On May 8th, Assist FX expressed caution in prematurely poking the seafloor for a bottom in the paper gold market: “Gold is not yet a clear buy as one might suspect with higher inflation. This is due to the risk of sharply higher interest rates still on the table. Higher real interest rates are an enemy to gold. We see […]
US Nominal GDP Is Burning Rubber at a 7.4% Annual Clip: The Public Will Get the Inflation It Thinks It Wants
Our thesis was driven by fiscal math gravity facing government budgets and game theory analysis for how central planners would react to it.
US from a year ago: – Export Price Index: 4.9% – Import Price Index: 4.3% – Shelter: 3.5% – Fuel oil: 25.3% – Transportation Services: 3.8% – Case Shiller Home Price Index: 6.8% – Retail Sales: 6% – Real Average Hourly Earnings: 0% (would be negative with a “less adjusted” index) Fed’s “preferred” PCE Index: still below 2%. Thank goodness […]
Cryptocurrencies are not going to eliminate old, inefficient middlemen and change the world for the better by requiring new centralized middlemen in order to facilitate their existence.
Safe-haven sovereign bonds are experiencing a counter-trend snapback rally as the focus has shifted to a slew of troubling yet still mostly second-tier geopolitical events. The incoming populist Italian Five Star Movement/right-wing League political coalition is pursuing a shift away from painful austerity back toward the type of popular but damaging heavy borrowing and spending regime that led to Italy […]
Oil, Sticker Shock, and Upward Pressure on Yields A perfect three-pronged storm is brewing: oil, the labor market, and fiscal policy in the US will soon propel inflation notably higher than appreciated by overly complacent economists and analysts stuck in a delusion of “low-flation” recency bias. Just this past Friday afternoon–Friday afternoons being the most notorious time to quietly dump […]
Synchronized global growth heading into early 2018 has become more complicated. Global divergences are forming in growth and inflation. US Treasuries are not coming off the hinges just yet but an increased risk of (too) sharp of a rise in interest rates is clearly in the back of investors’ minds. China and Europe are decelerating somewhat but from elevated levels. […]
An influx of new fixed income supply over the coming four plus years is going to have a difficult time finding enough increased marginal demand to fill the void left by central banks gradually winding down their balance sheets.
We like to build a foundation of top-down macro themes over longer time frames and then optimize specific risk management strategies to fit the nature of the themes more actively.
The current fiat-based monetary system is becoming insolvent from a dead-end Keynesian “debt and inflate” feedback loop paired with a lack of needed structural reforms, and it can only be kept intact going forward with capital controls and financial repression–which is what will eventually kill the current trickle-down system of centralized government fiat and precisely what spawned cryptos in the first place.
The Privatization and Decentralization of Money: One of the Greatest Financial Stories in Your Lifetime Is Unfolding Right Before Your Eyes
One thing is nearly certain from our perspective: governments will try to blame private cryptocurrencies for the failures of a poorly devised trickle-down inflationary monetary system which spawned their demand.
Global Macro Backdrop: Absolutely remarkable and historically unprecedented Developed market equity indexes are scorching higher across the board. New all-time highs or multi-decade highs are being reached nearly every day in the US, Japan, Germany, and elsewhere. Bond yields are constrained across the duration and risk spectrum near multi-decade lows. European sovereign 2-year notes in periphery nations such as Italy, Portugal, and Spain are negative and continuing to hit new lows. Bond spreads between Germany and the periphery are generally narrowing to new lows, pricing in similar levels of risk between EU nation states. European high yield bonds are trading below 2%. Equity, bond, and currency market volatility are all at or near historic lows. This is the least volatile […]
However, we would like to point out the most important passage in the statement supporting the “central bank put” thesis outlined in several Assist FX notes.