James Lavish Profile picture
reformed hedge-fund manager + ex-@yale hockey | cfa + @cornell fintech | #btc | 🧠The Informationist Newsletter, 14K+ subs: https://t.co/GzW9VkXlgk
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Mar 21 41 tweets 8 min read
Another Fed Meeting, another decision based on flawed metrics. One of them is the new CPI. Or shall I say the *New New CPI*?

Because the calculation has been sneakily adjusted again recently, and yes, it matters. Why and how?

Time for an inflation 🧵👇 🧐 Current CPI

First, for those who are new to the whole Fed Shell Game, or if you need a little refresher, a quick review of CPI:

The Consumer Price Index, also known as CPI, is the benchmark for U.S. inflation as calculated by the Bureau of Labor Statistics (the BLS).
Mar 15 41 tweets 9 min read
With the 'sudden' onset of bank insolvency and credit risk, it seems a good time to peek at the US Treasury’s *own* financial position.

Take its debt temperature, so to speak. This is a long but really important one, so saddle up and settle in.

It's time for debt 🧵👇 🥸 What’s the CBO report?

First off, CBO stands for Congressional Budget Office, the federal agency that semi-regularly provides budget information and economic forecasts to Congress

And the CBO recently published its federal budget projections for the next 10 years.
Mar 7 35 tweets 7 min read
As you may have heard recently, Credit Suisse is in trouble. Deep Trouble.

Question is, can they—*will they*—seize customer deposits to pay off creditors in a bankruptcy restructuring?

Time for a Bankruptcy 🧵👇 🤑 Bail-outs

If you’re in your 20’s or older, you likely remember the Great Financial Crisis

You know, that event in 2008 to 2010 that pushed major banks to the edge of catastrophic-level collapse because of poor—or non-existent—risk management policies?
Feb 21 40 tweets 8 min read
US CDS spreads have rocketed higher recently, suggesting an accelerating probability of default.

But why is this happening, and what exactly is the CDS market telling us?

Time for a Credit 🧵👇 🧐 What’s a CDS?

First things first, what exactly is a CDS, or Credit Default Swap?

If you subscribe to 🧠The Informationist, you’ve heard me discuss CDSs before

If you’re new, though, or just need a refresher, this article is a great place to start: jameslavish.substack.com/p/credit-defau…
Jan 20 38 tweets 8 min read
Wall Street loves leveraged buyouts. So much so, that a mountain of 'hung' LBO debt now threatens to blow up right in their face.

But what is an LBO and how are they hung?

Time for a debt 🧵👇 You may remember the term leveraged buyout or LBO from the good ol' Gordon Gecko days of 1980’s Wall Street

If not, or if you’re wondering how those go-go days matter today, let’s take a few minutes to walk through it all nice and easy.
Jan 16 41 tweets 10 min read
The endless scrolling Debt Clock.

What is it, and what exactly do all the numbers tell us?

Time for a Debt 🧵👇 ⏰ What is the Debt Clock?

Some of you are old enough to remember back in 1989, when real estate investor Seymour Durst had this version of the debt clock installed on 42nd Street and Sixth Avenue in New York City
Dec 23, 2022 27 tweets 6 min read
US Treasury yield curves are inverted--really inverted--right now.

But what exactly does that mean, and more importantly, does it truly signal an incoming recession?

Time for a Treasury 🧵👇 👐 What is an inverted yield curve?

We’ve talked about yield curves on 🧠The Informationist before

If you haven’t read that article yet or just want a refresher, you can find it here:
Dec 9, 2022 29 tweets 7 min read
Does the money supply really drive inflation?

If so, how will Fed monetary tightening affect prices in the near future?

Time for a money 🧵👇 🤏 What is Narrow Money?

To understand money and supply, we first need to understand the different types of money and their definitions

We'll focus on US definitions and USD money supply for today.
Nov 28, 2022 33 tweets 7 min read
Can Merkle Trees prove that your #Bitcoin is safe on an exchange?

Are they fool (or crook, in recent cases) proof as a method to verify your balances?

Excellent questions that need answers ASAP.

Time for a collateral 🧵👇 #️⃣ What is a Hash?

I’m no coder, and I don’t expect you are either

So, let’s walk through this nice and easy today

Get you a bit smarter on the collateral side of the decentralized world, shall we?
Nov 14, 2022 31 tweets 6 min read
The latest FASB ruling will be a pretty big deal for #Bitcoin.

But what’s FASB, and why should you care?

Time for a Corporate Treasury 🧵👇 Accounting is boring. FASB bleh. 🤮

Normally, yes. But not this time. The latest FASB vote opens the door for companies to buy and hold Bitcoin in corporate treasuries without balance sheet penalties

OK, how?

Let's walk through it nice and easy, shall we?
Oct 31, 2022 34 tweets 8 min read
With interest rates rising globally, many companies and countries are at risk of becoming zombies, and even the G7 is starting to look pretty spooky.

👻 Happy Halloween, everyone, you may want to peek through your fingers while reading this one.

It's time for a scary debt 🧵👇 💀 What’s a Financial Zombie?

First, a little slang explanation

Zombie companies are ones earning enough money to make interest payments and keep operating, but not enough to pay off their debt

So, they must keep borrowing more and more to cover expenses and continue operating
Oct 27, 2022 34 tweets 6 min read
Liability Driven Investments or LDIs for short.

What are they, and how did they almost take down the entire UK pension fund system?

Time for a debt 🧵👇 🤑 Pension funds

First, a pension fund or scheme, as known in the UK, is an investment vehicle that pays income to members upon retirement

The total amount to be paid is set up as a long series of future payments

Put simply, these future payments are liabilities to the fund
Oct 20, 2022 29 tweets 7 min read
Is the US Treasury market getting disorderly?

And what can the Fed or Treasury do to prevent a total bond meltdown?

Time for a Treasury 🧵👇 🤒 Treasury Market Temperature

First, let’s have a peek at how the US Treasury market is acting recently, you know, take its temperature

There’re a few things we look at when determining the health of the Treasury market, one of them being the overall demand of USTs globally.
Oct 14, 2022 25 tweets 6 min read
As the USD continues to dominate global currencies and cause pain abroad, there’s increasing speculation of a Plaza Accord 2.0.

But what was the first Plaza Accord, and is this time different?

Time for an FX thread👇 🤝 The original Plaza Accord

The Plaza Accord was an agreement in September, 1985 between the UK, West Germany, France, Japan, and US to depreciate the USD versus all those currencies

It was named the Plaza Accord, as the agreement was signed in the famous Plaza Hotel in NYC.
Oct 4, 2022 38 tweets 8 min read
Treasury auctions can give us clues to the health or problems of the entire US financial system.

But what are those clues and how can you tell?

Time for a Treasury 🧵👇 👋 Auction Terminology

First, this is about auctions by the US Treasury, selling bonds to finance US public debt

They have various maturities and names

Let's walk through them...
Sep 29, 2022 4 tweets 2 min read
I repeat. Ignore the talking heads and look at CDS spreads instead. Image Getting lots of questions about Credit Default Swaps, and so here's an early article from 🧠The Informationist Newsletter I wrote about CDS spreads.

It's simple and straightforward (as always) and should get you started!👇 jameslavish.substack.com/p/credit-defau…
Sep 27, 2022 27 tweets 6 min read
If you've never heard of TARGET2, you will soon. Why?

Europe has a rapidly growing capital balance problem.

Time for an ECB 🧵👇 🎯 What is TARGET2?

First, TARGET is an acronym that stands for Trans-European Automated Real-time Gross Settlement Express Transfer System

Right. We’ll stick with TARGET

And 2 just means it’s the second iteration of the payment system implemented by the Eurozone.
Sep 20, 2022 29 tweets 6 min read
It’s Fed Week, and that means lots of Fed Speak: Acronyms, terms, and obfuscation!

So, let’s get you prepped for the fog and mirrors today.

Time for a short Fed 🧵👇 From Overnight to Discount to Neutral to Terminal

We’ll start with the basics and end up with where we think the Fed is headed

And we’ll keep it nice and easy, as always, let’s go!
Sep 15, 2022 41 tweets 8 min read
Fed Chairman Powell has mentioned Volcker quite a bit recently, channeling his hawkish stance

But Powell is no Volcker, and this is not 1980.

Time for a Fed 🧵👇 🧐 Who is Volcker, anyway?

So, who is this Paul Volcker character we keep hearing about?

Like a Federal Reserve superhero or something...

Why do we keep hearing his name 40 years after his so-called moment at the Fed?
Sep 13, 2022 24 tweets 4 min read
Another CPI reading, another violent market reaction.

So, what exactly is the CPI, and why is everyone so focused on it?

Time for a super simple inflation 🧵👇 🥩 What’s the CPI

First, let’s get a solid understanding of what the CPI is and what it’s not

The Consumer Price Index (CPI), is the benchmark measure for U.S. inflation and is calculated by the Bureau of Labor Statistics (BLS).
Sep 6, 2022 32 tweets 6 min read
So what exactly happens when a country defaults on their debt?

First of all, it happens far more often than you may think...

Time for a debt 🧵👇 🤕 Types of default

Let’s first cover how sovereign debt differs from corporate debt

Sovereigns are often considered far safer than corporates and are far more liquid

Trading $100M of USTs is as easy as a quick phone call with settlement instructions

Try that with Tesla bonds