We are watching a 21st Century Moment moving from Horse & Carriage to Racecars but it's really hard to discount.

Here is a framework that works in the current backdrop:

Investors have always had the choice of where to put their fiat money.

They can either invest in productive assets, sit in cash or sit in stores of value.

The simple equation of how to invest- Start with a basket of goods for $100. If productivity per year is 2% that basket of goods at the end of the year should cost $98 if you are invested in productive equity or business.

If inflation is 3% then that basket of goods at the end of the year would be $103 if you just sat in cash.

The difference between inflation & productivity is tax you pay to the issuer of the sovereign currency if you sit in cash. In this case you are paying 5% tax to sit in fiat cash.

Now where this gets really wonky is if you have productivity that is completely outside of any norm in history.

@leopoldasch Describes this productivity boom in his Situational Awareness treatise.

@RaoulGMI @LynAldenContact @SantiagoAuFund @Globalflows @jvisserlabs @fejau_inc @qthomp @GavinSBaker If productivity gains are in the 100%+ then the choice to keep your money in Fiat Currency becomes obsolete.

The concept of inflation & currency becomes negligible next to the productivity gains.

I think this is why bitcoin is falling- bitcoin at the end of the day is a software.

Software as we know it with high P/E ratios gets decimated just like the news industry got decimated by podcasts & Substack.

As access costs drop to zero and productivity boom starts in overdrive there are winners & losers.

My guess is this chart does not mean revert this time unless there is some sort of credit event (Possible- we are starting to see stress, but the gov't has backstopped AI with the Genesis Plan)

There is no other choice but to invest in the AI supply chain if this productivity boom is real.

A little macro thread to keep on your radar.

Some divergences happening today.

2 year inflation breakevens are telling us there is something funky going on.

They are rolling over to the downside indicating deflationary pressures are building, not inflationary!!

Where are the inflationistas?!

Fed probably needs to ease faster.

Oil under $59 bucks and HY Credit spreads are widening.

We are in a buyback blackout period & systematic funds are fully invested while retail call option open interest at one of the highest levels ever.

Some reasons to be careful.... HY Credit CDS is a bit jumpy today.

Credit is tightening.

Yesterday was pretty simple- By concentrating on inflation, Powell jawboned the breakeven inflation rates lower (orange line) while nominal rates slightly rose (white line) from overly dovish expectations.

Financial conditions tightened and systematic investors seem to have priced in an overly-hawkish Fed NOW because of self-reinforcing volatility targeting flows.

🧵 Credit Tightened a bit and HYG broke the 50 day. This will be important to watch going forward to see if the longer term bull has ended, but the economy is in way different shape and a lot of debt has been termed out.

The biggest risks in credit are geopolitical (from China imploding).

My favorite John Burbank line is "“Last price is a liar, [real] price is an equilibrium of liquidity.”

How does this relate to bitcoin and meme stocks?

A Thread.. Now, imagine there was a utopian island where everyone wanted to live.

This island was relatively unknown, but for the majority who lived there, it was extremely coveted.

Are we watching a generational wealth transfer into digital assets?

Every marginal dollar from the Fed and fiscal is finding its way into digital assets now

An afternoon coffee thread...@Blockworks_ @JasonYanowitz When ownership of any asset class is cornered by large institutions, everything trades on the margin.

When large institutions own a majority of shares, the remaining shares that are available to trade on the open market (known as the float), become constricted.