When you are a Boomer Central Banker, everything looks like the ghost of the 1970's...heuristic bias will give unexpected outcomes (deflation) when total debt to GDP is this
Meanwhile, memes rule the world and the Central Bankers in their late 60's worship this meme: Wrong person for these times.
But the politicians (in their 70's mainly) are focussed on this meme...The Pension Crisis, where the system is forced to bail out past unkept promises. Voters will win in the end and household bail outs will come.
Everyone else can just worship #REKTGUY as rents are unaffordable, property remains unaffordable, real wages cant rise and central bankers are busy destroying wealth to get on the front of a book.
And the robots are coming for your jobs...
Everyone has to figure out in this broken system how they are going to make it. WAGMI? Depends what you own. I like the own the thing that destroys the old system. You can fight technology or invest in it but it ain't going away...
You can fight QE but it ain't going away (the debt is too damned high and Boomers are too damned old).
The J-Po might want to be Volker but the politicians will win (its the voters, stupid!) and the cowbell will return and when it does...
You need to own the stuff that goes up the most.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
No, it's not a bubble in tech stocks. We are less than 1 standard deviation from the trend. You can see what a bubble looks like in the late 1990's when we exploded out of the decade long log regression channel to be multiple SD's from trend.
Nothing to see, move on... 1/
Also, "But P/E ratio's are at bubble valuations!" narrative doesnt take into account the fact the during debasement the P rises (due to debasement) more than E (anchored by GDP growth in general). If debasement is 11% and GDP is 2% trend over same period then P/E rises by 9% p.a
This means that P/E ratio's double over 8 years or so. Its the denominator effect.
Also BTC is less than 1SD from trend. It usually hits 2 SD.
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.