The equity losing streak continues. Jobless claims continue to print the same number and Philly Fed data was solid, allowing yields to rise further, with the 10Y at 4.63% and the 2Y settling in at 5%.
Other than that people are still watching Netflix and I guess we'll be releasing gas from the strategic petroleum reserve this summer.
In other news Ray Dalio reminds us what he thinks good money is while also "not" recommending people by gold:
"Good money is both a good medium of exchange and a good storehold of wealth that is widely accepted around the world. The most globally recognized and accepted monies are the dollar......These monies are held in debt assets—i.e., they are debt-backed money—i.e., currency = debt. "
" Since debts are promises to pay money, when a government has too much debt to be paid, its central bank is likely to print money."
" Gold, on the other hand, is a non-debt-backed form of money.....Cryptocurrencies are also non-debt monies. I don’t know of any other types of non-debt monies...."
"When the financial system is working well—which is when there aren’t debt and inflation crises and the borrower-debtor governments printing debt-backed monies are meeting their obligations and paying their interest without printing and devaluing money—debt assets and other financial assets are good assets to hold; on the other hand, when the reverse is the case, gold is a good asset to own. That’s the main reason that gold is a good diversifier and why I have some in my portfolio. "
On the day ahead it's just the dovish Goolsbee from the Chicago Fed.
XTOD: So market went from pricing 7 cuts for FY24 in mid January to pricing just ONE in Nov with dwindling odds of a second cut. Not sure if everyone realizes : that’s a very short timeframe for such a radical reversal. We had anticipated this (that’s what #bigflip2 was about).
Yet it shows that the initial 7 were built on flimsy expectations, actually mostly driven by a policy error by JPOW in Dec 23.
It should keep everyone on their toes when it comes to this new found certainty of higher for longer, probably driven by yet another policy error…. This game is not easy…
XTOD: Once RRP vol hits zero, liquidity will continue to drain from the financial system with continued Balance Sheet Runoff and Treasury issuance. The trend-line is pretty powerful. As it stands, there could be as much as $1.3T drained from the financial system by the end of the year
XTOD: It's a really interesting view that highlights how the military revolution of 14th-16th century redefined the state, its financing needs, and how trial & error led to central banking. As Josh notes, it is no accident that the state today maintains a monopoly on violence and a monopoly on money. Here is his article (2/5) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4759755
XTOD: MMT was taken for a test drive. They called it the “CARES Act.” The failed theory crashed into a wall & burned to the ground as MMT-ers doubled down with more “free” money igniting the mother of demand-pull inflationary spirals. Other than that, the play ended swimmingly.
XTOD: “We are all born original, but many die as photocopies." —Blessed Carlo Acutis, c/o
@stephengadubato
https://x.com/INArteCarloDoss/status/1780991921155920111
https://x.com/ScottSkyrm/status/1780936035381174408
https://x.com/DavidBeckworth/status/1780777665839915069
https://x.com/DiMartinoBooth/status/1780947132637200441
https://x.com/lukeburgis/status/1781089790936453357
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