I’ve gone into detail elsewhere about the Fed’s “silent partners,” the Primary Dealers – big banks that have special status to act as intermediaries in the market where the US Government sells debt to raise funding for government activities. This is the Government Securities market, commonly known as the Treasury market.
The Primary Dealers are the conduits through which the Fed executes monetary policy. They’re very loyal friends to the Fed and the U.S. Treasury, and they talk to them all day long.
Well, no good deed goes unpunished…
Right now, the Primary Dealers are in big trouble (thanks to a dastardly move on the part of the Fed).
And that means you (specifically, your portfolio) are in trouble too.
Here’s what’s happening, and how to protect yourself.
It should come as no surprise to you that I have a secret “jet fuel indicator.”
Or that it tells you something crucial about how to invest right now.
Or that it has everything to do with tax data. (You didn’t really think you’d get away with this, surely.)
The US Treasury publishes the Daily Treasury Statement every day virtually in real time, with just a one day lag, and follows up a couple of weeks later with the slightly more detailed Monthly Treasury Statement. The daily and monthly tax data is useful in that it tells us what to expect when the lagging economic data indicators are released later. Unlike economic data, tax data isn’t statistically massaged. Tax data gives us actual numbers on how the US economy is performing in real time. It tells us whether the statistically manipulated and late arriving economic indicators are promoting a false narrative.
But I also look at the data from the US Energy Information Administration on Gasoline Demand and Jet Fuel Demand for another near real time indicator of how the US economy is faring right now.
That helps us with our trade timing. But the information is mostly useful in telling us what the Fed will be seeing when it gets the data. It helps us to know whether incoming economic data will keep the Fed on track or not.
Here’s what the fuel tax data is telling us now about how we should approach our trading and investment strategy.