OK, potential mea culpa time.
Ive now had 2 phone calls as well as email correspondence with US Treausury Dept about TIC data regarding what it does & does not show.
Long story short, its a bit confusing bc they recently changed methodology and may change it...again.
1/ In thread below I will share what Ive learned.
U are then free to make up your own mind as to what info is saying & what it means for markets.
The debate started a few months ago when charts of UST holdings by China started making the rounds.
TIC is the source for the chart
2/

Much has been made of the recent Fed rake hiking cycle as well as the coinciding collapse in long term UST Bond prices. I thought I'd do a short thread in order to help those who seek a better understanding of what is going on & whether "It's different this time."
Enjoy...
1/ Lets take look at historical hiking cycles.
Since late 70s, have been 7 cycles.
Chart shown below.
Absolute value right hand axis.
% growth shown on chart
(numbers approximate).

77-81 (290%)
83-84 (40%)
87-89 (60%)
94-95 (100%)
04-07 (400%)
15-18 (900%)
22-23 (2000%)

2/

Which does a government hate more? What is more likely to lead to deflation?

For anyone who thinks I haven't done my research, I'm posting a paper I wrote on Bitcoin several years ago.

It is now somewhat dated but please feel free to tell me where I have it wrong or which part I "just don't get".

1/ 2/

A thread...

I started in this business almost 25 (!) years ago.
In that time, I have transitioned through the .com boom/bust, Sept 11, the RE boom/subsequent GFC, the Euro sovereign crisis, the '18 volmageddon, the '19 repo crisis, the Covid crisis & the '22 Fed hiking cycle.
1/ Safe to say Ive seen many separate episodes of both panic & euphoria. Sometimes right on heels of each other. Despite all of that, I've never seen a more uncertain time than right now. This is long way of saying if someone says they know for certain what comes next...
2/

Think of the monetary system like a game of Musical Chairs. USD Base Money (Reserves at the Fed + Physical Cash & Coins) are the Chairs. All other USD monetary aggregates (M2, M3, Securitized Debts/Loans, USD credit extended, etc) are the people circling the chairs. While these are often times considered Supply, these monetary aggregates are also DEMAND. Bc when the music stops (USDs stop circulating/credit stops being extended) all these Aggregates (people) are ultimately claims on the Base Money (chairs).

IMO, the ability to keep on's mind, when everyone else is losing theirs, will be the primary determinent in how investors do over the next few years.

With that in mind, let's do a little test...

How many soccer balls do you see in the picture below?

1/ Are you sure?
Take a closer look...

2/

At this point most of those operating in, or following the world of global finance, have seen some version of this "Chart of Truth" (@RaoulGMI) where the US 10Yr yield has poked its head above the top of its 40 year channel.

Where it goes from here, I don't know... What I do know is that this is not a uniquely American issue. The whole world is dealing with funding costs rising. Germany, Canada, Australia...for god's sake even Japanese rates are rising...

So let me get this straight:
Russia is going to be fine bc they have huge natural resources. And due to sanctions natural resources prices are going to rise. So they can now sell all these commodities at higher prices.
1/ Meanwhile, China's two most important imports are energy and food. The are so important China has spent years negotiating low cost access to these commodities.
And now, due to Covid, supply chains & geopolitical conflict, these import prices are rising quickly.
2/

When a system de-levers, the asset that underlies the system rises in value.
If the asset that underlies the system falls, there is no need to de-lever. Like it or not, USD is the underlying asset for the entire global monetary system. And due to opaqueness of the Eurodollar market, the system is levered to greater degree than many think possible. This is proven by the fact the system still exists, for it must grow to survive.

Can't go a day without someone saying Russia going to invade Ukraine and nothing the Biden admin can do to stop it.
And the media is happy to paint the situation as an evil attempt on Putins part to take over a sovereign nation despite US's own record. Whatever you think of Putin, I hope we can all agree he is not a stupid person. Like him or hate him, he has been an extremely effective leader. And has probably played the hand he was dealt better than any of his peers. And even the f'ing birds respect him.

#AWallStreetStory
When I moved to NY in the late 90s I often took the subway bc I didn’t have money to ride around in cabs and town cars all the time. So the 6 Train doubled as my limousine and Grand Central Station doubled as my garage. In May 1999 I was fortunate to be hired by Donaldson Lufkin & Jenrette for their Wall Street training program. This was very convenient because the DLJ offices were just two blocks from my garage.
#277ParkAvenue

If China bails out the US by proving PPE bc we don’t make enough masks, ventilators and other protective equipment ourselves, who has the upper hand in that scenario? If China bails out Bangladesh bc they borrowed too much money and are now in Default, who has the upper hand in that scenario?

For anyone who is interested...or anyone who just thinks I don't understand, am going to get rekt, need to do research or want to have fun staying poor...here is the white paper I wrote on #Bitcoin a few years ago.

1/ 2/

Two definitions of money, both faith based:

1. The most marketable commodity (the most marketable bc have faith based on its history that it will retain its value)

2. That which the Gov demands in tribute (you have faith if don’t pay your taxes in it the gov will jail you)

1/ One can argue that #2 above...actually leads to Govs fiat money becoming #1 above.

Regardless, all money is ultimately faith based. At their core, they are confidence games.

Once the confidence is gone, regardless of the reason, so is the value of the money/currency.

2/

Hi everyone.
Based on recent comments/twitter posts/interviews...my email, vm, dm & twitter stream have been inundated with questions about, & challenges to, my assertions regarding QE being "deflationary" rather than "inflationary"

1/ Many extremely smart & successful people (many of whom I like & respect) disagree with me.

Vehemently.

As such, I have been asked for "Proof" or my "Source" to back up my assertions.

The "Smoking Gun" per se...

I'll attempt to answer this as clearly as possible below

2/

Ok...anyone want to hear a story that nothing to do with dollars, gold or bank reserves?
No...?
Well too bad...
Because this week is the 30th anniversary of one of the top 5 moments of my life.
And I'm feeling old.
And sentimental.
So... I grew up in a small town of 1,000 people on the edge of the sandhills in western Nebraska. Many of my friends came from families that were farmers or ranchers. And everybody loved football.

Hi All. With recent market action in equities and dollar, I have had several questions regarding...messages in support of...and challenges to (shocking, I know)...my outlook.

In order to try and provide some clarity...this thread will need to suffice for now.

1/

https://twitter.com/SantiagoAuFund/status/1268703151751786496

Long story short, the fall in Q1 & subsequent rally we've seen in last 3 months in equities is NOT due to the core part of my thesis. It IS part of "moments of great terror & disbelief along the way" part of thesis...but not how I envision equities moving to all time highs.
2/

Like many others, I watched the interview with @RaoulGMI and @hendry_hugh with great interest.

If you work in macro and don’t find a convo between these two interesting you should probably find a different line of work 😅

1/ One of the parts I found most interesting was Hugh bringing up Princes of the Yen.
It’s a great book by @scientificecon and summarized well in this video.

2/

I’ve answered this many times before and will attempt to do so (somewhat briefly again now).
The milkshake theory basically says there is a supply/demand mismatch with regard to dollars in the world. My argument has been that this fact, along with others such as the institutionalized effect of the GRC, the design of the dollar payment system, the US military and the largest & deepest capital markets on earth will drive capital flows to the US over next few years.

With gold, dollar, bonds and equities all up...have received several messages/questions regarding the Dollar Milkshake theory.
But have been out of office for last few days so have been somewhat slow to answer... The most common question I have received is some form of...

“How much longer can this dollar run last...?”