2023.46 - Soft Landing

IMHO

The Soft Landing narrative is being shoved down our throats.

Soft Landing:
refers to the Federal Reserve's goal of achieving a slowdown in economic growth without causing a recession. This means the central bank wants to avoid any sudden or sharp declines in employment, inflation, and other key economic indicators while still managing to cool down an overheating economy. —Hermes AI

OK, so let's look at some of the key indicator used to measure whether or not the mythical "soft landing" is being achieved:

Inflation: CPI print fell to 3.2% in October (beating expectations of 3.3%). How do we square this with rising prices across so many sectors?

Easy peasy, just change the way CPI is calculated.

In this particular case they changed the way they calculate the health insurance portion of the CPI, causing it to "drop" 34% (they are now measuring insurance company profits instead of customer paid premiums).

Unemployment: Looks like the much awaited "softening of the labor market" is finally happening.

But was the labor market really all that strong to begin with? Mr. Anderson calls BS explaining that part-time jobs and second jobs constituted a significant amount of the "job growth"

Any way you slice it, seems layoffs are coming soon to a business near you

Financial Market Stability: Well, the stock market is dong pretty well, especially if by "stock market" you mean 7 top tech stocks and you ignore M2 expansion (see Fiat News).

And don't get me wrong, I love tech, and am all for it. But these valuations are insane. Nvidia —who just lost $5B to a chip embargo— added the equivalent of 7 years of earnings in 10 days, mind you it was already 178% up this year (560% up since Jan 2020) before this happened.

I'm not saying it can't go higher, nor am I saying I'd short it. I'm just pointing out this is not a serious market.

We could keep going and look at consumer spending, the housing market, credit conditions or some of the other parameters by which a "soft landing" is evaluated. At the end of the day, the numbers will be massaged constantly to support the narrative at least until the election. They may get their "soft landing" but the thing that lands will be a pissed off Dragon of Debt.

Billionaire Ray Dalio chimes in:

We are at a point where we are borrowing money to pay debt service… that means you have debt service encroaching on your spending… if you want to keep spending at that level there is a need to get more and more into debt… and the way that works is it accelerates —Ray Dalio

In addition to a huge existing debt —over $8 trillion of which will need to be re-financed at higher rates within a year —there is a growing deficit which seems to have no breaks.

Bottom line is, the US can't afford positive real rates, which would be worrisome under any circumstance, but is especially bad at a moment when foreign governments —usually big buyers of US Debt— are buying much less of it (Dalio also mentions this).

It's good to be clear for some foreign nations , it's not a matter of whether they WANT to buy Treasuries, they NEED to sell USD denominated assets (including Treasuries) to defend their own currencies against the "Dollar wrecking ball".

There's another buyer who'll be running out of steam soon. The funds in the Reverse Repo facility are being drained rapidly (down $1.3 Trillion since its peak 7 months ago)

So, who's going to buy all the debt the US will need to issue (and at what price?)

Excellent questions on which much of the global economy may hang.

The situation is not the current administration's fault —incompetent as though they may be. This is a problem that's been brewing for a very long time, but their insistence on pushing a "soft-landing" narrative is politics at its worst.

Those who buy the story will be caught off-guard when the economy turns. Don't be one of those people, protect your savings in hard assets.

Bitcoin News

El Presidente

Javier Milei is the new President of Argentina. I'm old enough not to pin my hopes on any politician and I am not well versed on Milei's stance on all things. But I understand he is for property rights and liberty. Many (including the market, which pumped on the news) think he's good for Bitcoin. I don't know about that.

I do know he understands Bitcoin better than most and that Argentina's money and economy are beyond broken, so I'll say this: he makes me hopeful.
"Viva la libertad carajo!"

Pavol Luptak did a good job of capturing my sentiments towards Milei:

Sober Lightning

David Marcus (ex. Meta / Paypal) give a bullish but sober assesment of Bitcoin and Lightning:

• Bitcoin is the only viable neutral settlement asset / network
• Lighning is necessary to make it faster
• Lightning works well for enterprises
• Non custodial / sovereign use of Lightning still needs improvement
• Stablecoins / other assets on Lightning will be critical

Thainance

Binance to open a new exchange in Thailand

Commerz

Custodial services from banks will be commonplace in the future. This is not bad per se, but history clearly shows you should custody your own coins

Bruv

This is embarassing. Brad Mills —a well known Bitcoin Maxi with over 65k followers— is not up to speed on the basics of Lightning. This wouldn't necessarily be a bad thing …if he wasn't an outspoken Lightning advocate.

Long As They Pay…

I've said it since the beginning. As long as the Ordinals / Inscriptions (NFT) crowd pay for their shennanigans, I don't have a major issue with them.

Derivative Work

I'm not particularly a fan of derivatives or leverage. My experience is they're a perfect combination to get REKT. But CBOE will be offering them starting January next year.

"Crypto" News

The jokes often write themselves

Not Sending Their Best

Look, many of us have fallen for one crypto narrative or another along our journey, but becoming an active Hexican is a hard one to come back from.

Ish

Chainalysis is supposed to be the firm that destroys the anonymity in Crypto (for your safety of course). But apparently sometimes they just guess.

Clearing Rubble

Some of the major parties entwined in the latest crypto meltdown are finally starting to move forward

Bankrupt cryptocurrency lender Genesis has reached a $33 million settlement with former crypto hedge fund Three Arrows Capital to resolve $1 billion in claims relating to transfers made before the former’s bankruptcy in January. —Elizabeth Franklin

TETHER

Few words in this space are as polarizing as "Tether". Austin Campbell makes a couple of good points about them:

• Their lack of US nexus is a feature, not a bug (they're part of the "Eurodollar" market)
• It's massively profitable
• If it were unbacked, someone would have already broken their peg through arbitrage

So Close

Should've just bought some Bitcoin.

Fiat News

Not Impressed

If you adjust the stock market returns by taking out monetary (M2) expansion, you might find yourself in the red.

Mirror

This is a good barometer for gaging the extent to which most investment advisors understand what's going on. I understand they haven't wrapped their head around Bitcoin, but they should at least be allocating SOME percentage to gold.

The fact they are not suggests they're basing their portfolio on the experience of the last 40 or so years and not paying a lot of attention to the ways in which the foundations of the system have been deteriorating. They are in for a nasty surprise.

Dystopian News

Exits Barred

Make sure you have a hardware wallet on hand before your country decides to ban them, like Vietnam did.

OK Nimrata

Nimrata Nikki Randhawa, who plays a politician called "Nikki Haley" on TV, says you can't use fake names on social media because National Security. LMAO.

WHO DaF*k?

There is discussion to give The World Health Organization (WHO) —an unelected supranational entity— broad powers through a Pandemic Treaty which give them the right to declare a public health emergency and morph from a guiding force into an authoritarian ruler —including the power to remove Freedom of Speech and Human Rights protections— and allowing them to mandate surveillance and vaccinations. All to combat "public health threats" and to prevent climate change of course.

I strongly recommend you take a few minutes to peruse this thread, which spells out some of the proposed changes.

Criminalizing Curious Giorgio

IN Italy you could be jailed for searching the wrong words in your computer.
Read that again.

A few Trilli

The Pentagon still has no clue where $3.8 Trillion went. It's hard to imagine just how big one Trillion is, let alone almost 4

Here's an image for context, mow multiply by four:

Amateurs

One of the biggest business sagas in my lifetime played out over the weekend.

In what many have described as a coup, OpenAI's board surprise-fired founder Sam Altman for vague (as far as the public could see) motives.

This end-of-day news caused Microsoft —who had pledged but not transferred $80 Billion to Open AI— to shed a few Billion in market cap, rightfully infuriating its CEO. Rumors flew all weekend and it seemed the Board would resign and bring Sam back…

Instead Sam was hired by Microsoft and over 650 (out of 700) OpenAI employees might follow along. Open AI is basically done. Impressive really.

Here's a quick blow-by-blow

WIN

The EU Parliament has voted against CHAT CONTROL, a warantless mass surveillance proposal that would have allowed the EU to scan messages, including encrypted ones. "for possible criminal content".

dr. calle 👁️⚡👁️

Dear friends, today is a great day for online privacy! With an overwhelming 51:2 vote, the EU parliament has decided *AGAINST CHAT CONTROL* proposed by the EU Council. It included warrantless mass surveillance of phones and circumventing end-to-end encryption. The fight is not over yet. We will…

Price News

Bitcoin Surfing

Bitcoin jumped for joy with Melei's election to Argentina's presidency. Seems it may be shaking off its sea legs.

Dip Fishing

Melei's triumph pushed Bitcoin above the $37k mark. The previous week saw it bounce between the full range between $38k resistance and of $35k support (still in play).

Calm Chart

November looks like it will close green.