There is a big disconnect between inflation and interest rates, and a lot of people seem to think it can persist. I doubt that very many people ('people' including institutions) are going to be buying 30-year Treasuries at 1.81%, or even at 3%, if sustained inflation looks to be in say the 5-6% range.
One thing that may exert an upward push on interest rates, is the worldwide vogue for 'clean energy'. Wind and solar are far more capital-intensive than are conventional power plants; even nuclear is more capex-intensive than are fossil fuels. Much of this will be debt-financed, either by government or by private/semiprivate organizations. There is so much momentum behind this thing now that even if there are Republican wins in 2022 and 2024, there will still be huge outlays for 'green energy'.
Has to be one of your best posts. The gaggle of speculators seemed to flood into crypto, then weed stocks, then back to crypto, to meme stocks, back to crypto and now off to...where? These were the cocktail waitresses in 2007 who had 3 no- doc mortgages and were flipping houses. Now it's Reddit bros. But when you hear half the parents at your kid's soccer game talking about Ethereum, is that necessarily a bad thing? It could very well be. With a "nothing to see here" message being white washed on the walls of the media on the cusp of an election year, my guess is this flow moves to equities, though we know that won't last, no matter how pretty Jim Cramer says the picture is.
Thanks. I did call the top in 2001, but a couple of months prematurely. I am not calling a top here, but I think crypto is in for a world of hurt. Bitcoin could see 12k....(when fear takes over greed, in thin markets they do crazy things)
I have a smart friend who's sent me links each month for years, providing every well reasoned take imaginable as to why the market will tank. She stopped sending about 3 years ago. Is there a perma-bear left standing? Oh, and Cramer has lost his fucking marbles.
I saw the SF sale on the news. Visited my neighbor yesterday and she brought me a post card indicating a 900k over asking in my little town. New construction, remodel of an existing home. 2x4's must be getting really expensive. The bay area has been driving folks out due to high prices for many decades now, but the playbook is now showing a new hand never seen before.
Of all the trades in the world I kick myself for, it's BTC at 30k in July. Visual, go-no-go-zone if there ever was one. But hindsight is always easy.
Keeps the posts and links coming! Merry Christmas.
I should add, Chinese stocks peaked in February and never looked back. They won't get up off the mat until the real estate issues are solved, and the Big Boss steps off the neck of business.
You know I've been very bullish many cryptos since March and of course before that. I'm evenly split on whether this next sell off which has already begun of course is a quarterly breakdown or a longer-term thing. A number of differences between 2008 and now, including dependency on OPEC, will come into play but one of the important things people haven't spoken about is a lot of money recently has been pulled out of altcoins and put into the NFT's.
I'm still taken aback at the strength of the stock market and eventually, any rally which is driven by the mindset of "nowhere better to put your money" is destined to at best, pause, and at worst, crash like '87.
That stated, one could do a hell of a lot worse than to heed the words of Milton Friedman.
(For those that don't know, the above commenter Mitch has been trading and involved with markets for years and years.) I am always taken aback at the strength of the stock market I guess. I remember 87 too well but markets always break faster than they rally so you always made more money (or at least it seemed easier) when you carded up stuff on the red side of the card. I wonder how the dependency on OPEC will infiltrate markets? What's the straw that breaks the camel's back this time? In 1987, it was Merchandise Trade which was really a bogus number when you think about it. Information is very transparent now, and lies are found out relatively quickly. So, I think it has to be real for the market to sustain a break. The NFT market is fascinating, real, and a bit crazy. Although, I do think eventually all tickets to all events will be NFTs.
First, inflation was much lower over the last 20 years because they measure it differently. Regardless of which way is "better", using the same metrics as we used to, inflation has been much closer to what it was than what they say it is.
Second, IMO inflation took on a different form when we went from silly monetary and fiscal policy to idiotic policies coupled with fintech and financialization of everything. Rather than the traditional generalized inflation, the too much free money was chasing too few particular assets. And those repeated asset bubbles which are not well measured or not measured at all by traditional inflation gauges were in fact a form of inflation, just not one anyone chooses to count as inflation.
Now that we have progressed beyond the mundane idiotic to truly insane monetary and fiscal policies we are experiencing the worst of both worlds with the strawberry shortcake of the everything asset bubble being topped off with the frothy whipped cream of good old-fashioned, garden-variety generalized inflation.
Not even Arthur Burns nor Jimmy Carter could accomplish that.
There is a big disconnect between inflation and interest rates, and a lot of people seem to think it can persist. I doubt that very many people ('people' including institutions) are going to be buying 30-year Treasuries at 1.81%, or even at 3%, if sustained inflation looks to be in say the 5-6% range.
One thing that may exert an upward push on interest rates, is the worldwide vogue for 'clean energy'. Wind and solar are far more capital-intensive than are conventional power plants; even nuclear is more capex-intensive than are fossil fuels. Much of this will be debt-financed, either by government or by private/semiprivate organizations. There is so much momentum behind this thing now that even if there are Republican wins in 2022 and 2024, there will still be huge outlays for 'green energy'.
Has to be one of your best posts. The gaggle of speculators seemed to flood into crypto, then weed stocks, then back to crypto, to meme stocks, back to crypto and now off to...where? These were the cocktail waitresses in 2007 who had 3 no- doc mortgages and were flipping houses. Now it's Reddit bros. But when you hear half the parents at your kid's soccer game talking about Ethereum, is that necessarily a bad thing? It could very well be. With a "nothing to see here" message being white washed on the walls of the media on the cusp of an election year, my guess is this flow moves to equities, though we know that won't last, no matter how pretty Jim Cramer says the picture is.
Thanks. I did call the top in 2001, but a couple of months prematurely. I am not calling a top here, but I think crypto is in for a world of hurt. Bitcoin could see 12k....(when fear takes over greed, in thin markets they do crazy things)
Lol no way BTC hits 12k
I have a smart friend who's sent me links each month for years, providing every well reasoned take imaginable as to why the market will tank. She stopped sending about 3 years ago. Is there a perma-bear left standing? Oh, and Cramer has lost his fucking marbles.
I saw the SF sale on the news. Visited my neighbor yesterday and she brought me a post card indicating a 900k over asking in my little town. New construction, remodel of an existing home. 2x4's must be getting really expensive. The bay area has been driving folks out due to high prices for many decades now, but the playbook is now showing a new hand never seen before.
Of all the trades in the world I kick myself for, it's BTC at 30k in July. Visual, go-no-go-zone if there ever was one. But hindsight is always easy.
Keeps the posts and links coming! Merry Christmas.
Hindsight is easy. You might get another chance. Not sure I'd buy dips!
I should add, Chinese stocks peaked in February and never looked back. They won't get up off the mat until the real estate issues are solved, and the Big Boss steps off the neck of business.
No bullish thesis for defi 2022? Come on!
Great insight, great article.
You know I've been very bullish many cryptos since March and of course before that. I'm evenly split on whether this next sell off which has already begun of course is a quarterly breakdown or a longer-term thing. A number of differences between 2008 and now, including dependency on OPEC, will come into play but one of the important things people haven't spoken about is a lot of money recently has been pulled out of altcoins and put into the NFT's.
I'm still taken aback at the strength of the stock market and eventually, any rally which is driven by the mindset of "nowhere better to put your money" is destined to at best, pause, and at worst, crash like '87.
That stated, one could do a hell of a lot worse than to heed the words of Milton Friedman.
(For those that don't know, the above commenter Mitch has been trading and involved with markets for years and years.) I am always taken aback at the strength of the stock market I guess. I remember 87 too well but markets always break faster than they rally so you always made more money (or at least it seemed easier) when you carded up stuff on the red side of the card. I wonder how the dependency on OPEC will infiltrate markets? What's the straw that breaks the camel's back this time? In 1987, it was Merchandise Trade which was really a bogus number when you think about it. Information is very transparent now, and lies are found out relatively quickly. So, I think it has to be real for the market to sustain a break. The NFT market is fascinating, real, and a bit crazy. Although, I do think eventually all tickets to all events will be NFTs.
First, inflation was much lower over the last 20 years because they measure it differently. Regardless of which way is "better", using the same metrics as we used to, inflation has been much closer to what it was than what they say it is.
Second, IMO inflation took on a different form when we went from silly monetary and fiscal policy to idiotic policies coupled with fintech and financialization of everything. Rather than the traditional generalized inflation, the too much free money was chasing too few particular assets. And those repeated asset bubbles which are not well measured or not measured at all by traditional inflation gauges were in fact a form of inflation, just not one anyone chooses to count as inflation.
Now that we have progressed beyond the mundane idiotic to truly insane monetary and fiscal policies we are experiencing the worst of both worlds with the strawberry shortcake of the everything asset bubble being topped off with the frothy whipped cream of good old-fashioned, garden-variety generalized inflation.
Not even Arthur Burns nor Jimmy Carter could accomplish that.