25 September 2019

1) There are fears that the repo (repurchase agreements) market or short term funding, where banks lend to each other, is looking like it did on the 2007 market crash. The Federal Reserve Bank injected hundreds of billions of dollars into the repo system after it seized up last week when the interest rates quadruple. This has been coming about for the last several years after the Fed ended the policy of quantitative easing (QE) in order to increase liquidity to encourage banks to lend more. The squeeze like last week’s indicates there isn’t enough reserves in the financial system for the repo markets to operate. This means the government is having to buy back treasury securities.

2) Presidential candidate Bernie Sanders has propose a tax that would cut billionaires’s net worth in half. This wealth tax takes Elizabeth Warren’s idea and pushes it even further, with Sanders goal to cut American billionaires’ fortunes in half over 15 years. This wealth tax would raise an estimated $4.35 trillion dollars over the next decade by targeting 0.1% of U.S. households.

3) The consumer confidence index has declined by the most in nine months. Americans’ expectations for the economy and the job market deteriorated posing a risk to the household spending that is key to growth. The index dropped from 134.2 to 125.1, the lowest level since January. The overall measure remains elevated suggesting consumers will continue to support the record long U.S. expansion via spending.

4) Stock market closings for – 24 SEP 19:

Dow               26,807.77    down    142.22
Nasdaq            7,993.63    down    118.84
S&P 500         2,966.60    down       25.18

10 Year Yield:    down   at    1.64%

Oil:    $56.80

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