Emerging market currencies as a group are on the verge of testing lows not seen since late 2016 when the “Trump trade” was fueling expectations for a surge in multi-pronged fiscal stimulus and inflation. As it turns out, reflation expectations weren’t so far off the mark. Higher interest rates in the US are pulling capital away from emerging markets as […]
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.
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 toxic news sludge into the market–Saudi Arabia went […]
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. […]
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 […]
US Economy Is Increasingly Dependent on Elevated Stock Shares and Real Estate As Personal Saving Rate Hits Decade Low: “Central Bank Put” to Remain in Place if Core PCE Stays below 2%
The “central bank put” safety net for asset prices will remain in place because it is too late to do otherwise. Therefore, selling risk assets short will remain the equivalent of pushing an inflated basketball under water. We reiterate our call to accumulate equity index longs on any dips and trim position sizes on rallies until core PCE convincingly rises above 2%.
Central bankers have flat lined risk and investors have crossed to the other side expecting nirvana & free money forever.
“Revenge of the Savers:” The Real Reason Behind Demand for Bitcoin and Other Decentralized Digital Currencies
The main driver of cryptocurrency demand, which we describe as “revenge of the savers,” is what concerns central banks, governments, and too-big-to-fail banking behemoths such as JP Morgan Chase.
Venezuela: a tragic reminder of the follies of political corruption, unjustified increases in money supply, and heavy handed actions by central planners to cheat basic economics.