Daily Treasury Statement Charts Update: 16/3/11 – Are we going to see an increase in TARP withdrawals again?

An update of the daily treasury statement charts:


Total Operating Balance Vs S&P 500 Inverted

Click to enlarge.

Another very weak day for risk assets; in particular, the repatriation trade was in full force. The total operating balance of the US Treasury rose yesterday (latest), increasing by a hefty $75 billion. Although the unwinding of the supplementary financing account continues to push the total operating balance lower, we shouldn’t be surprised to see increases to meet ‘emergency expenditures’.


As I have said previously: If markets are to remain this weak for a while, it is likely that the US Treasury will surprise itself by how much it ‘needs’ to withdraw from its coffers. This could bring the foxing ‘crack-up’ move  that precedes a more profound downward leg. I now present the total operating balance with some risk assets lagged ~40 trading days; the charts suggest that the ‘crack-up’ move could begin in around 12-13 trading days:


Total Operating Balance Vs Dow Inverted (LAGGED)

Click to enlarge.

Total Operating Balance Vs S&P 500 Inverted (LAGGED)

Click to enlarge.

Total Operating Balance Vs Russell 2000 Inverted (LAGGED)

Click to enlarge.

Total Operating Balance Vs VIX (LAGGED)

Click to enlarge.


Over the past two days there have been withdrawals from the US Treasury’s coffers for the purpose of TARP (Troubled Asset Relief Program) expenditures. They have been tiny (compared to history), but nevertheless we should watch out for these withdrawals as the mood in the market deteriorates:


TARP Withdrawals Vs S&P 500

Click to enlarge.


Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression


EDIT (5:30 ET): The Yen (& Franc) are really on the move today. The repatriation trade is in profound and vicious force. The Yen just appreciated by 3% against the dollar in a 10-15 minute period:



Click to enlarge.


Needless to say, this is terrible for Japanese companies, who – by and large – sell to the world. Perhaps we’re seeing a final epic squeeze in long-term synthetic (debt) and absolute shorts on the Yen?

See here for our collection of rare historical economic data.

Posted Mar 16, 2011