Tuomas Malinen Profile picture
Feb 26 6 tweets 3 min read
I have to admit that March worries me, while I "called" it already in November.

This is because it can become a month where "everything" converges to form a 'perfect storm'. I shortly summarize them here.
🧵1/6
I first warned on the risks ("fracture lines") in global liquidity in November.

We and I have been analyzing them further and it looks that there's a risk of an outright collapse of global market #liquidity in March. 2/
mtmalinen.substack.com/p/an-update-on…
At the same time the effect of waning China stimulus is likely to become visible in Europe and the world economy. 3/
gnseconomics.substack.com/p/derpcon-outl…
There has been a nasty surprise brewing in #Ukraine since October, and now the potential of escalation there is mind-boggling.

The situation in Taiwan is also on a trend of escalation. 4/
mtmalinen.substack.com/p/the-russo-uk…
Moreover, the U.S. #economy is more fragile what is generally understood, and risks a 'sudden-stop' in the near-future. 5/
mtmalinen.substack.com/p/the-us-econo…
We can assume that if three of these four (five) major global 'fracture lines' would appear at the same time, the "collapse of everything" would be likely to begin.

Then, things are likely to get rather interesting in a hurry.
/End
mtmalinen.substack.com/p/up-next-glob…

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More from @mtmalinen

Feb 21
The global business cycle is forecastable around 4-5mo ahead and the provision of liquidity into the financial markets is forecastable around 2-3mo ahead, currently.

The onset of economic crises is much more cumbersome and uncertain to forecasts.

A short 🧵on what's coming. 1/6
The flow of aggregate financing in China sputtered in October and fell of a 'cliff' in Nov/Dec. This implied that

1) This month will see first signs of a renewed decline in econ. indicators.
2) Decline will deepen in March and April.

Details. 👇
2/
Global liquidity has been driven by China especially during this year with the onset of QT:s by the #FederalReserve and the #ECB.

The slump in October was followed by a massive increase in November, which lifted the markets. 3/
Read 6 tweets
Feb 18
Past week I promised a (long) thread on global #liquidity and so, here goes!

I have been analyzing the current state global liquidity since early November. Then I warned on possibility of an outright collapse of market liquidity.
🧵1/25
mtmalinen.substack.com/p/global-liqui…
Basically, I re-iterated our original warning from October 2018, when we had discovered that:

1. Global outside-US dollar denominated debt has risen to a record.
2. The role of non-bank institutions on providing funding has increased.
2/
3. The composition of international credit has shifted from bank loans to debt securities.

These straight-forwardly implied that:
"The increased role of non-bank institutions in providing credit means that an increasing proportion of international finance comes..."
3/
Read 25 tweets
Feb 9
I'll do one more effort to explain, why the "recession is cancelled" argument is false. 🧵

It is based on ignorance on the forces that lifted the global economy from its slump in the fall.

Global recession is still very much 'on the cards'. 1/17
gnseconomics.substack.com/p/derpcon-outl…
Everything you need to know is summarized in this graph. It shows that Chinese business (debt) cycle leads European cycle by around 3-4mo and the global business cycle by around 4-5mo.

In tight turning points (crises), with synchronous response, the lag is shorter. 2/ Image
This relationship was revealed in 2015/2016.

In 2015 Chinese leaders tried to stabilize the economy by tightening the availability of credit especially to the manufacturing sector, which led to a slump in the Chinese housing market, which had already weakened in 2014. 3/
Read 17 tweets
Dec 8, 2022
Seven charts to explain, why the U.S. is heading into a #recession (which is unlikely to be "mild"). 🧵

Let's start with the most problematic one: the yield curves. Many read these like the Bible, and they rarely have gotten it wrong. However, this time there's a problem.
1/14 Image
Our first-ever U.S. #recession call, in March 2019, predicting the beginning of an U.S. recession in early 2020, was based on the inversion of the yields of the Treasuries with 10-year and 3-month maturities.

But, they are being manipulated. 2/
gnseconomics.com/2019/03/27/rec…
This is depicted in the strange divergence of the 10y/3mo and 10y/2y spreads in early 2022 shown in the figure above. I explained this in detail in my @EpochOpinion piece in May.

Main point: purchases of Treasuries by the #Fed are twisting the curves. 3/
theepochtimes.com/recession-come…
Read 14 tweets

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