His answer ... "political betting markets sometimes aren’t that smart." and ... "traders don’t have a lot of technical sophistication about election forecasting."
2/13
@NateSilver538 has used the "they are stupid" line of reasoning before. It is the same one that CEOs of poorly performing stocks use.
Like those CEOs, this line of reasoning blew up last week ... again.
3/13
Before I go further, let me stipulate that I'm a big fan of @NateSilver538 and @FiveThirtyEight and think their models are great.
But as British statistician George E.P. Box famously wrote “All models are wrong, but some are useful.”
The Bloomberg Global Aggregate Index is now down a staggering 21% YTD (right). It made yet another new low on Friday. For comparison, the S&P is down 23% on a total return basis.
This equates to a market value loss of above $14T (left), from ~$69T to~$55T.
2/4
The Bloomberg US Aggregate Index, the bond market's version of the S&P 500, is down 15.84% through Friday, and also on a new low for the year.
Data goes back to 1976, and nothing remotely close has happened to this index before. (Left)
Market value loss is $2.3T (Right)
3/4
Here is the chart of the Merrill Options Volatility Estimate or MOVE Index. Think of it as the VIX of the bond market.
It remains at some of the highest levels ever recorded. Such levels always coincide with problems (labeled).
“Today’s report shows some progress in the fight against higher prices, even as we have more work to do. Inflation over the last three months has averaged 2%, at an annualized rate. That’s down from 11% in the prior quarter,”
This is 100% correct
2/5
But it neglects to mention that energy (essential gasoline) is a big reason for this decline above.
3/5
So, when you look at inflation less energy, it was still running at a 6.75% pace in Q3.
Crypto needs to decouple to become viable. This will happen when they develop a real use case, other than degen speculation (which is what "institutional adoption" really is).
3/4
I believe crypto will find this use case, via DECENTRALISED payments. But first, CeFi Crypto, like Binance and SOL, all the Terra-related blowups, might have to go away or truly decentralise.
RRP is simply, it is an overnight loan from the NY
Fed (lender), or a Reverse Repurchase. For the financial institution (borrower) it is a Repurchase agreement, known as a repo.
As the chart shows, there is currently $2.2 trillion of these loans, up from ~$0 in Jan 2021.
3/13
Why so popular? Simply they offer a competitive rate (blue line at 3.05%, 20 bps below the top of the FF range) and the safest counter-party in the world (NY Fed).
Why not park your money with the NY Fed with little hassle, zero counter-party risk, and good rates?