The most important governmental advisory committee you’ve never heard of just issued a stunning forecast and warning that every investor needs to hear.
This warning was not reported in the mainstream media, even though it came from the most elite level of Wall Street.
Nor did this crowd release its forecast through its captive media, like CNBC or The Wall Street Journal.
I’ll tell you why in a minute, but people who do get this warning will have the chance to protect what’s theirs and make some money when this happens.
Why We Need to Listen to TBAC
The committee that I am talking about is known in governmental circles and on Wall Street as the “TBAC” – the Treasury Borrowing Advisory Committee. This committee is authorized under federal law to meet with the U.S. Treasury to advise it on the Treasury’s borrowing needs for the current and next quarter, as well as any other long-term issues that the Treasury requests.
The TBAC is comprised of the top executives of a select group of banks, investment funds, and primary dealers. In other words, it’s the epitome of “plugged in.”
The current 15 members of TBAC are a virtual “who’s who” of top Wall Street executives: managing directors, chief investment officers, and head traders for firms like Prudential, BlackRock, JPM, Vanguard, BNY Mellon, Citadel, Barclays, Morgan Stanley, Goldman Sachs, PIMCO, Citigroup, and other less familiar, but equally powerful worldwide institutions.
Once each quarter, TBAC issues a report to the U.S. Treasury secretary that reviews economic developments of the past quarter and makes recommendations for future borrowing. The reports are issued early in February, May, August, and November.
The economic review is a rehash of old news.
More importantly, TBAC makes “recommendations” to the Treasury regarding its future borrowing needs. Those recommendations include a detailed schedule of issuance for the remainder of the current quarter and the following quarter. These schedules cover literally every bill, note, and bond auction, including expected gross and net issuance for the next four-and-a-half months.
And they are hardly “advisory” in nature – more like “diktats, written in stone.” That’s what makes this so unsettling and potentially dangerous.
I have been using these reports in my research for the past dozen years, and in that time the Treasury has never materially deviated from TBAC quarterly estimates. There can be no question that these reports are worked out jointly between the Treasury and TBAC.
And because the committee always includes at least five representatives of primary dealers, it is in constant, direct communication with the Fed, as well.
This raises a question: Just who is advising whom? There is no question that TBAC is an integral partner in the policy-making progress.
Here’s why that matters so much – why it’s crucial, in fact…
This Is a Powerful Indicator of How the Fed Will Act
The central idea of my research is that if we know how much Treasury supply is coming and how much the Fed is buying, then we know what we need to know about the direction of the financial markets over the short, mid, and long term.
Every three months, TBAC gives us half of that equation in four-and-a-half-months advance.
TBAC issued its latest quarterly report to the Secretary of the Treasury Steven Mnuchin on Aug. 2, 2017.
I believe that this report is the most important one I’ve read over the past dozen years or so.
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