is ugly. The chess pieces for World War III are already in place and all we need is a spark to set it all off. The dollar will collapse somewhere within this mess.

People ask me about the war of Gog and Magog a lot, the apocalyptic wars described in Ezekiel and Zechariah. Those wars are centered on Israel, obviously, because that's what the book is about. Many thought WWI and WWII were Gog and Magog. They weren't. What the current situation has that those wars did not is a hot focal point here. So maybe this is it. Who knows. I try not to take it too seriously and just keep it in the back of my mind.

Reverse Repos Down to $155B

Wolf Richter has covered the RRPs for the first time in a while. Everything he says is pretty much accurate except for one thing, which I don't think anyone (that I know of at least) takes into account. Richter says (my bold):

Wall Street hates QT, and so earlier this year, there was this big to-do in the financial media how the Fed would be “forced” to end QT when ON RRPs drop to $700 billion or whatever, because it would drain so much liquidity out of the system that something would blow up when ON RRPs drop below $700 billion. And now they’re getting closer to zero or near-zero, and nothing has blown up, and reserve balances are still plump and ready for draining.

The part I disagree with is the bold. Reserve balances are not plump.