Alf Profile picture
17 Dec, 8 tweets, 1 min read
The support I've received here on FinTwit since I came back has been huge: thank you!

I also got quite a lot of requests to share tips that helped my career to progress quickly.

Here you go!

0/7
#1: Use mentors.

Select them carefully.
They've been there before you.
They know the game, listen to them.
#2: Be curious.

If your job is just your job, it will be hard to excel.
If you are curious and eager to learn every day, you are already 10 steps ahead.
#3: Ask questions.

Seriously, just be the annoying guy asking questions to the senior and knowledgeable people around you.
All. The. Time.
#4: Train to be more diplomatic.

Trust me, this took quite a big effort for me.
But if you work for any corporation with >2 employees, ''soft skills'' will be required. A lot.
#5: Work hard, but rest.

Especially if you're passionate about what you do, you'll tend to work hard and long.
Rest and sleep are at least as important for your success, don't skip them.
#6: Try to wear other people's shoes.

When talking to somebody with a different opinion, always try to understand where he/she is coming from. It's very powerful.
#7: Be lucky.

Yep. You need to be at the right place, at the right time. As I always say: you don't become the head of a $20 bn Investment Portfolio at 27y old only for your skills - you need to be lucky enough to have somebody who really believes in you.

Luck is very important

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More from @MacroAlf

19 Dec
Tapering and quantitative tightening will be prominent topics in 2022, so I feel we need a reminder here

Central banks DON'T print money

QE simply forces the private sector to swap away duration intensive, coupon bearing bonds for 0 duration, 0 yielding deposits/reserves

1/9
Central Banks expand their balance sheet by creating reserves and buy bonds from the private sector.

The private sector now has less bonds and more reserves.
That's it, just a swap.

No ''money'' has been created.
Yeh, but what if the CB buys from another entity?

2/9 Image
Same story, one difference

Pension funds and asset managers can't hold reserves, so they now have new bank deposits

Those are still inert, 0 duration, likely 0 yielding assets that don't find their way to the real economy

They find their way in M2 though, be careful...

3/9
Read 9 tweets
15 Dec
As promised, here is the bond market 101 thread!

Answering the top 10 questions I received in a previous tweet, here we go!

1/10
Question #1: ''Why is 10yr not going up with Fed about to finish QE/star hiking/inflation printing high?''
A: 10y yields are roughly the sum of 10y real rates, 10y CPI expectations and term premium. When the Fed tightens, the medium/long-end of the bond market extrapolates lower nominal growth going forward (= lower rates) and more certainty about this outcome (= lower term premium)
Read 22 tweets
14 Dec
Plenty of people are calling for an imminent stock market crash, but they are missing a key point: inflation-adjusted interest rates are still way below the estimated equilibrium levels!

Why does that matter?

1/11
Real yields are very relevant for savers, investors, borrowers and asset class valuations: it's not only the absolute level that matters though, but also the relative level against the equilibrium real interest rate (r*).

A low absolute risk-free real interest rate matters as:
1) It punishes savers and investors by rewarding very little (or even inflicting negative returns) on savings and risk-free investments
Read 11 tweets
10 Dec
Over the last few years, I had sometimes the chance to meet and talk with very high level decision makers - sometimes even PMs and Central Banks’ board members!

Here is a couple of fun episodes.

1/5
Once I had dinner with the former Prime Minister of a G10 country.

We were half drunk, and I asked him why his country was not investing in financial literacy, education and other long-term easy wins. His answer?

2/5
“Young man, I have to get re-elected in few years, and the benefits of those reforms would be huge but I won’t be there to reap the political benefits. So we’d rather do some short-term unproductive but easy-to-market stimulus to get some votes”.

Incentive schemes are vital

3/5
Read 5 tweets
8 Dec
Commercial banks print money.
They are able to extend credit to the real economy, temporarily boosting aggregate demand and GDP.

They are not doing that, and it's key to pay attention!

Why?

1/10
The chart above shows the 2y mov.avg. of the growth in US bank lending to the real economy. It therefore excludes mortgages, but it includes commercial, industrial and consumer loans - basically credit that ends up on the account of consumers the engines of the real economy

2/10
It's now running at a very modest +1.6% on an annualized basis, peaking from the +5.0% reached in early 2020 when governments effectively guaranteed the majority of the credit risk on bank loans during the first stages of the pandemic.

3/10
Read 10 tweets
7 Dec
> $ 12.000.000.000.000

This is the amount of the $-denominated loans and bonds sitting on the balance sheet of entities domiciled outside the US

The death of the USD has been called for times and times again (last: '20-21): it's an easy narrative, but caution is required

1/8
Our economic and monetary system is based on continuous credit creation.

The US sits at the epicenter of this system as they enjoy the benefit of issuing the global reserve currency to the world: the majority of trades, settlements, payments across the world happen in USD.

2/8
As @patrick_saner shows, the world is highly leveraged towards the USD: while the US only accounts for 15% of global GDP, 50% of global trade invoices and 75% of global securities issuance are $-denominated. Wow.

3/8
Read 8 tweets

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