SAINIK Profile picture
6 Sep, 21 tweets, 4 min read
1.“The Dog that Didn’t Bark”
Gregory: “Is there any other point to which you would wish to draw my attention?”
Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Holmes: “That was the curious incident.”
2.Since 2008, when FED started its QE there was a fear that the wall of Liquidity would lead to very high Inflation, bordering on Hyperinflation.
However, that did not happen flummoxed the best of the minds.
3. In the last one year due to COVID the concept of “HELICOPTER MONEY’ which was touted by Bernanke in the early 2000’s as one solution to take care of low growth. So how is Helicopter Money different from Quantitative Easing?.
4.Helicopter money has commonly been misconstrued as quantitative easing. Although both are monetary policy tools that expand the money supply, the impact on the central bank’s balance sheet is different
5.For QE, the central bank creates reserves by purchasing government securities from commercial banks and other financial institutions. On the other hand, helicopter money involves giving away money to the public, which does not increase assets on the CBs balance sheet.
6.Essentially, helicopter money increases the money supply by distributing currency to the public, while quantitative easing increases the money supply by purchasing government securities.
7.COVID -19 was the trigger to start “Helicopter Money” in a slightly different format, what with the Government decided to put money directly in the hands of the consumer to mitigate the crisis.
8.While the Helicopter Money has been gradually reduced by the Govt with most of the schemes expiring, the Inflationary forces have been resurrected which had been buried by Volcker in the mid 80’s.
9. Droughts in South America which have made soft commodities more expensive & man made experiments like banning of Fertilizers in Sri Lanka raising the spectre of crop failures in Tea & Spices which have further exacerbated a delicate balance between Inflation & Deflation
10.The 600-pound Gorilla in the room is the actions of China who have depressed the inflationary trends locally by releasing its stockpiles of Commodities while disincentivising exports.

In effect China is exporting Inflation.
11.While there is scant focus on this action of China, its already being sniffed out by the “smart money”.

Supply side shocks have also played a role such as Freight rates going through the roof which is reflected in the Baltic Freight Index at a multi-year high.
12.We have also noticed the chip shortage which has now become the bug bear of everything Electronic including Auto Manufacturing.
13.With the withdrawal of Incentives by the U.S.Govt where one by one scheme has been wound up leaving the consumer with less money in his pockets, demand will shrink with a lag.
14.Thus, we are staring at a ‘Perfect Storm” of poor consumer sentiment hence depression of Demand & a Supply shock in terms of crucial components for many Industries thereby increasing input costs which would mean Higher manufacturing prices .
15.A sure recipe for very high Inflation to continue to manifest in the next couple of years.

The Inflation Genie is out of the Bottle & difficult to put it back.

The Fed and other CBs are as usual behind the curve.
16.On paper they are an Intelligent bunch of people.

But in reality, they are a bunch of Intelligent Idiots as the Sub-prime crisis showed more than a decade ago.
17.Remember Bernanke’s address to the Congress in March 2007 where he opined confidently that Sub-Prime is contained and affects only a small portion of the Mortgage Market.
18.Subsequent events proved otherwise.

This time all the CBs are touting the same line “ Inflation is Transitory “.

Considering their impeccable track record of being behind the curve whether it’s the LTCM crisis& Sub- Prime crisis, they are in line for a Hat-trick of sorts.
19.On Friday, when Employment Numbers were below even the lowest expectations, the Pavlovian response of the market was for yields to crash & risk assets like S&P futures to spike happened for a few minutes, then everything did not go to plan.
20. Like the “Dog that did not bark “ in the story of Sherlock Holmes, the financial markets did literally NOT BARK.
Time to realise that its no longer business as usual.
Time to batten down the hatches.
@threadreaderapp "unroll"

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with SAINIK

SAINIK Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @sainik636

12 Sep
@Jai_hyderabad @vka27 . A thread on Health & Sport. "If I can do it, anyone can do it ". Just like the Stock Markets. Running a Marathon requires the same kind of skill sets as Investing in the Stock Market. Here I am just describing my Running Experience (1/n)
2. In early 2015, when I was around 54 years, the running bug bit me when I saw a friend of mine running on the Marina Beach. He introduced me to Marina Minnals one of the many running groups which are based out of Chennai.
3. In College I was into Sports, mainly short sprints having represented college in various Inter-Collegiate Meets, but anything above 400 m was Hell for me. In 2015 my Running group friends helped me to navigate Hell.
Read 12 tweets
5 Sep
1. MY BIGGEST REGRET : Recently on a CH session, a guy asked me whether I regretted my decision to accumulate Dec Put options in end July when Nifty was around 16k. My reply : I never regret my actions made after a great amount of study so long as only I lose money.
2. Regret happens when others take my advice & lose money or don't make money. However in the past have regretted since others took my advice & lost an opportunity.
3. July 2013. Had identified a stock after a great deal of Research, which then was the most hated. Had traded a long time b/w Rs.21-24 & rapidly fell to Rs.18 when it caught my attention. Immediately alerted everyone I knew that it was a bargain for LT. Most believed me & acted.
Read 11 tweets
3 Sep
1. Time to validate what this 91 year old gentleman says :
2. My good friend @Prashanth_Krish supplied me this data on MF flows in the past
3. This I picked from Mint :
Read 6 tweets
1 Sep
1. ONE LONE VOICE ...... Q: If a tree falls in a forest, and there’s no one around to hear it, does it make a sound?🙄 Another "rant" in 10 parts.
2. Yesterday, I ranted through 25 Tweets on the current market conditions. Going by the response, the above question assumes relevance. Adding another edition today in the fond hope that some of you may find meaning in what I tried/trying to convey.
3.Had made my observations of the market here on WhatsApp & CH discussions that while its futile to "Catch a top" in terms of Numbers, it may be still a good idea to "time" the market in terms of ... well "Time"
Read 12 tweets
27 Aug
1.The MF Mafia's Motto : Mutual Fund Sahi Hain
2. MFs have convinced its target Audience through constantly repeating that they don't have KNOWLEDGE ; TIME, EXPERTISE & EXPERIENCE .
3. KNOWLEDGE : The typical target is a well educated, successful individual who is trying to explore alternative Investment Avenues other than traditional Bank FDs. He/she has investible surplus & has the capability of seeking knowledge easily during these times. Google, anyone ?
Read 27 tweets
26 Aug
1.A series on 'Bullshit Gyan" spouted by Market Gurus Here is the first one: " Its time in the market that counts, not timing". Think about it : If you do not time the market properly enough, then your time in the market is likely to be not profitable
2. Just imagine buying "Hot Stocks" like Brokerage ones just last month. All of them are down anywhere between 20 - 30 %. And the honchos of those esteemed brokerages would tell you that a return of 20 % is great in the Stock Market 🙄
3. Or look at "Hot Sectors" like Metals. They have not fared any better. They are overbought even at these levels. So much for Multi year Commodity Bull run nonsense spouted by Strategists.
Read 5 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!