Discover and read the best of Twitter Threads about #Bigflip
Most recents (21)
One of the lowest event vol days for Powell we’ve had in quite some time, not sure what to expect as his last speech he was a full on dove, so in my head, I figured economy outlook was looking bleak and or something broke, the hot NFP # following that presser completely negated
That thesis hence #bigflip came to fruition as economy was strong and inflation is reaccelerating with demand so strong and a total repricing in the bond market happened. With CPI, PCE & PPI coming in hot, as well as the labor market remaining very tight as the data has shown
Powell either changes his tune from dove to hawkish before things get out of control again, or he says January data was transitory. Any talk of higher terminal rate and or 50bps could be a shock to the markets and with event vol being relatively low compared to previous pressers
1/
Thank you for update
@jam_croissant
"Flows have been supportive."
Macro flows (🔥economic data, FED bobos like Crashkari) vs. supportive flows (👸🦥).
Volatility has been dampened by FED.
The FED doesn't want markets higher.
It’s not that they’re “selling VIX calls.”
Thank you for update
@jam_croissant
"Flows have been supportive."
Macro flows (🔥economic data, FED bobos like Crashkari) vs. supportive flows (👸🦥).
Volatility has been dampened by FED.
The FED doesn't want markets higher.
It’s not that they’re “selling VIX calls.”
2/
FED is writing calls means:
The more the market runs, the stronger the economy is, the more we’ll get interest rate rises, and Quantitative Tightening (QT).
This is the opposite of the FED PUT aka Quantitative Easing (QE), where they PROVIDE LIQUIDITY.
FED is writing calls means:
The more the market runs, the stronger the economy is, the more we’ll get interest rate rises, and Quantitative Tightening (QT).
This is the opposite of the FED PUT aka Quantitative Easing (QE), where they PROVIDE LIQUIDITY.
3/
That's why 🥐said in a TDA pod a few months ago to be careful thinking that this next rally will be a secular one. He is of the opinion that FED will continue to reduce liquidity which will decrease equity $, but in a manner that is controlled and not volatile to🔪 inflation.
That's why 🥐said in a TDA pod a few months ago to be careful thinking that this next rally will be a secular one. He is of the opinion that FED will continue to reduce liquidity which will decrease equity $, but in a manner that is controlled and not volatile to🔪 inflation.
Canadian Kitties: Monthly Thread - Feb 2023
@joekittyano @gozmike @chadhammerman @convexreflexive @DerParadiso @NIKOSKINOS @Chacal2900 @ASharpclaw @CablesCap @GTsonef @Deliorm92393096 @PoundingDaRock @mik_sinclaire @TheOldFirm1 @Mattybomb1 @KiwiPMI @marketsgonewild @DanRach7
@joekittyano @gozmike @chadhammerman @convexreflexive @DerParadiso @NIKOSKINOS @Chacal2900 @ASharpclaw @CablesCap @GTsonef @Deliorm92393096 @PoundingDaRock @mik_sinclaire @TheOldFirm1 @Mattybomb1 @KiwiPMI @marketsgonewild @DanRach7
@FrankPalmeri1 @EponymouslyAnon @drjeffwarren @dclarke416 @CrypticWrtngz @KNLCBD @LouisPhdSB
Theme this month was China's influence. From undercover police stations, to controlling political party members (still in office!) Canadians should be worried about their sovereignty.
Theme this month was China's influence. From undercover police stations, to controlling political party members (still in office!) Canadians should be worried about their sovereignty.
I prepared a deck to help some of my members understand the #bigflip framework as postulated by @INArteCarloDoss
Sharing here for those interested
1/4
Sharing here for those interested
1/4
2/4 
The markets this past week 🧵…
- PCE
- Housing markets 🏠
- Inflation 🛍️
- Earnings / Guidance 💸
- Retail investors
- $SPX 📊
- AI stocks 🤖
- Headcount vs $SPX
- Financial conditions 💰
- Fed funds 📊
- $USD / $DXY 💵
Let’s dig in below, if helpful please RT 🔀… read on 👇
- PCE
- Housing markets 🏠
- Inflation 🛍️
- Earnings / Guidance 💸
- Retail investors
- $SPX 📊
- AI stocks 🤖
- Headcount vs $SPX
- Financial conditions 💰
- Fed funds 📊
- $USD / $DXY 💵
Let’s dig in below, if helpful please RT 🔀… read on 👇
PCE feds preferred inflation measure comes in 🔥 than expected.
Per @benjaminMlavine “First YOY PCE increase since September. Only 6 of 61 economists surveyed by Bbg had a 1.8% personal spending forecast. Establishment caught off guard by the #bigflip”
Per @benjaminMlavine “First YOY PCE increase since September. Only 6 of 61 economists surveyed by Bbg had a 1.8% personal spending forecast. Establishment caught off guard by the #bigflip”
Another datapoint that saw a recent bounce - used cars 🚗 chart by @Lvieweconomics
Was discussing this as chatted on PCE this a.m. #bigflip @eliant_capital
Was discussing this as chatted on PCE this a.m. #bigflip @eliant_capital
As we enter the new year, many reports have emerged that could be considered anomalous, such as retail sales and payrolls. However, the recent Personal Consumption Expenditures (PCE) number has brought into focus the message of the #bigflip.
While many pundits have suggested that the current inflationary cycle is a short-lived phenomenon that will transition away, the reality is quite different.
Inflation is becoming more entrenched with every passing day. With wage gains now firmly embedded in the economy, the Federal Reserve will have to take action to shock the business cycle into layoffs.
🛬🚨🛩️: How are we going to land?
“Powell: "You fly, right? Sometimes the landing is perfect. Sometimes the landing is a bit bumpy. It's still a good landing." - back in May
Historically extensive rate hike cycles don’t end well. So how is a soft landing possible?
Read on… twitter.com/i/web/status/1…
“Powell: "You fly, right? Sometimes the landing is perfect. Sometimes the landing is a bit bumpy. It's still a good landing." - back in May
Historically extensive rate hike cycles don’t end well. So how is a soft landing possible?
Read on… twitter.com/i/web/status/1…
🛬 Landing? #Bigflip ? Soft landing?
What does this all even mean ⁉️
Great overview by @benjaminMlavine to help set the foundation 👇. $SPX $QQQ
What does this all even mean ⁉️
Great overview by @benjaminMlavine to help set the foundation 👇. $SPX $QQQ
The fed pivot has quickly turned into a fed pause for longer. Markets don’t typically bottom 📉 while rates are 📈.
Another chart to illustrate in the following tweet.
Another chart to illustrate in the following tweet.
A thread on where the US stands in its ongoing desire to learn Portuguese🧵
My bro @hkuppy has flagged an interesting development that I hadn’t fully appreciated in the context of #bigflip (hattip @INArteCarloDoss) until this weekend.
Namely, the US is now a 2-speed economy.
1/
My bro @hkuppy has flagged an interesting development that I hadn’t fully appreciated in the context of #bigflip (hattip @INArteCarloDoss) until this weekend.
Namely, the US is now a 2-speed economy.
1/
First we have the financial economy that relies on interest rates - this economy is totally fuct. Here you have the recession in Wall Street, PE/VC/tech, hedge funds, CRE/office, even some housing/auto — basically anything that needs a rate. As rates go up it gets more fuct.
2/
2/
Then there’s the real economy which is screaming out of control. Hand out stimmies, cull a few million from the workforce, and then layer on COLAs…that economy is the real world not the nominal world — and it is hot.
3/
3/
On the massively-overdone #bigflip macro thesis (higher growth & rates tanks stocks), let me try this, using Levine's writing style:
If the numbers a year from now are GDP +2-3%, CPI +3%, and Fed Funds 5-6%, that would be, like, pretty normal? For any time prior to the GFC?
If the numbers a year from now are GDP +2-3%, CPI +3%, and Fed Funds 5-6%, that would be, like, pretty normal? For any time prior to the GFC?
On the 2 replies with counters - both valid:
(1) "But then S&P500 at 18x is too high": Yes indeed, which is why I still own almost all high-cash-flow or high-hard-asset stocks and own none of my old high-growth / low-or-zero-current-profits tech stocks.
(1) "But then S&P500 at 18x is too high": Yes indeed, which is why I still own almost all high-cash-flow or high-hard-asset stocks and own none of my old high-growth / low-or-zero-current-profits tech stocks.
(2) "The wall of corporate debt maturities needing to refinance higher would crush earnings or cause bankrupties": Yes, that's a problem for some, but I'm not sure its a huge overall markets problem. Don't own the zombies.
Back from a long break. Personal news to be shared soon. As for markets? #Reflation and #BigFlip in the making. Animal spirit is back, supported by lower rates' vol. Definitely a new market regime. 1/n
What is the new regime about? Fed is done with micromanaging of financial conditions. No more, no less. And it makes complete sense for them to finally stop holding the markets' (bearish) hand. However, actions have consequences and markets are what they are. 2/n
Financial conditions've eased, animal spirit's back. It should support some reflation later in the year. Stocks've already sniffed it out. Equities are lower (discount rate), but internals say no to disinflation/recession narratives. Also the case when you exclude Energy. 3/n
Happy LORD's Day brothers and sisters!
"Giga 🐂 idiot" here w/ early gift bc tmr SUPER BOWL!
Next week surely is NOT as easy as every FinTwit furu wants you to believe.
So many differences in opinions/analyses...
Let's try to think about this critically 🥐style.
See below 🧵:
"Giga 🐂 idiot" here w/ early gift bc tmr SUPER BOWL!
Next week surely is NOT as easy as every FinTwit furu wants you to believe.
So many differences in opinions/analyses...
Let's try to think about this critically 🥐style.
See below 🧵:
1/
Recap:
Mostly everything 🥐talked about, has played out for the past couple months. More recently, we've squeezed shorts heavily into an area that once was thought unreachable (past the MOAT, 200d sma).
However, the FED was hellbent on preventing moar...
Recap:
Mostly everything 🥐talked about, has played out for the past couple months. More recently, we've squeezed shorts heavily into an area that once was thought unreachable (past the MOAT, 200d sma).
However, the FED was hellbent on preventing moar...
2/
After JPOW nothing burger, which propped up equities back to ~4190, numerous FED speakers came out and all reiterated essentially the H4L (coined by dampedspring - follow him, won't tag bc of notifs) "Higher For Longer" rhetoric.
Equities responded in turn ⬇️.
After JPOW nothing burger, which propped up equities back to ~4190, numerous FED speakers came out and all reiterated essentially the H4L (coined by dampedspring - follow him, won't tag bc of notifs) "Higher For Longer" rhetoric.
Equities responded in turn ⬇️.
1/
I've written a thread that will hopefully spark discussion around the #bigflip phenomenon, initially presented by @INArteCarloDoss .
Many consider him the most prescient within the Fintwit community, so if you haven't paid attention yet, now is the time.
Let's dive in!
I've written a thread that will hopefully spark discussion around the #bigflip phenomenon, initially presented by @INArteCarloDoss .
Many consider him the most prescient within the Fintwit community, so if you haven't paid attention yet, now is the time.
Let's dive in!
2/
For several months, consensus in Fintwit was: There are evidence of a recession, FED will pivot soon, demand is stalling, consumers run out of money using the below chart as proof 🤦 and many other predictions that you can look at @CumLordeAwards Join btw, lots of FUN
For several months, consensus in Fintwit was: There are evidence of a recession, FED will pivot soon, demand is stalling, consumers run out of money using the below chart as proof 🤦 and many other predictions that you can look at @CumLordeAwards Join btw, lots of FUN
3/
You may ask:
Is the US in a Recession? Is a Recession coming soon? Will the FED pause? Will they Pivot? Will they keep hiking?
The #bigflip concept helps you navigate within the chaos and keeps you focused on the forces that actually matters.
But which are these forces?
You may ask:
Is the US in a Recession? Is a Recession coming soon? Will the FED pause? Will they Pivot? Will they keep hiking?
The #bigflip concept helps you navigate within the chaos and keeps you focused on the forces that actually matters.
But which are these forces?
CPI Thoughts for Traders with ADHD
#Gothilocks #BigFlip
Just as everyone is cozy that Inflation is last year's story, a brave few have been warning about a pick-up in Inflation.
So lets make it simple:
(KISS = Keep It Simple Shrub)
🧵
#Gothilocks #BigFlip
Just as everyone is cozy that Inflation is last year's story, a brave few have been warning about a pick-up in Inflation.
So lets make it simple:
(KISS = Keep It Simple Shrub)
🧵
- On Jan 24th, the Cleveland Fed Nowcast for JAN was at +0.53% mom
- But on Feb 10th, the JAN Nowcast got revised UP to +0.63% mom
- And we also have now an estimate for FEB and it's +0.68% mom!
Reminder: the DEC print came in at -0.10% mom & got revised today UP to +0.10%!
- But on Feb 10th, the JAN Nowcast got revised UP to +0.63% mom
- And we also have now an estimate for FEB and it's +0.68% mom!
Reminder: the DEC print came in at -0.10% mom & got revised today UP to +0.10%!
In summary:
a) Jan vs Dec inflation is UP +0.5% MoM and the TREND is UP
b) If we annualize 0.5% MoM, we get 6% inflation! My maths is bad, but 6% ain't no 2% !
c) The Feb nowcast is also pointing to sticky inflation at >6% annualized ! So Jan isn't a one-off !
a) Jan vs Dec inflation is UP +0.5% MoM and the TREND is UP
b) If we annualize 0.5% MoM, we get 6% inflation! My maths is bad, but 6% ain't no 2% !
c) The Feb nowcast is also pointing to sticky inflation at >6% annualized ! So Jan isn't a one-off !
Surprised no one asked the most obvious question: how did the #bigflip epiphany come to be? I mean before the data started to make it pretty obvious to me. Well, here’s how. I started to be puzzled by how naive the assumptions that market expectations were feeding on in Q4 23
1/4
1/4
Clearly this naivety was fed by narratives peddled by unsophisticated economists, journalists and investors. First level of naivety was to over-estimate the effects of the hiking cycle when private savings were so high. This was bluntly wrong to the naked eye.
2/4
2/4
Second level of naivety was the prevailing expectation that somehow inflation will be brought under control so quickly and with so little real economy pain. You clearly have to be totally oblivious to how the economy works to believe this. I mean the Fed stood a chance.
3/4
3/4
The Fed committed a massive policy mistake by not pushing against market pricing cuts that started in q4 2022. While they used all sorts of spurious bullshit to dance around their « transitory » disastrous fallacy, they now are the only possible recipient of blame.
1/3
1/3
With rising net disposable incomes, fiscal and monetary impulses fully faded, labor market burning hot, all-time high home equity, available excess savings stock still high, inflation is about to accelerate and they are firmly behind the curve. #bigflip
2/3
2/3
How long they remain behind the curve will be crucial in determining how high they will need to hike, but whatever that number is, it’s much higher than current terminal. Time lost since q4 2022 will end-up being the trigger for a hard landing end 2023/early 2024. 💥
3/3
3/3
Hi brothers and sisters,
Happy LORD's day~
We heard some terrible news from the 🥐.
Please pray for him and his family.
Though I was not going to post THREADS for a bit,
figured I'd "do what I love" as 🥐said and supplement his teachings in his absence. Least I can do.
See 👇:
Happy LORD's day~
We heard some terrible news from the 🥐.
Please pray for him and his family.
Though I was not going to post THREADS for a bit,
figured I'd "do what I love" as 🥐said and supplement his teachings in his absence. Least I can do.
See 👇:
1/
If you were to ask me where I would fundamentally stand when we had very poor mega tech earnings, MUCH hotter than expected NFP, ⬆️ USD, and other macro risks at hand - I would say MUCH lower than where we are.
When risks are this high but price is here tho:
Respect it!
If you were to ask me where I would fundamentally stand when we had very poor mega tech earnings, MUCH hotter than expected NFP, ⬆️ USD, and other macro risks at hand - I would say MUCH lower than where we are.
When risks are this high but price is here tho:
Respect it!
2/
🐻had their chance in their 🪟and failed to capitalize EVEN with the above! What does that tell you about this rally?
As @lord_fed mentioned, this is THE MOST HATED RALLY.
While you may hear a bunch of 🐍oil about how this is "retail driven," data shows otherwise.
🐻had their chance in their 🪟and failed to capitalize EVEN with the above! What does that tell you about this rally?
As @lord_fed mentioned, this is THE MOST HATED RALLY.
While you may hear a bunch of 🐍oil about how this is "retail driven," data shows otherwise.
If the dollar is set to rally from here, what does that mean for inflation? A short 🧵
Conventional wisdom holds that if the dollar rallies, US inflation will fall. A good narrative, as the US is a net importer, and imports become cheaper when the dollar strengthens
BUT...
1/8
Conventional wisdom holds that if the dollar rallies, US inflation will fall. A good narrative, as the US is a net importer, and imports become cheaper when the dollar strengthens
BUT...
1/8
...but note how in 2022 the dollar peaked right at the same time as core CPI peaked. Sometimes narratives don't work so well
2/8
2/8
This is great Sam. Just a minor difference in view from my end (talking my book here, so a big grain of salt to go with my 2 cents):
1/22
1/22
Markets are in a weird schizophrenic moment, with a burst of euphoria in equities on the one hand (where speculators are flooding back into what worked in the bubble just as momentum factor in L/S blows up), and disinflationary collapse pricing into US rates on the other hand.
2/
2/
As @donnelly_brent mentioned earlier, the -50bps in late 2023 rates isn’t the beginning of a gradual cut cycle, but a probabilistic reflection of, say, a 25% chance of an aggressive -200bps response in a short period of time to a recessionary collapse.
3/
3/
If you are not familiar with the #bigflip thesis, coined by the great @INArteCarloDoss, the bottom line is this:
-Labor inflation is entrenched and remains very hot (holding core inflation high)
-Goods will inflect higher (leading to more volatile inflation
The consequences are:
-Labor inflation is entrenched and remains very hot (holding core inflation high)
-Goods will inflect higher (leading to more volatile inflation
The consequences are:
-Repricing of the yield curve (no cuts in '23)
-Dollar up
-Equities lower
-Precious metals lower
-Dollar up
-Equities lower
-Precious metals lower
Right now the market is pricing in a perfect scenario or "Gothilocks" as a famous shrub @agnostoxxx puts it. This illustrates a fundamental misunderstanding by the market of longer tail inflation dynamics and will have to reprice lower.
So no recession in q4, hardly any slowdown. I mean after 7 rates hikes and 400 bp later, we ticked down from 3.2% to 2.9%…but the lags…yes q1 23 will be weaker, below trend even, but will also be low point. This outstanding feat is DESPITE manufacturing and housing slowing
1/3
1/3
What carried the economy were the consumers with their still high stock of excess savings and barely tapped sky high home equity. This will get a disinflation tailwind, while manufacturing recovers from the bullwhip, retail sales accelerate with recovering auto sales
2/3
2/3
and a stubbornly resilient labor market with solid low earners wage growth. FCI restrictive impulse is quickly fading. Liquidity is expanding. Fiscal policy flipped to a tailwind. Add global dynamics like China re-opening and you get the perfect mix for the #bigflip
3/3
3/3
MARKET JOURNAL
The UK/BOE pension crisis since it broke out two weeks ago gave FED the opportunity to prove its resolve in real time in the face of volatility, and harden the path of hikes. And as evidenced by BOE flip-flopping and the RBA’s dovish surprise, it’s clear that now
is not the time for dovish pivots. BOE doesn’t have enough financial market stress evidence to go all-in on QE, and the AUD continues to fall.
IMO, we’re mid-crash right now. It’s choppy. It’s messy. It’s confusing. But the risk/reward short here is even better than pre-BOE/UK.
IMO, we’re mid-crash right now. It’s choppy. It’s messy. It’s confusing. But the risk/reward short here is even better than pre-BOE/UK.
