Sridhara Shankara

Market observer, contra investor and 'trader' lastly!!

[Sridhara Shankara @essemmess15]

https://t.co/6zDJyp6gH4

[Macro Liquidity by Sunil Reddy @Macrobysunil]

Today’s news: Treasury may start using its nearly $1 trillion TGA cash balance to fund bond buybacks.

Here is what that actually means.

The TGA — Treasury General Account, is basically the U.S. government’s bank account at the Federal Reserve.

Normally the flow is simple:

Taxes + Treasury borrowing
→ cash enters the TGA
→ government spends that cash
But Treasury is now considering using part of that cash balance to buy back long-duration government bonds from the market.

Suppose Treasury has $950B sitting in the TGA and decides to use $100B for bond buybacks.

The flow becomes:

Treasury buys $100B of long bonds
→ TGA falls by $100B
→ that cash moves back into the banking system
→ bank reserves/liquidity rise
→ long-duration Treasury supply held by the market falls

So Treasury achieves two things at once:

Liquidity goes up Pumping markets
duration pressure goes down
And this is where it gets interesting.
Treasury does not necessarily have to issue $100B of new bills at the same moment.
It can use the existing cash first.

That means:

Buy long bonds today
→ relieve pressure on the long end
→ inject short-term liquidity
→ wait for calmer market conditions
→ issue bills later to rebuild the TGA

So in effect, Treasury is using the government’s bank account to buy time.

It is separating two transactions that normally happen together:

support the bond market now
finance/replenish the cash later

This is still not QE.

The Fed is not creating new money.

The TGA cash already came from previous taxes and borrowing.
Eventually, if Treasury wants to rebuild the TGA balance, it has to issue more debt again.
So the full cycle looks like this:
Long-duration bonds bought back
→ TGA cash released
→ liquidity injected
→ long-end supply reduced
→ bills issued later
→ TGA rebuilt
The end result is effectively a shift from:

long-duration debt → short-duration debt

But the timing matters enormously.

If the 20Y or 30Y bond market is under stress, Treasury can use the TGA as a temporary shock absorber, rather than dumping more issuance into the market immediately.
That gives Treasury more control over:

when debt is issued
where duration sits
when liquidity is injected
when liquidity is drained

So the government is not solving the debt problem.
it is being shifted forward and shortened in maturity.

More bills mean more refinancing risk and greater dependence on stable short-term funding.

And if Treasury increasingly has to manage duration and liquidity to keep long yields contained, pressure eventually moves toward the Fed.

That is the path toward fiscal dominance, financial repression and a weaker fiat system.

[Shanaka Anslem Perera ⚡ @shanaka86]

On 19th August the US Treasury held 936.4 billion dollars in cash. Its own buyback rules say those operations exist to support liquidity in older securities and are not intended to address acute market stress.

That is the document underneath today's one trillion dollar rescue headline.

CNBC reported on 24th August that two senior Treasury officials consider the General Account available to fund long bond buybacks. No draw size. No date. Nothing committed. The only published change is narrower than the coverage suggests. From 9th September to 4th November the ceiling on each long end operation rises from 2 billion to at least 4 billion, and the revised schedule has not been released.

Bessent has called the idea a Treasury twist. The comparison breaks on the balance sheet. When the Federal Reserve ran Operation Twist it bought 667 billion dollars of longer securities and sold or redeemed 667 billion at the short end, because it owned a short portfolio to sell. Treasury owns no such thing. It would spend cash, then decide how to replace it.

Which creates two clocks running in opposite directions. Paying out of the account moves money into commercial bank accounts and reserves rise. Rebuilding the account by selling bills pulls those reserves back out. Equity and crypto traders may price the first. Bond investors have to price both.

And the 936.4 billion is operating cash rather than surplus. Treasury's own 5th August plan assumed 950 billion at the end of September and up to 1.05 trillion in late October, because large outflows were coming. Money spent on a buyback still has to be there for federal payments the following week.

The first test already ran. Treasury's own curve put the 30 year at 5.28 percent on 18th August and 5.19 on announcement day. By 21st August it was back to 5.27. Eight of the nine basis points were gone inside two sessions.

Nothing has been committed. What exists is an operating balance, a reported option, and a mechanism whose reversal is written into the same page as the relief!!

[Sridhara Shankara @essemmess15]

@elonmusk Amazing!,.. vaccination is even being debated!….does Operation Warp Speed ring a bell?🔔 🤷🏼‍♂️🤷🏼‍♂️

[Sridhara Shankara @essemmess15]

@YahooFinance Now, its become...er, a laughing stock!🤔

[Sridhara Shankara @essemmess15]

@Stocktwits This is exactly what is happening!🤷🏼‍♂️

[Sridhara Shankara @essemmess15]

@ActusDei @Sunilj22 @AswathDamodaran ...Very exact same thing..

[Sridhara Shankara @essemmess15]

@shanaka86 The machines will never replace humans ....

[Sridhara Shankara @essemmess15]

@ABC Capitalism at its best or worst?!

[Sridhara Shankara @essemmess15]

@NDTVProfitIndia Why not?!...better late than never!...👇

[Sridhara Shankara @essemmess15]

@WhaleInsider @WeekendInvestng Unhesitatingly...yes!

[Sridhara Shankara @essemmess15]

@TheBlockCo

[Sridhara Shankara @essemmess15]

@saylor If there was no preparation(on the part of it's avid proponents) for the doomsday day scenario vis-a-vis the Cryptocurencies ...none can bail out the innocuous retail investors!..one can only empathise with em'!...is all!🤔

[Sridhara Shankara @essemmess15]

@elonmusk

[Sridhara Shankara @essemmess15]

@YahooFinance Old habits …die hard!..

[Shanaka Anslem Perera ⚡ @shanaka86]

On Friday morning, $8.6 billion worth of bets that Bitcoin would go up WILL quietly turn to ash, all at once, in the largest single incineration of bullish wagers this entire year.

Many are asking the wrong question about this expiry. The headlines want to know whether Bitcoin gets magnetically pulled up to $74,000, the so-called max pain price, before $10.6 billion in options settle on Deribit Friday. Cute story. It misses what the number is actually telling you.

Of that $10.6 billion, roughly 80 percent, about $8.6 billion, is already out of the money and on track to expire worthless. The crowd holding that worthless paper is the bulls. There are 87,000 call contracts against 76,241 puts, which means the bets that died were overwhelmingly the ones wagering on a higher price. This is not a neutral event. It is a graveyard, and it is almost entirely full of optimists.

Walk back how it happened. Months ago, with Bitcoin in the seventies, traders bought calls at $80,000 and above, paying real premium for the right to a rally that felt inevitable. Then June arrived. An 11 percent slide dragged spot down near $63,000, and one by one those strikes went dark. The dream of $80,000 Bitcoin did not just fail to arrive. It is being formally cancelled, in writing, at 8am UTC Friday, with a price tag of billions.

The cruelest twist is what the trapped bulls have left for hope, that the max pain magnet is real and drags Bitcoin up toward $74,000 into settlement. There is a real mechanism behind it. Dealers who sold those options hedge by trading spot, and that flow can pull price toward the crowded strikes. But look at where the walls are. Max pain sits at $74,000, a full 15 percent above spot, and the heaviest call wall stands at $80,000 with $406 million stacked on it. The very ceiling the bulls bought into is now the ceiling capping their escape. The magnet they are praying to is bolted to the trap that is holding them down.

So the honest read carries both edges. The bears are not safe either. That same $60,000 put strike holds $450 million in open interest, and if a hot inflation print on Thursday cracks it, dealers re-hedge downward and the floor gives way fast, exactly as it did in March when a $14 billion expiry turned an ordinary drop into a rout toward $66,000. This is a coin balanced on a knife. A soft print sparks a relief bounce that the $80,000 wall caps. A hot print breaks $60,000 and the same dealer hedging that could lift it slams it instead.

But strip away the two-day noise and the real signal is simpler and colder. The biggest options event of 2026 is not a launchpad. It is a funeral for the idea that this was still a bull market, and the market is making the optimists pay admission to attend.

The bills always come due. Friday, $8.6 billion of them come due at once, and almost every one is stamped with the name of someone who bet this would all be over by now.

[Shanaka Anslem Perera ⚡ @shanaka86]

AI just hit a wall that no amount of money can move. The planet itself.

There is not enough power, water, or land on Earth to build the data centers the AI race now demands. So the most valuable bet in artificial intelligence is no longer a chip company or a model. It is a rocket company. The plan is to leave.

In January, SpaceX filed with the FCC to launch up to 1 million solar-powered data center satellites into orbit. In February it bought xAI, the maker of Grok, folding an entire frontier AI lab into a rocket company in the largest corporate merger ever recorded. On June 8 it unveiled the AI1, a compute satellite with a 70-meter wingspan, wider than a Boeing 747, powered by the sun, cooled by the vacuum of space, and wired to the ground through Starlink. Four days later it went public in the largest IPO in history, near 1.77 trillion dollars, touched 2.1 trillion on its first day, raised close to 86 billion, and made one man the first trillionaire alive.

Now read the direction of that merger, because it is the whole story. A rocket company bought the AI lab. Not the reverse. For three years everyone assumed the constraint on AI was chips, or data, or talent. It is none of them anymore. It is energy and heat and dirt. The head of Anthropic said his company grew faster than the exponential, 80 times in a single year, and that is exactly why it ran out of compute. The answer was not to build more data centers in Virginia. It was to leave the atmosphere, where the sun never sets and a solar panel does five times the work. The moat in artificial intelligence is no longer the model. It is the launch.

And the first rent is already being paid. A rival lab, Anthropic, is reported to be sending roughly 1.25 billion dollars a month to Musk for compute. Google near 920 million. If intelligence moves to orbit, the company that owns the only affordable road there becomes the landlord of the next layer of the internet, the way one bookstore became the landlord of the cloud. The merger is the proof of concept. The IPO is the war chest. Those monthly checks are the lease.

Here is the part the price tag does not want you to read. Close to a trillion dollars of that valuation rests on orbital data centers that do not yet exist, and on a chip factory, Terafab, that SpaceX's own public filing calls a general framework with no binding deal, one that may not achieve commercial viability. Musk said it on camera. This is not a promise. The largest IPO ever written is priced on a future the filing itself cannot verify.

The other side is just as real. Compute in orbit costs about four times what it costs on the ground today, and the curve may not cross for fifteen years. The machines that print the chips are backordered for years. Shedding heat in a vacuum at this scale has never been done. Musk's timelines have a long history of meaning later. And Bezos is racing the same orbit with a constellation of 51,600 satellites of his own.

But strip it all away and the trade underneath is one sentence. Earth has run out of room for intelligence, and whoever owns the road off the planet owns whatever gets built next. Call it the most expensive science fiction ever sold, or the first time the map of the internet pointed up.

[Sridhara Shankara @essemmess15]

@shanaka86 All the ' story ' really lies in the U S bond market

[Sridhara Shankara @essemmess15]

@shanaka86 ..The (such) 'myths' were propagated by vested interests...is all!

[Sridhara Shankara @essemmess15]

@elonmusk Seriously!!...🤷‍♂️🤷‍♂️

[Sridhara Shankara @essemmess15]

@piersmorgan @suchetadalal The result of being an erstwhile reality TV host ....perhaps!..