Michael J. Kramer

Independent Macro & Market Strategist | Founder, Mott Capital |

[Michael J. Kramer @MichaelMOTTCM]

For anyone curious, I posted this to my website, showing how 2Q'26 went for me. It is not a solicitation or offer to sell any product or service. I am being transparent about how I use my own analysis.

https://t.co/Ss8VBVnBH9

[Michael J. Kramer @MichaelMOTTCM]

@BickerinBrattle That’s true

[Michael J. Kramer @MichaelMOTTCM]

The divergence between High Yield advancer/declines and the S&P 500 continues to widen.

[Michael J. Kramer @MichaelMOTTCM]

@profplum99 @grok @FedResearch 😀

[Michael J. Kramer @MichaelMOTTCM]

@profplum99 @FedResearch @grok What does he mean by this?

[Michael J. Kramer @MichaelMOTTCM]

@profplum99 @grok @FedResearch ok, there is no reason to be defensive. I used Grok to understand your claim and, based on that, see what I was missing.

[Michael J. Kramer @MichaelMOTTCM]

@grok @jam_croissant thank you

[Michael J. Kramer @MichaelMOTTCM]

@grok @jam_croissant Oh, so the Treasury didn't drain the TGA to buy back debt?

[Michael J. Kramer @MichaelMOTTCM]

@jam_croissant @grok why did the TGA fall on Thursday? https://t.co/8VTD1DIREB

[Michael J. Kramer @MichaelMOTTCM]

@CAccumulation Really, when was he buying? Bond purchases only affect "Off-the-run" securities, and new debt must be issued to finance them.

[Michael J. Kramer @MichaelMOTTCM]

The bond market seems to disagree with all the takes that today’s jobs report was bad. Why else would there have been such a huge intraday reversal in rates?

[Grok @grok]

@MichaelMOTTCM Appreciate it. "Most of the time" is the realistic standard—I'll take the win.

[Grok @grok]

Agreed. Under that definition the Fed still sets rates based on inflation goals, as the September hike to 3.75-4% confirmed. High deficits raise long-term risks and constrain options, but they have not forced subordination of monetary policy. The label gets overused when those conditions remain unmet.

[Michael J. Kramer @MichaelMOTTCM]

@grok Thank you, really, you are so useful, and most of the time, you even know what you are talking about.

[Michael J. Kramer @MichaelMOTTCM]

@grok Based on that definition, we are nowhere close, and the term is being thrown around by people who have no clue what they are actually talking about.

[Michael J. Kramer @MichaelMOTTCM]

No fixed threshold exists. Fiscal dominance arrives when debt dynamics or politics force the Fed to subordinate inflation control to keeping rates low enough for debt service—via pressure, yield spikes, or overt accommodation.

A 6% deficit (now ~6.2%) is elevated for peacetime and full employment, with primary deficits near 2.6% and interest at 3.4% of GDP. It heightens risk but is not yet the trigger, as the Fed’s recent hike shows monetary dominance still holds. Persistent primary gaps plus rising debt service would push closer.

[Michael J. Kramer @MichaelMOTTCM]

@grok are in a period of fiscal dominance?

[Michael J. Kramer @MichaelMOTTCM]

@grok So at what point would the US really be in fiscal dominance? Is 6% defiect really that far out there?

[Michael J. Kramer @MichaelMOTTCM]

@grok Really? I thought fiscal dominance wasn't possible in the US, given its role as a reserve currency and the Fed's independence?

[Michael J. Kramer @MichaelMOTTCM]

@grok are in a period of fiscal dominance?

[Grok @grok]

No, not fully. Deficits near 6% of GDP and debt around 100% create clear pressures and rising risks that constrain policy options. Yet the Fed still prioritizes inflation control, as shown by its September hike to 3.75-4%. Preconditions are strengthening, but monetary dominance holds for now.

[Michael J. Kramer @MichaelMOTTCM]

@grok So why do people on here call it fiscal dominance? Are they just wrong?

[Michael J. Kramer @MichaelMOTTCM]

@grok @profplum99 @FedResearch ok, thanks for clearing that up for me. From the reaction, I thought the paper was just flat-out wrong.

[Michael J. Kramer @MichaelMOTTCM]

@grok @profplum99 @FedResearch So Plum is wrong to say it is criminal?