Here are the 7 most important charts in global macro right now.
Together, they hint at what's next as the banking crisis broadens into other segments of the financial landscape.
#1 - the elephant in the room right now is Yield Curve Inversion. h/t @DylanLeClair_
Together, they hint at what's next as the banking crisis broadens into other segments of the financial landscape.
#1 - the elephant in the room right now is Yield Curve Inversion. h/t @DylanLeClair_
As a reminder, when the banking crisis hit a couple weeks ago, bond yields suddenly dropped.
(The bond market realized that the Fed's tightening game is up - they will have to cut rates this year.)
Rates have peaked. QT is dead, QE is back.
(The bond market realized that the Fed's tightening game is up - they will have to cut rates this year.)
Rates have peaked. QT is dead, QE is back.
#2 - If you zoom in on the 10y and 2y UST yield inversion, you see that it appears to be closing now, as a result of the last few weeks.
While this seems like good news, every major recession in modern history has begun in earnest once the yield inversion resolves. (aka, soon)
While this seems like good news, every major recession in modern history has begun in earnest once the yield inversion resolves. (aka, soon)
#3 - While the BTFP program has backstopped banks holding underwater bonds (but don't call it a bailout)...
these same mechanics have created unrealized losses on balance sheets in other industries.
Insurance companies have seen CDS prices jump (which pay off if company fails).
these same mechanics have created unrealized losses on balance sheets in other industries.
Insurance companies have seen CDS prices jump (which pay off if company fails).
#4 - The commercial real estate (CRE) sector has similar problems, amplified by demand drop from work-from-home shift.
$2.5T in low-rate CRE loans are coming due in next 5 years, will be painful to refi at today's high rates.
Many CRE holders will go under, unless Fed helps.
$2.5T in low-rate CRE loans are coming due in next 5 years, will be painful to refi at today's high rates.
Many CRE holders will go under, unless Fed helps.
#5 - As high interest rates create crises in these (and other) industries, Fed assistance will have to ramp up.
How much will they print to stimulate out of this crisis? On track for $2T already, will it be $10T like with Covid?
If so, that's how we get 10%+ inflation.
How much will they print to stimulate out of this crisis? On track for $2T already, will it be $10T like with Covid?
If so, that's how we get 10%+ inflation.
#6 - What assets do well during periods of high inflation?
Well, in the 1970s' stagflation, gold was the star performer.
Well, in the 1970s' stagflation, gold was the star performer.
#7 - But now, because of the combination of the current macro backdrop + Bitcoin's unique properties, the star performer during this decade's inflation could be #Bitcoin
To learn why... check out my latest Bitcoin & Macro update, released today.
And add your email to the list to get my future updates!
jessemyers.substack.com
And add your email to the list to get my future updates!
jessemyers.substack.com
Some folks who have informed the above analysis: @FossGregfoss @LawrenceLepard @LynAldenContact @PrestonPysh @DylanLeClair_ @BitcoinIsSaving @CarlBMenger @VailshireCap @real_bill_gross (and the legend, Paul Tudor Jones)
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