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Geoffrey Fouvry Profile picture
@GraphCall
Apr 5 • 9 tweets • 4 min read • Read on X
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1/9 Precious Metals:
It stinks more than you think,
Let's stop & think for a minute.
What was happening in markets?
From Feb 21st the Nasdaq was already in trouble while
the Precious Metals Gold and Silver were ramping.
D-I-V-E-R-G-E-N-C-E
@DerivativesDon Image
2/9 We have notorious velocity problems with an insolvent Fed, and a quasi fiscal deficit. Meaning that the Fed has to pay Banks for not using reserves. IORB..
That's a sterilization short-term but inflationary long term.
A QFD as explained by Rodriguez at the World Bank is a very nasty condition of sterilization costs
documents1.worldbank.org/curated/en/465…Image
Image
3/9 Now you know what signal it meant. In a situation where stocks are dumped and precious metals are rallied it means "we don't trust the Financial assets, nor the currency".
So when the real issue is sterilization problems and velocity at the Fed. It was just not authorized to happen let me explain....
4/9 As I have explained many times #BTC is non-inflationary liquidity decoy to absorb this excessive liquidity without creating inflation. As explained in a previous post, if the liquidity was going into food and metals, this would create inflation with 2nd & 3rd consequences.
5/9
 #BTC is most likely a Gov sponsored program.

It has a SECOND impact as a non-inflationary liquidity decoy.

If the liquidity were to go into
Foods and Metals =>
higher prices =>
higher inflation numbers =>
higher interest costs for the gov =>
higher deficit interest burden =>
higher cost of sterilization for the #Fed via IORB and more negative equity at the FEd (compromising the other components that is M0)

#BTC is therefore a way to protect the USD and UST.

x.com/GraphCall/stat…Image
Image
6/9 Except that the liquidity was going into PM until the 3td of April, while stocks were going down hence of course the necessary intervention on April 3rd and raising the margins.
IT HAD TO BE STOPPED. MARGINS.
7/9
Can you imagine margins increased on April 3rd at brokers on Stocks?
What would have been the plunge in stocks?

Well the authorities did EXACTLY THAT on Precious Metals.
Why for the reasons explained before.
Sterilization and velocity control.
THE FLOWS CAN NOT BE ALLOWED TO GO INTO COMMOs (BECAUSE IT's INFLATIONARY)
8/9 Liquidity fleeing the financial assets and the currency into commodities (inflationary)? NOT ALLOWED.
#BTC, the non-inflationary decoy since April 2nd? Miraculously flat.
lol... Image
9/9
 People are being fooled into thinking that the primary risk is deflation. The condition of the Fed and primary deficit point to the complete opposite direction.
This market A JOKE

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More from @GraphCall

Geoffrey Fouvry Profile picture
Oct 18
1/25 PRIVATE EQUITY ZOMBIES PART I:

THE BIG FAT REGULATORY ARBITRAGE BETWEEN BASEL II BASEL III

How the Boiler room of procyclical mark to model under Basel II in banks leading to the GFC was stopped in banks by Basel III but moved to NDFIs - private equity not subject Basel
2/25

It all started in 2000 with IFRS accounting. The EU endorsed those procyclical standards even though bankers and politicians in Germany and France were against it, as they fear that accounting procyclicality would promote “irrational bubbles...
3/25
...in expanding period and amplify downswing movements in contracting period”. The fair value accounting was pushed under the guise of "transparency"
bis.org/bcbs/publ/wp28…Image
Read 26 tweets
Geoffrey Fouvry Profile picture
Oct 15
1/20 PROVING THAT BITCOIN IS A LIQUIDITY DECOY WITH SIMPLE DIFF EQUATIONS.
“HODL” on to your socks. (a bit technical)

ALSO The Fed is semi-lying, in fact, about “We would lose control of interest rates without IOR.”

docs.google.com/document/d/1n1…
2/20 Well, the opposite is true (long term), in fact, when the portion of interest-receiving reserves converges to 1.
IOR is convenient in the short term but lethal long term.
(Patience) Image
3/20 Payment on IORB is a short-term fix (absorption of reserves, slowing down velocity) at the expense of massive problems down the road. Because it can end in a differential equation of “ever-increasing rates of sterilization,” and then you are in hyperinflation.

As Rodriguez explains, there are two sources of monetary growth.Image
Image
Read 19 tweets
Geoffrey Fouvry Profile picture
Oct 8
1/25 Can a push in a new tech prevent a credit correction in bad credit areas?
Maybe, but there is a precedent in 1885
2/25 After the 1873 Franco-Prussian war, there was first a credit expansion. The beginning is the prosperous part but this credit extension as usual ends in degenerations in Minsky asset. The Funny thing is that people today even claim “degen” as an basis for investing!!
3/25
As this misallocation tries to self-correct, “power syndicates” try to delay the recognition to find exit liquidity. It’s not a “conspiracy” it’s just a matter of historical record!
RINSE/REPEAT Image
Image
Read 25 tweets
Geoffrey Fouvry Profile picture
Oct 8
1/15 UST Bonds Stuffing & National Security
Moreland, in his presentation about Morgan Stanley, shows how much the bank has been stuffing into UST and explains how, typically, “banks,” for some odd reasons, have an ability to predict rate cuts.
Here? Fiscal dominance twist... Image
2/15 Morgan Stanley is not the only one to be stuffed with U.S. Treasuries,
BUT this has had ZERO impact in reducing the 10-year UST. Image
3/15 Bonds STuffing
U.S. Treasuries relative to total assets in these banks expanded from 3% in 2013 to 11% in 2024.
Read 15 tweets
Geoffrey Fouvry Profile picture
Oct 7
1/22 YIELD-PIGGING AND BUGS IN THE WINDSHIELD
Credit problems in history are almost ALWAYS due to yield pigging BTW.

(There is evidence of that when looking at investment-grade private credit versus CCC private.)
But let me explain first.
What is yield-pigging?
2/22
Say you are operating in a strategy like risk arbitrage, where you have to arbitrage merger-arbitrage spreads (the difference between the current price and the deal value).
3/22
If a lot of money comes into the strategy, you are under pressure to be “invested,” and the hedge fund manager would typically put pressure on the head of research and research team to be “invested,”
Read 22 tweets
Geoffrey Fouvry Profile picture
Sep 18
1/25 The GraphCall Credit quality vs spread metric

Watching the consumer delinquencies rise is worrying but it is not per se at a very high record (although some adjustments in those calculations are coming and BNPL have data silo issues)....

Are the credit spreads reflecting that properly?Image
2/25
Those are the credit spreads Image
3/25
RATIONALE:

In other words if the consumer delinquencies are low but the credit spreads are low it sounds rather rational.

If the delinquencies are high but the credit spreads are ALSO high then there it also sounds rather rational
Read 25 tweets

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