The concerns around recession, inflation, and the Fed frame WHERE equities are going on a cyclical basis.

The key is aligning the structural macro drivers with cyclical changes and then executing trades when positioning is offside.

Let's break each of these down (Pt1) 🧵👇 On a structural basis, delinquencies remain VERY LOW which is why equities continue to shake off drawdowns. Underlying growth in the economy continues to rise and we aren't seeing signs of a recession comparable to a 2008 regime.

The Top Intro Books For Macro And Markets: 🧵

Having a proper view of Bitcoin is based on two things:

1) Macro liquidity
2) Positioning

We are seeing an alignment of factors that is beginning to set the stage for a final move in BTC

I am going to break down the drivers and risk/reward for WHERE we are going 🧵👇 BTC had a positioning unwind earlier this year because every major investment bank was floating a narrative that the tariffs would cause a recession. When this didn't happen, BTC and equities had to reprice higher. As a result, the 100k level functions as really clear cyclical support so as long as we don't have an imminent recession (highly unlikely) we are unlikely to break BELOW that level

Financial markets are approaching a tipping point similar to 2021 when the Fed actively decided to let inflation run hot and let equity markets melt up

We are in the early innings and the signals are flashing right now 🧵👇 I have been laying out for a while that bonds are moving to the downside because the Fed has failed to adjust as more credit gets pumped into the system

https://x.com/Globalflows/status/1929570091622113499

We are entering a period of macro liquidity that is creating a violent squeeze in short positioning that is similar to 2021 when $GME made its historic rally

Hedge Funds are about to get caught offsides again 🧵👇

@TheRoaringKitty and @unusual_whales = important for this We entered this year with a massive washout in long positioning and hedge funds were able to limit their drawdowns by being short or hedged.

The tail index showing the pricing of OTM puts on SPX blew out with the VIX showing a massive premium for hedges. As this went down, everyone began to realize they the tariff dynamic was all misdirection by @realDonaldTrump and @SecScottBessent and they needed to get long fast.

There is excessive focus on an imminent recession in the US

We are seeing @elonmusk, corporations, and economists all have the same consensus about risks to growth

The credit cycle is telling a different story and this will have massive implications for markets 🧵👇 Right now we are seeing one of the largest setups for consensus extrapolating fear in headlines to a collapse in growth.

Economists (the guys who are always wrong) are expecting a 40% probability of a recession right now:

A few important things to note from the Macro Regime Tracker heading into NFP tomorrow 🧵👇 Link: capitalflowsresearch.com/p/macro-regime…

Global inflation has pressure building under the surface which has much greater significance than the M2 charts floating around

Allowing inflation to accelerate with central banks pausing creates the most significant trends in financial markets

Let's dig in 🧵👇 The starting point for every major view is WHERE interest rates are going. Druckenmiller made a comment once about this book, The Price Of Time, that every major bubble and crash in history is driven by central banks.

https://x.com/Globalflows/status/1922383620301611290

The Macro Regime Tracker with all of the models and tear sheets has been published

I am going to walk through a few key charts that should be on your radar below 🧵 Link for the tracker is here: capitalflowsresearch.com/p/macro-regime…

The macro liquidity environment is going to become increasingly difficult to navigate as interest rates push higher

I am going to lay out the macro regime and positioning in equities and Bitcoin for WHERE we are going

Let's dig in 🧵👇 We are in a macro regime where equity valuations are expanding considerably. Equity valuations are NOT driven by sentiment, euphoria or fomo. They are driven by macro liquidity.

I am pulling together all of the major charts from the Tear Sheets and connecting them to HOW we are developing in the macro regime. (these are published everyday on the website and free)

Let me break a few down for WHERE we are in equities, rates, FX and Bitcoin 🧵👇 In terms of weighted contribution for returns in the session today, the index was led higher by Communication Services and Information Technology. Energy remained the weak spot.

Traders in the US bond market are drastically underestimating what is about to take place in macro volatility

This next move in interest rates will set the stage for macro flows over the next 2 years and no one in the media is even talking about it

Let's dig in 🧵👇 Interest rates are THE most important part of macro because they are about the price of money. All goods, services and assets are denominated in money. This means that interest rates are the asymmetrical linchpin on which the economy and financial markets turn.

As a result, small changes in interest rates can have a big effect. large changes in interest rates can change the trajectory of countries. If this is a new concept, you can check out the book thread below on macro books

x.com/Globalflows/st…

Financial markets continue to punish those who bet on a recession without the data to actually back it up

The long end of the yield curve continues to send the clearest signal about WHERE we are in macro and it impacts equities, Bitcoin, and memecoins: 🧵👇 MAIN IDEA: Growth is accelerating, and credit is being slammed into the system at an increasing rate. This is going to push bonds down and risk assets up until a final capitulation takes place and volatility blows out again.

The important thing is knowing the signals to watch

Powell's stance as Federal Reserve chair has begun to deviate from the economy and interest rates

This is creating a gap in expectations vs reality and the result will be an increase in macro volatility

Let's dig in 🧵👇 As we entered this year, the Fed's sentiment centered around WHEN rate cuts are going to take place and they assumed that inflation wasn't a risk because headline CPI was below 3%

Macro volatility has been compressing interest rates for over a year, and it is beginning to expand

This is setting the stage for the next stage of the growth cycle and credit cycle

Let's dig in 🧵👇 Volatility in bonds has been compressing for years after the inflation of 2022 but recently it has begun to tick up

The most important question we can ask is WHY? When volatility expands, this is when the underlying rules of the game change and positioning is caught offsides.

One of the most important signals of macro liquidity and risk-on/risk-off flows is centered around carry trades.

This is one of the key inputs into trading of Bitcoin and all risk assets

Changes are taking place as central banks shift their stance. Let's dig into it 🧵👇 Carry trades are all about borrowing in low-yielding currencies and investing in high-yielding ones.
When global rates diverge, capital flows to where returns are highest

These are THE TOP BOOKS I would give someone who wants to understand macro, interest rates, and FX:

🧵

Understandingt the history of money Understanding the history of interest rates

Let me explain something about interest rates and inflation

What is currently seen is priced in. What is unseen and the risks around that are what move markets and create the distribution of probabilities.

Let me explain WHERE we are with bonds right now 🧵👇 All of us know inflation has been trending down since the high in 2022. The entire regime we are in is about two questions:

1) How wide of a spread should the Fed hold rates above inflation and 2) What SPEED will inflation fall at?

If you can answer these two questions, you can solve interest rates. The problem is, we don't know the answer and neither does the Fed.

The US real estate market is approaching an inflection point as interest rates push higher

Outdated frameworks assuming "housing is the business cycle" will continue to fail, and permabears will continue losing credibility

The macro framework for WHERE we are going 🧵👇 Real estate is highly leveraged to interest rates because the only way to consistently make reasonable returns is by leveraging your portfolio. The problem with this is that real estate is driven by HOW HIGH interest rates. The other driver for real estate is the underlying fundamentals of the respective market and asset class.

I laid out how central banks are falling behind the curve and that this is going to cause capitulation. (thread below)

People don't understand that there isn't a high probability of a recession, this is WHY the bond market is going to crash 🧵👇

https://twitter.com/Globalflows/status/1922327795482411386

Since 2008 and @michaeljburry shorting housing, a culture in finance has developed around making recession calls. Why? Because fear sells and 2008 is ingrained in everyone's mind as the worst possible scenario.

Central banks have fallen behind the curve, and we are now approaching a macro inflection point that will squeeze out positioning and cause capitulation across interest rates, equities, and the global economy

Let's dig in 🧵👇 When we came into this year everyone thought the greatest economic boom would take place because of the Trump win.

We then had equities sell off and bonds rally because of the tariff risk and everyone in financial markets began to think a recession was imminent.