The desire among investment bank bank economists, and the Fed, that inflation is transitory is so strong that they either ignore data that conflicts, or intentionally get it wrong.
Chicago hedge-fund billionaire Kenneth Griffin said he won a $43.2 million first-edition copy of the U.S. Constitution at a Sotheby’s auction on Thursday—and now he intends to lend it to a free Arkansas art museum.
Yes, he is a long established big art buyer, and sits on many art museum boards.
But I do not believe he has shown interest in Revolutionary War era documents before last night.
3/4
He's not a crypto fan:
Last month at the Econ Club of Chicago, he told the audience that he doesn’t trade in cryptos because of its “regulatory uncertainty,” adding [he]“wished all this passion and energy that went into crypto was directed toward making the US stronger.”
But as this chart shows, the correlation is poor (bottom panel). Of course, this look backwards so it could be an inflation hedge going forward.
But something else correlates better ...
2/5
Two charts below.
One (single line) is a standard price chart of ETH. The other (two line) is the Bloomberg Payments Company stock index (red) with the ETH price PLOTTED INVERSELY.
When shown like this, they do seem to move with each other.
3/5
Below is the correlation (bottom panel) between payments and ETH (plotted inversely in top panel).
The correlation is getting more negative over time.
This mean the relationship between higher ETH prices and lower payment stocks, or an inverse relationship, is growing.
Yesterday, Western Europe printed the highest daily case count of 2021 (bars). And it was the fourth highest daily count ever, only the November 2020 peak was higher.
2/4
Germany, Austria, and the Netherlands all spiked to new all-time records yesterday.
Mr. Biden met each candidate separately for interviews on Nov. 4, and he was joined in the Oval Office for those meetings with only one other adviser, National Economic Council Director Brian Deese, according to people familiar with the matter.
Each meeting was scheduled for one hour, though Ms. Brainard’s ran slightly over the allotted time, one of these people said. Some people familiar with the matter said Ms. Brainard’s meeting went better than expected.
3/5
Yet another story that paints Brainard in a better light than Powell.
But the betting markets are still steadfast that Powell is 70-ish% to get renominated.
Recall I think it is
Powell 50.001%
Brainard 49.999%
This gives the impression is the chain is at 100% and it will take years to expand it. And that assumes everyone wants to invest the big $$$ to do it.
So, to repeat myself, how do you fix this? Zoom prices much higher so we stop buying stuff.
See the latest CPI report
2/6 Transcript:
Peterson: If they can't get their products in in time for the holiday season. And of course it also means consumers are going to pay really high prices for everything.
Now before I go any further and we get get sucked into a discussion of treatments, hospitalizations and death rates, ECONOMIC POLICY is driven off cases.
So, Cases = Lockdowns. This is why cases are the most important statistic to ECONOMIC GROWTH.
3/20
Start with the US, cases have bottomed and turned higher. See the bottom panel, the 7-day average is increasing at the fastest pace in two months
Someone tell the betting markets! They think Powell gets the nod and Brainard gets a consolation prize.
3/3 Biden stalling on decision is the latest ever, Joe Stiglitz wants Powell out, and we get stories about Brainard, not Powell.
This is not the narrative one would expect to see if Powell's probability of getting re-nominated was truly believed to be 75%. project-syndicate.org/commentary/fed…
Even though the cash bond market was closed today, the interest rate futures were open and had a fairly sizeable decline. Not like yesterday's sell-off, but they did continue yesterday's declines with even more losses.
Bond futures were off about 1/2 point.
2/8
Most interesting (to me, at least) was fed fund futures tanked AGAIN today.
This show the implied yields out to May 2023. Or, where the market is pricing in the funds rate out to May 2023.
3/8
Wonky chart alert ...
This chart shows the shifting of the forward curve from last Friday (red) to yesterday (orange) to today (blue).
In the last month, markets are pricing in more aggressive tightening of monetary policy across the globe, sending short rates higher. This move accelerated in the last week. Is this signaling the end of the “transitory” inflation era?
A thread to explain
2/12
The last two weeks have seen short-term interest rates around the globe shoot higher, as the following series of charts show.
3/12
This trend is most acute in Australia where it appears yield curve control is blowing up. The Reserve Bank of Australia cannot maintain its target of 0.10% (blue line).
The election to watch this week is the Virginia Governor Race. Election day is Tuesday, Nov 2.
Biden won Virginia by 10 pts just a year ago.
The Democrat, Terry McAuliffe, might be staging what some political wags are calling 1 of the greatest collapses in a generation.
2/4
As late as a month ago, the McAuliffe had as much as a 15 pt lead over (R) Glenn Youngkin. Now, not only is that lead gone, but it might have reversed.
McAuliffe was a former Governor so he is hardly some obscure figure in Virginia politics. Youngkin has never held office.
3/4
Youngkin was at Carlyle for 25 years, rising to Co-CEO. He left in September 2020 to run for Governor.
We've seen numerous examples of the polls/bettors getting it wrong. So, maybe, McAuliffe wins by a bunch? We'll know in three days.
The S&P 500’s outperformance over the Russell 2000 is reaching historic extremes, something that typically only happens in a bear market. Investors have redirected government stimulus money into the stock market.
A thread to explain
2/11
The next chart starts on March 15 and shows the rolling return of the S&P 500 (blue) and the Russell 2000 (orange). Since this date, the S&P 500 is up 15.26% while the Russell 2000 is down 2.72%.
3/11
So, in the last 161 trading days, the S&P 500 has outperformed the Russell 2000 by 17.98%. This is the biggest outperformance by the S&P 500 over the Russell 2000 in 20 years!
The market is pricing in a far more aggressive response to inflation than economist or the Fed currently envision.
This matters are the market is major voice in setting policy. It is sending a powerful message.
A thread to explain.
2/16
The chart below shows selected fed funds futures curves since September 3 (blue).
The market is pulling rate hikes forward almost every day (curves shifting left), perhaps as a result of the higher inflation expectations in recent weeks.
3/16
The CME’s “Fed Watch” tool offers another way to view the market’s probability on Fed policy. This tool uses the fed funds futures forward curve shown above.
A probability over 50% signifies a rate hike is priced in.
1/6 What is the bond market signaling? And how to read it? A thread to detail.
This chart shows YTD 10-yr total return each year since 1973. Gray lines show past years’ returns, while the blue line shows this year’s returns. Through October 21, the 10-year has returned -5.60%.
2/6 Only 3 years posted worse total returns through Oct 21 – 2009 (worst), 1999, and 1994. 2021 is already one of the worst years in bond market history.
How much pain in the bond market does the transitory crowd demand before they acknowledge the market is signaling a problem?
3/6 Bond market volatility is also beginning to show signs of concern, as the next chart shows.
@dandolfa
What causes this run on stablecoins that you worry about? And it seems your concern is they will exposure weakness in the current financial system, so those weaknesses must be protected, not that stablecoin growth means it should be corrected.
You wrote: "History shows very recently that the might get into trouble if they experience a wave of redemptions than they can't honor the dollar peg, and might feel compelled to dump a whole pile of CP on the market."
Sounds like the problem is CP, not stablecoins ...
What history are you referring to? Seem like USDT has spent most of its life NOT holding its peg (green), yet, the growth of stablecoins has not been bothered by this at all.
The Los Angeles and Long Beach ports collectively unload just under one million containers a month. For the last year, they have been running at/near a record pace.
In other words, they are running as fast as they can. The problem is they are at their limit.
3/13
The much-heralded solution is to run the ports 24/7. The problem is the Long Beach terminals are already 24/7 and the LA terminals are already running 18 hours a day. These added hours at LA are only going to increase unloadings by 2%-3%. This is not going to matter much.
23 added to My Authors
