Suggest that you do a corresponding post on your thesis for US investors who are likely very long dollars. Perhaps being overweight DM ex US and EM equities plus holding short-duration US bonds and gold as good fit to your thesis and becoming more so gradually as your thesis plays out over the next 6-24 mos.?
If this were a debasement trade, wouldn't bonds be in the toilet?
Michael Howell had an excellent piece this week saying "Fed liquidity floats bitcoin, Chinese liquidity floats PMs"... With China pumping, and doing even more so this year, and with the US/ Western economies reaccelerating (liquidity drain) it does kinda check to me.
As you said "none of that is happening yet". Can the dollar fall much more while those fundamental flows remain dormant? Seems like a good place to buy from a r/r perspective. Thoughts?
Thank you for the article Alex. Great as usual. On the dollar debasement though, if you plot treasury interest payment to annual fed tax receipts or budget, the % is looking alarming again on a multi-decade context. To me, this is what could drive financial repression in the US, which can probably arm twist other countries into accepting a weaker usd relative to other currencies, thereby inflating away the debt? (Granted I’ve not looked at int pmt vs tax receipts for other countries yet)
“Foreigners hold ~$20t of US stocks and $15t of US debt.” - doesn’t line up with chart, possibly flipped?
Simple and fairly clear piece, agree with the importance of connecting narrative to the right trade expression ie SPX/USTs (asw imho) and not DXY. This has been the biggest source of my alpha over the years.
Disagree re healthcare / defence meme, kind of a nonsense statement as these are not mutually exclusive budget lines. Health isn’t free in EU, the insurance cost is somewhat socialised and more realistic; just look at national health outcomes & health spending per capita. On the defense side, sort of agree on the underspend, but it’s plagued with poor outcomes if not outright petty corruption, plus the (partial) reality that 21st C war is not really kinetic, it’s mostly cyber / tech / econ.
Giving more incentives to do the manufacturing investment in the US. Better business case with the combination of tarrifs and lower dollar to export excess plant capacity to offset the higher input costs
In this situation I was not thinking at the nuclear option, just adding pressure yuan and pboc
Your understanding of China, is quite limited.
the comunists will fall. he's right.
On this, good luck operating under this principle. Does modern China have anything to do communism?
Winnie the Grand Poobah might be falling as we speak
you read too much twitter and watch too much YouTube videos.
Suggest that you do a corresponding post on your thesis for US investors who are likely very long dollars. Perhaps being overweight DM ex US and EM equities plus holding short-duration US bonds and gold as good fit to your thesis and becoming more so gradually as your thesis plays out over the next 6-24 mos.?
If this were a debasement trade, wouldn't bonds be in the toilet?
Michael Howell had an excellent piece this week saying "Fed liquidity floats bitcoin, Chinese liquidity floats PMs"... With China pumping, and doing even more so this year, and with the US/ Western economies reaccelerating (liquidity drain) it does kinda check to me.
that's my point
so rather than sell dollars, sell assets denominated in dollars
As you said "none of that is happening yet". Can the dollar fall much more while those fundamental flows remain dormant? Seems like a good place to buy from a r/r perspective. Thoughts?
Thank you for the article Alex. Great as usual. On the dollar debasement though, if you plot treasury interest payment to annual fed tax receipts or budget, the % is looking alarming again on a multi-decade context. To me, this is what could drive financial repression in the US, which can probably arm twist other countries into accepting a weaker usd relative to other currencies, thereby inflating away the debt? (Granted I’ve not looked at int pmt vs tax receipts for other countries yet)
“Foreigners hold ~$20t of US stocks and $15t of US debt.” - doesn’t line up with chart, possibly flipped?
Simple and fairly clear piece, agree with the importance of connecting narrative to the right trade expression ie SPX/USTs (asw imho) and not DXY. This has been the biggest source of my alpha over the years.
Disagree re healthcare / defence meme, kind of a nonsense statement as these are not mutually exclusive budget lines. Health isn’t free in EU, the insurance cost is somewhat socialised and more realistic; just look at national health outcomes & health spending per capita. On the defense side, sort of agree on the underspend, but it’s plagued with poor outcomes if not outright petty corruption, plus the (partial) reality that 21st C war is not really kinetic, it’s mostly cyber / tech / econ.
Really looking forward to your post on AI agent framework
Good luck with that lol
Thought of the possibility the dollar is weaponized to pressure RMB and Chinese economy and facilitate reshoring and polishing balance sheet?
In the pre-kinetic war phase - seems like the US is already in economic warfare modus and "shaping the board" before any action happens
what do you mean by 'facilitating' reshoring? It's not like China is blocking it.
weaponizing the dollar is nuclear option if they go hot on Taiwan imho
Giving more incentives to do the manufacturing investment in the US. Better business case with the combination of tarrifs and lower dollar to export excess plant capacity to offset the higher input costs
In this situation I was not thinking at the nuclear option, just adding pressure yuan and pboc
Is the demand for US financial assets a function of reserve currency or a function of financial returns?