They should raise rates? Get back to something more reasonable according to past history, right?
But debts are too high vs GDP and higher rates will kill EVERYTHING... 1/
And this is why the Chart of Truth works...yields peak out at lower and lower levels...due to debt.
But Im a saver and nearing retirement and I want my yield! Tough shit. You aren't getting it. You simply cant. Im sorry. Its all your faults for taking on too much debt. If you didn't, then it's everyone else's fault.
The Fed didn't create this, demographics did.
But inflation is high!! Yes, but it is driven by supply issues. Raise rates on that and you get high prices due to supply constraints and you get a consumer that is killed. You can see this by the fear in the UM Consumer Indices...
With a fiscal cliff coming... a drag of 3.5% of GDP next year
Central Bank balance sheets slowing...
Credit impulse slowing..
Labor force Participation rate net offsetting any wage rises...
And commodity prices hitting margins and consumption..
And the data slowing globally...
Then the odds are that things slow down fast. Even if supply shortages keep prices high, growth will slow.
So, what can the Fed do? Taper and see. And that will slow things further.
But with a weekly DeMark 9 at the top of the wedge...
And a monthly in place...(perfect signal since 1980)...
I don't see a quality bet on rate rises.
I see the quality bet on rates falling.
If you did get your "The Fed are bastards for creating inflation - raise rates now!", you will just destroy the economy. That ship sailed in 1997. too late lamenting over past times.
I don't have the bond bet on meaningful because I see crypto right now as a win/win. If inflation = win, if economy slows and Fed print = win.
Later, there will be Goldilocks for a bit and crypt0 will underperform but it's too early for that.
If I am wrong and bonds go up, the Fed will impose Yield Curve Control (see Japan, EU (sort of) and Aus for details, which bizarrely is a form of money printing into an inflation cycle. Crypto wins.
To my mind, monetary condition are tightening too as the dollar slowly rises.
2022 is going to be a very different year and my bet is more QE and fiscal into an economic slowdown.
Shout inflation all you want. But see the demand side too. It ain't pretty.
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Let's talk about the Crypto Waiting Room... many key part of the crypto ecosystem are in the waiting room ready to launch. Let's look at a few (you will have yours too...)
Total3 - Ex- BTC and ETH...ready to launch from the waiting room. 1/ ...
OTHERS (Outside of Top 10... purest form of Alts season where all shit rises). Still in the waiting room but longer to launch...
Crypto is still feeling the tightening in liquidity from the stronger dollar and higher rates in Q4 2024. That is almost done and financial conditions are easing fast and M2 is headed back to new highs. This is just a regular correction... 1/
We had the exact same correction in 2017 caused by the same reaction to Trump policies (higher dollar and higher rates which then reversed). 2/
Over time, we just keep climbing the log regression channel. Whether we stay at the man (red) or climb above it by another standard deviation or two remains to be seen as the cycle develops.
We are very close to being in the Last Chance to Add Zone in crypto. The next step should be the memes breaking out and after that there is nothing to do but wait to take lifestyle chips off the table.
These are the three most important charts in Global Macro, along with Crypto - from this months Global Macro Investor publication:
1. Demographics are destiny. GDP slows over time as size of labour force shrinks.
2. Government Debt to GDP ratio is just a function of the working population. It offsets the weak growth and pays for the compunding interests on the debts. This is THE most important chart in macro.
3. That debt is serviced via debasement via liquidity increases over time.