Thread by @frankoz95967943

What @JeffSnider_AIP talks about here is this period I think

I dont have a model yet like he does for EU$ curve.
🧵👇

as oil dropped stonks++
oil dropped 10% stonks went up 9%

as stonks recovered and more importantly, as gas prices went down, consumer sentiment recovered
BUT inflation never went down.
Your rent doubled?
Thats the new reality

Now comparing today to past recessions
2008 vs now

Dotcom bust 2001 to now

Black monday oct 1997

en.wikipedia.org/wiki/List_of_r…

Could the market be getting false signals due to Japan buying all those bonds?

When japan buys bonds USDJPY--(gets stronger) making the dollar weaker. Because USDJPY is part of "the formula" it makes stonks moon

And you can see it on this chart - usdjpy-- (buy bonds)

This '08

green (dxy) gets weaker
stonks rip higher

There is a REASON japan is buying all these bonds.
And that REASON is happening now
Notice yellow is going down at same time red(qqq) is going UP

You might not like to hear this, but the smartest people in the room? Japanesa.

Here ive invrted USDJPY and DXY
qqq (red) not inverted

when u c it...

Stonks are rising BECAUSE JPY buying bonds& USDJPY is STRENGTHENING (by default DXY--) lifts risk asset prices.

Can they keep doing this?
yip.

Why are they doing this?
Rocks ahead

c 2008 chart.
#repeat?
👀

2008 vs now again.
This time ive included usdjpy
USDJPY-- (yellow, inverted) makes dollar (green) go UP
The market reads a weak dollar as rally signal

Notice that oil fell 20% in 2008 - same as stonks

But now? oil fell 9%. HALF as stonks.

So what gives? Inflation (oil) remains elevated.
Biden is STILL sucking the SPR dry. Oil imports are DECLINING.

Inflation isnt "fixed".

But stonks are rallying thinking no more hikes?

And that might be true, but inflation didnt come down fully. Stonk rally is predominently currency arb bc usd got weaker vs usdjpy.

I also think japan is going to keep buying bonds to replace all the bonds they sold previously over the past 330 days.

So dxy will prolly go lower, which is inflationary. As oil-- dxy-- stonk++ then add in japan bond buying dxy-- more.

Do stonks rally back to near all time highs on shitty earnings and no forward guidance?

Prolly.

Cause now japan a buyer not a seller and they move markets.