Intro to the Housing Market

Homes have been getting expensive - home prices relative to income are at highs exceeding those of the Great Financial Crisis.

But why are prices continuously rising and what might drive them down?

Here's a primer on the housing market!
🧵👇 Many of the insights gathered in this thread were inspired by @PensionCraft's video:

Is the Housing Market Going to Crash?
Link:

Other sources used will be listed at the end of the thread.

Let's get into it!

Macro Overview from a former senior trader at the Federal Reserve.

We studied Joseph Wang (@fedguy12) to learn what may be next for financial markets and monetary policy.

An inside look into the Fed and what the market may be misunderstanding 🧵👇 (2/41) This thread summarizes a recent interview with @FedGuy12 and @MoneyMorningAU.

It also features insights from Wang's recent blog posts.

This thread covers:
- Fed Pivot
- QE and Yield Curve Control
- What's next for equities, housing, fixed income and more.

Let's dive in!

Intro to the US Dollar

The US Dollar is the strongest it's been in 20 years, and the effects of its rise are felt by the whole world.

But why does the dollar continue to appreciate and how does it impact the US and the globe?

Here's the good, the bad and the ugly of the USD 🧵 Many refer to the rise in the US Dollar as a double edged sword or even a wrecking ball.

As the global reserve currency, the impact of a strengthening dollar can have positive but also very negative impacts on the US and the rest of the world.

Lyn Alden on the Global Energy Crisis, the US Dollar Wrecking Ball and the Fed Pivot.

@LynAldenContact summarizes major macro themes and how the Fed may respond and impact the economy and financial markets.

Here are notes on her macro masterclass 🧵👇 @LynAldenContact This thread summarizes a recent interview with @LynAldenContact and @MikeIppolito_.

Link:

Contents

• 3/ Global Energy Crisis
• 17/ The Rise of the US Dollar
• 21/ How much can the Fed tighten?
• 28/ Long Term Debt Cycle
• 33/ Outlook for the decade

Michael Burry: 50% More Downside to Come 📉

Analysts are forecasting strong corporate earnings growth this year despite compromised supply chains and tighter policy.

But what might happen to equities if earnings miss?

Let's break down Burry's bearish call in simple English: Let's start off by discussing multiple compression.

In this case, multiple compression refers to a decrease in the Price to Earnings (P/E) ratio of the S&P 500.

The P/E ratio is derived from dividing the price of the index by the earnings per share (EPS).

What's going on with the Bank of Japan?

While Central Banks globally raise rates and tighten policy, the BoJ fights to keep yields low.

We cover Japan's fascinating economic history to help you understand the BoJ's policy and how it impacts global markets.

Ready for a story?🧵 2/38

In the 80s, Japan's economy was booming.

With advances in manufacturing and technology, Japanese consumer electronics & automobile industries were overtaking those in the US.

They had the second largest economy at the time, with potential to become the leading power.

Intro to Inflation Expectations

There were 14 mentions of "inflation expectations" in the June FOMC Press Conference.

But why is the Fed paying so much attention to this and how are these expectations measured?

Let's get into it! Inflation expectations are the rate that people, businesses and investors expect prices to rise in the future.

These can be measured in several ways:
• Surveying consumers and businesses
• Forecasts from economists
• Market-based inflation-related financial instruments.

Ray Dalio on How The Economic Machine Works

Productivity and innovation are better than ever, but the economy is in the midst of a credit crisis.

But why does the economy run on credit and what leads to economic cycles?

Learn why 30,000,000 people watched Dalio's video.
🧵👇 This thread summarizes Ray Dalio's famous video:

"How The Economic Machine Works"
Link:

It covers the basics on credit, deficits, interest rates and the cyclical nature of the economy.

Let's get into it!

Intro to Reverse Repo (RRP)

In 16 months, the Overnight Reverse Repo Facility went from virtually $0 to $2.14 Trillion now.

But what even is Reverse Repo and why is so much money piling into it?

Here's Intro to Reverse Repo!
🧵👇 This thread is a summary of @PensionCraft's video on Youtube:

"Reverse Repo Market Hits $2 Trillion!"
Link:

We found his explanation to be very fluid and probably the most complete one we came across.

Let's get into it!

The Great Inflation of 1965 - 1982

Excess fiscal spending, oil shocks and failed monetary policy.

A perfect storm of misfortunes and poor decisions led the US into 17 years of uncontrollable inflation and unemployment.

Who's ready for a story?
🧵👇 Following WWII, the US enjoyed 25 years of strong economic growth and price stability.

This changed in 1965 as the next 17 years were marked by uncontrollable price increases & high unemployment.

This moment in history, ending in 1982, is known as The Great Inflation.

Option Market Makers (MM) and their impact on the stock market.

We've seen large swings in the market this year.

Much of this volatility is due to options markets and MM hedging activity.

Read this to understand why fundamentals aren't the only thing moving the stock market. Who are Option Market Makers (MM) and why are they so important?

MMs are individuals or firms that are contracted by an exchange to ensure that there is enough liquidity and depth in both the bid and ask side of the market.

Intro to Quantitative Tightening

On June 1st, the Federal Reserve will begin to aggressively shrink its $9T balance sheet through QT.

But what even is QT and how might it impact the economy and financial markets?

Let's break it down in simple English!
🧵👇 The Federal Reserve begins its quantitative tightening (QT) program on June 1st.

This type of contractionary monetary policy has only been done in the US once before (2017 - 2019).

This tool is used to reduce liquidity in the economy to combat inflation.

Cathie Wood: Fed will stop its tightening moves at some point this year.

Notes: In The Know - Inflation or Deflation? (May 21)
Watch:

Topics:
-Fed's late tightening
-Inflation now vs 60s/70s
-Corporate profit decline
-Economic/Market Indicators

🧵 (1/43) Cathie Wood is joined by Nancy Lazar, Piper Sandler's Chief Global Economist.

Much like Cathie, she shares the view that inflation is not embedded into the system like it was in the 70s.

Notes: @MacroAlf and @WallStreetSilv on Europe's economy, Gold & Silver.

Link:

Topics:
- Euro weakening
- Europe's inflation vs growth conundrum
- Supply chains compromised
- Demand destruction
- Where do gold, silver and precious metals go? @MacroAlf @WallStreetSilv The Euro has been falling considerably, now down to 2017 lows.

Alf mentions that the European Central Bank's (ECB) credibility is not high currently.

Inflation expectations are around 3.5%, much higher than the ECB's target of 2% over the medium term.

Intro to Stablecoins

Recent events with UST and LUNA crashing have put the spotlight on stablecoins.

But how do they work and what are the risks?

In this thread:
- Stablecoin basics.
- Types of stablecoins.
- How the UST algorithm failed to maintain its peg.

Let's dive in🧵 What is a Stablecoin?

Digital assets, referred to as tokens or coins, that are built on a blockchain and peg its value to an external, stable asset like the US dollar.

Stablecoins can also be pegged to commodities like gold or other financial instruments.

Notes on @7Innovator's interview with @saxena_puru:

"Investing in the Stock Market in 2022"

Watch:

Topics:
- Slowing Economy
- Inflation Peaking
- Yield Curve
- Index Bottom
- Comparisons to '08 and Dot-com

// THREAD @7Innovator @saxena_puru Puru Saxena is an investor in the high-growth technology space.

Late last year, he forecasted the ongoing sell-off in equities when the Fed abruptly reversed their policies.

He argues that monetary policy and liquidity drives booms and busts.

https://twitter.com/saxena_puru/status/1520149632009248768?s=20&t=_KemEEQRyZRkQWFjuT1vIQ

Intro to the Federal Reserve

By now you know that the Fed is raising rates and shrinking its balance sheet.

But how does it all work and how do their policies actually impact the economy?

Here's how the Fed operates and why it matters.
🧵👇 🏢💲 What is the Federal Reserve?

The Central Bank of the United States - responsible for the production and distribution of money and credit.

They are in charge of handling monetary policy and regulating commercial bank activity within the country.

Powell was asked today if he thinks the market is losing credibility in the Fed's monetary policy.

His answer was simple but useful to understand the relationship between Treasury yields and interest rates: The Two Year Treasury yield rose from 0.53% on November 30th to 2.65% now.

Powell announced in Q4 2021 that interest rate hikes were coming.

The Treasury market took Powell's words as guidance and yields began to climb before interest rates were actually raised.

LIVE NOTES: Powell speaks at the FOMC Press Conference.

The Fed will be hiking interest rates by 50bps.
Balance sheet run-off will begin on June 1st.

We will be adding updates to this thread live as we watch the Press Conference!

#FOMC #FederalReserve #Fed #Powell You can view Powell's discussion live through this link:

Notes: The Macro Trading Floor (April 24)

Hosts: @MacroAlf and @AndreasSteno
Guest: @LynAldenContact

"A Pendulum Between Stagflation & Reflation"

Topics:
- Shanghai Port
- Bonds and Rate Hikes
- Fiscal Handouts
- Outlook for this decade
- Energy Pipelines

🧵👇 Worst Take of the Week

Larsen gives the distinction to ARK Invest for their 2026 Tesla Price Target.

He's bothered by the bear case of $2,900 - triple of the current share price.

ARK used a Monte Carlo Simulation, but Larsen is skeptical of the data they fed into the model.

Brian Armstrong, CEO of Coinbase, is on a mission to increase economic freedom in the world.

He recently joined @theallinpod to talk about how regulation needs to evolve as we move into global adoption of crypto & blockchain technology.

Here's everything he said and more 🧵👇 📚 Topics Covered:

- Coinbase's mission and success in '20-'21.

- Classifying crypto (securities, commodities, currencies, etc.)

- US Regulatory bodies.

- Security Tokens vs Utility Tokens.

- Why is regulation needed?

- Balanced regulation for innovation.

- Stablecoins.