“As I always had great admiration for nature -the true one, not the one that is imposed by force since violence is that which violates the natural order, as the Greek philosophers already knew- I was very suspicious of this supposed enemy of the human being. I always knew that nature is infinitely wise -more than human reason that doesn’t even know how far the universe reaches- and dedicated to the growth of life, particularly of man.”
06/27/2022 - Alejandro Tagliavini – “No more questions, Your Honor”
06/13/2022 - John Collison in Conversation with Stanley Druckenmiller
06/03/2022 - Alejandro Tagliavini – Many will be left behind…
“The “old world”, where politicians build borders -create «international» conflicts- and impose “laws” with their monopoly on violence (the State), is inevitably being left behind, simply because borders and violent impositions are unnatural. Of course, this will take years and it will not be a revolution, but – like everything in the real, natural world – a slow evolution, a maturation. But beware, beyond the fact that the digital world is still incipient and, therefore, with errors and deceptions, many are being left out because the technological development that drives this «new world» is accelerating by leaps and bounds to the point that an enormous most don’t even have enough time to catch up.”
05/26/2022 - Alejandro Tagliavini – Disrupted markets (BTC, so bad?)
“Obviously, and therefore the great fear of the establishment, the Defi replace traditional banks -which today operate in an oligopoly with central banks- favoring people who interact directly without having to go through the banks and pay their commissions, but that the commissions are distributed completely among the individuals who interact in the market.”
05/16/2022 - Daniel Lacalle – A Choice of Global Financial Meltdown or Prolonged Inflation
“One day someone may finally understand that supply shocks are addressed with supply-side policies, not with demand ones. Now it is too late. Powell will have to choose between the risk of a global financial meltdown or prolonged inflation.”
05/05/2022 - Dr. Albert Friedberg on Inflation, Gold & Investing in the Current Challenging Environment
“A word about gold: The freezing of Russian currency reserves and the reserves of Russian oligarchs has given the coup de grâce to an international monetary system that started as a gold standard, morphed into a gold exchange standard (1922), and morphed further into a convenient dollar standard (1971). For international transactions, we may soon go back to a new gold standard or to a commodity standard of sorts. But no proud sovereign will again maintain its last-resort reserves in the currency of its potential rival or keep them in its banking system. The next step in this evolution will surely be taken by China, the holder of 3 trillion dollars’ worth of currency reserves. When it does, gold will no longer be trading at $2,000/oz., or $2,500/oz., or even $3,000/oz. It stands to reason that it will trade at a multiple of the latter.”
04/28/2022 - Yra Harris – Into the Weeds on Yen/Yuan
“Fast forward to present day where the YEN/YUAN is 19.60 and DOLLAR/YEN is at 128.55. Can the FED continue on the path of aggressive rate hikes and balance sheet reduction? Will the Chinese allow the YUAN to strengthen and blow out the 2015 high of 20.25 YEN/YUAN? (Note: It matched that level three weeks ago.) Will a strengthening dollar result in a MASSIVE DELEVERAGING as borrowers seek to raise dollars in an effort to avoid default as U.S. rates rise, excess liquidity ebbs and pressure to avoid default rises?
THE MOST IMPORTANT QUESTION REMAINS: EXACTLY HOW MUCH LEVERAGE REMAINS IN THE SYSTEM due to the liquidity programs of the world’s major banks? Most of all, can XI tolerate a global and domestic slowdown simultaneously? All I know is if the Japanese had asked for help last week and Yellen said NO it was a great blunder as the Japanese under Kuroda are pledged to the foolish Yield Curve Control, which caused such havoc in Australia. How do you prevent YEN weakness and all its impacts without global intervention? Nothing is ever as it seems.
04/28/2022 - Alejandro Tagliavini – The cryptoverse is unstoppable, but still incipient
” It is that in this world of blockchain, as is the case of Bitcoin (BTC), no one really governs -in the sense that no one imposes their criteria or will on another no matter how «fair» it may be- but everyone is free to take the decisions they want with the only requirement of being -although completely anonymous, according to each one’s wishes- transparent and true and validated, in all cases, by the simple majority of hundreds of thousands of computers spread throughout the world.”
04/27/2022 - Yra Harris – The Meaning of the Yen/YUAN Cross
“The level of the YEN/YUAN has significance in as will be covered in a follow-up post but if the YUAN is beginning to depreciate it will cause pain for world markets as a stronger DOLLAR coupled with rising interest rates will be a drag on emerging markets saddled with massive cheap DOLLAR debt. On Tuesday the dollar index reached a two-year high of 1.0232, matching the March 2020 levels when the FED had to open DOLLAR swap lines with nine central banks it didn’t previously have a relationship with to ensure enough dollar liquidity for the global financial system, resulting in a decline in the DOLLAR of 12% over the following nine months.
The U.S. Treasury and the FED need to be cognizant of the vast increase in dollar-denominated debt and the systemic stress brewing with a rising DOLLAR COUPLED WITH RAPIDLY RISING, MARKET-DRIVEN INTEREST RATES.”
04/21/2022 - Alejandro Tagliavini – Why does the dollar “blue” go down?
“Now, the problem for emerging countries like Argentina is that US bonds can become a tool for sucking in dollars from the world, since it will not be easy to find other investments that yield more than 3% and at the same time are as safe as these bonds.”
04/18/2022 - Jim Bianco on Why Central Bank Digital Currencies are Doomed to Fail
MacroVoices Podcast with Jim Bianco:
04/11/2022 - Yra Harris: Time to Escalate and Deescalate the Fed and Putin?
“The FED has a potential problem in how to unload its stockpile of mortgage-backed securities without breaking the robust residential real estate market as rates are speeding toward 5%. When the FED sells $35 billion of MBS a month how much higher will MORTGAGES rise as buyers wait to receive even higher yields. (Or, as Chris Whalen suggests, a potential MBS buyer strike.) My point with the FED and why I come to bury Powell and not praise him is that the central bank kept increasing reserves even as the negative economic effects of the COVID pandemic were proven to be contained. The massive fiscal stimulus from Trump and Biden administrations should have constrained the monetary stimulus that has created enormous losses for BOND BUYERS during those 24 months. As Jerome Powell would says, through NO FAULT OF THEIR OWN.”
04/07/2022 - The Roundtable Insight – Kushal Thaker and Peter Boockvar on the Economy and the Financial Markets
04/05/2022 - Alejandro Tagliavini – Dólares, “agrodólares”, hambre y “staking”
“Cuenta Invecq que, entre los meses de enero y marzo, el complejo cerealero y oleaginoso ingresó al país el récord de más de USD 7.900 M. En promedio, entre los años 2010-2020 para el mismo período, la liquidación de exportaciones sumaba unos USD 4.400 M. De modo que el 2022 arranca con un ingreso de divisas del agro de un 80% superior al promedio de la última década, y después de un 2021 que ya había sido récord. Es decir, que el sector crece sostenidamente va camino de un máximo en este año, superando los USD 32.800 M del año pasado.”
04/04/2022 - Yra Harris: Are Central Banks the Grand Illusion?
“Central bank interest rate policies are not one-dimensional and may be BEGGAR THY NEIGHBOR as well. While the SNB breaks no G-7 strictures (since it’s not a member), its regarded status makes its decisions critical for the underpinnings of an equitable global financial system. Oh well, Larry Fink proclaimed the end of GLOBALIZATION so everyone for themselves?”
03/28/2022 - Yra Harris – Is Globalization Dead?
“It has been the benefit of global capital chasing billions of low paid workers that have worked to keep pressure on wages throughout the developed world. If Russia’s invasion and NATO‘s response leads to the to a suppression of global capital flows then interest rates, and especially EQUITY MARKETS, are in for some periods of great volatility. It has been the combination of “cheap” capital coupled with low-wage labor that has driven up equity values around the world. In 2013, Thomas Piketty captured this in his simplistic equation: R>G, meaning that return was greater than growth.
If Posen, Marks and Fink are correct the coming years will experience a dramatic repricing of P/E ratios as global capital loses it mojo. While there’s some glory in the use of sanctions, I advise holding off on popping the champagne corks. When will capital feel the pain of lower returns and higher interest rates? I have timetable but it is something to be concerned about. It certainly makes the FED‘s task of a neutral interest rate very difficult, especially as it also attempts to SHRINK its balance sheet in an effort to deleverage the financial system. Globalization has been great for equity capital, but I wonder if Daleep Singh has factored this into his sanctions formula. The world as seen from NOTES FROM UNDERGROUND rests on the premise that 2+2=5. Any answers for there certainly are a plethora of questions.”
03/12/2022 - Implications on Inflation and Commodities from the Geo-Political Events
“Russia is a major supplier of the most wanted raw materials including: palladium, 46% of global production, platinum 15% of global protection as well as gold, oil, natural gas, coal, nickel, aluminum, copper and silver, as well as wheat.”
03/09/2022 - Cryptocurrencies (and the metaverse) a universe for peace
” In other words, cryptocurrencies -with all the instability typical of a new and still incipient world- are increasingly presented as an alternative to peace, that is, to evade sanctions and violent actions by governments that can do little to control them. , they can eventually control the people who use them, but not the cryptocurrencies themselves.”
03/07/2022 - Yra Harris: A Quick Hit On the State of Chaos
“The best things going right now for the global financial system are the FED‘s dollar swap lines to many banks and the Foreign International and Monetary Authorities Repo Facility, which the G-30 pushed Chair Jerome Powell to make permanent. This provides generous backstop for foreign institutions, which is important because something is definitely ROTTEN in DEMARK, FRANCE, GERMANY, ITALY, et al. What it is I don’t know but at this point, watch the European system. All acts of war and the sanctions will deliver unintended consequences. Be patient and let the false headlines be played by those relying on the newest expert to fill the airwaves. And also, let’s see where the FED goes in response to political systemic risk.
We’re only just beginning to evaluate and assess but the longer this goes on the more damage will be done as FOOD becomes scarce as countries are forced to protect their populations and four million barrels of Russian OIL go searching for buyers. Upon listening to the Chair of the House Agricultural Committee David Scott at Powell’s testimony last week I wouldn’t be surprised to see the Biden White House move to limit U.S. ag exports if prices continue to push higher and worries of scarcity arise. The optics of headline inflation are harming the Dems’ chances in November. As always in politics, OPTICS provide an incentive when policy is failing.”
02/23/2022 - Alejandro Tagliavini – NFTs or the real (and good) new normal
“Over the past week and early this week, Bitcoin (BTC) saw unstable pendulum swings, moving in a range and closing in a downtrend just like most altcoins. Factors such as geopolitical tensions in Ukraine, rising global inflation, speculation on interest rates and its supposed correlation with the US stock market are affecting its price.”