If you haven’t watched it, I recommend the Milton Berg interview. The man is well-informed and passionate. Great interview @Jack Farley
Stefan Clulow 560 Investor
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Tomorrow is a big day for the EU carbon futures market, with the European Commision due to publish the “Fit for 55”legislation. A request to @Raoul Pal and the powers that be at RV: Could you please bring back Lawson Steele for a discussion of the EU ETS market once the legislation is out and the market has digested its implications. Many thanks.
Apropos @Ralph Humphrey’s post on the “assets” “backing” Tether and the resulting discussion in the comments, Grant Williams posted today a great interview and his monthly newsletter for free on Tether, the principals behind the scheme and its potential implications as the GOAT ponzi. Worth the listen and read:
I don’t think I’m alone in disliking one aspect of the UI for the RV iPad app. The app is a huge improvement from the last one. At least I think it is. I can’t really tell because I don’t really use it. I used to use it almost all of the time, but now the UI sucks.
@Travis Kimmel @Weston Nakamura The app should default to the horizontal viewing mode. This issue was flagged a while back amidst a series of complaints about having to view videos in vertical mode on the then new iPad app. Exchange members discovered a workaround - the video goes vertical after you first are able to find it and start it in the horizontal mode and then find the right button to make it full screen. That was a pretty good fix, but its not a fix. Few of us read iPads using the vertical mode. I think the UI should baseline to that user experience. The current iPad looks good, but its less usable than it could be.
I’d run a poll on this, but I haven’t figured that out. If someone can put a poll together, I’d bet them $5 on good odds that the horizontal viewing mode is most popular.
I had some thoughts on the Fed’s actions today (below), but want to say a word first about Ed Harrison’s departure.
I have a mixed reaction to Ed Harrison’s plan to move on from RealVision.
I first encountered Ed in the very early days of Zero Hedge in 2008 and then watched his show Boom Bust on RT. I read his articles when I found them post-GFC, but got a whole new view during the dark days last March when the world was ending and I discovered RV (via an RV interview of Dan Zwirn posted on Thomson Reuters Eikon - another fellow worth listening to) and Ed’s Creditwritedowns newsletter (which was money well spent).
It has been a treat to see Ed weigh in on RVDB these past 15 months and have informed and thoughtful conversations with interesting people about interesting events, ideas and observations. Whoever Raoul brings in to fill the deep hole from Ed’s departure has a deep hole to fill.
Good luck and best wishes, Ed. I think I speak for us all when I say I’m looking forward to your next venture.
On the day’s events:
Today we got the Fed’s statements on monetary and economic policy. I found Powell’s press conference and Q&A repetitive and guarded, almost prevaricating. As noted in today’s RVDB, its clear that no one at the Fed (and probably anywhere) has a clear view of when tapering will start or if we get a full taper before the rate hikes kick in.
The only thing that came in loud and clear to me is the the Fed won’t normalize if it would result in even a single sparrow falling from the sky. I don’t think Powell wants to cause the slightest pain to bond holders, workers and “non-participating” potential workers, the poor or equity holders, not to mention all the politicians, pension plans and wealthy people.
The Fed has a tiger by the tail and seem for practical purposes only to have a general plan to keep on rocking with the printers and expanding their special temporary programs repertoire.
Does anyone think that the Fed ends QE and hikes twice by 2023? NFW. The whole system would stutter and start to slow down if they start to think about taking their lead foot off the gas, as we saw today. What are the odds we even get past the first or second QE reduction before we see a repeat of Powell’s ignoble retreat in 2018/19?
Treasury and the Fed are going to try to hold nominal values flat to higher and I think the risks lies in whether inflation continues to rise or fall when we’re beyond base effects and whether the dollar goes up or down and what this means for nominal asset values and hedging costs to derisk and get out of Dodge.
Treasury also has lots of bonds to sell, if only to keep the lights on, and I think everyone now gets that a growing marginal bid for bonds is from buyers who want to use them not for “saving”, but as repo funding instruments for cash management and leveraged speculations. The Fed wants the private sector and foreigners to buy them, not just the Fed.
It’s better for everyone if the status quo keeps going on as it is with a tilt towards mass capital investment and good jobs and good times for willing men and women.
I think that is basically the policy we’ll see pursued and will have to live with. It will be like 2009 to 2020, but from a different and arguably worse base and we’re on the path at about 2011 right now.
Copper supplies are arguably (clearly?) insufficient to electrify the world to the extent that everyone seems to want. However, a novel technology has been developed, after decades and decades of trying by engineers and metallurgists, to recover previously unrecoverable and uneconomic copper deposits using existing processing capex and workflows. It probably puts a dent in @Raoul Pal ‘s notion that copper could be an exponential asset en route to the Big Green Future…
Mitsubishi Corporation (those Japanese trading houses pop up everywhere these days), the Waltons and the Pritzkers seeded it and now BHP and Freeport have invested and populated the board with the ex-CEOs of BHP and RIO, the ex-CFO of Xstrata and other industry execs. This looks like a serious big deal:
Jetti (and its copper processing tech) is one to keep an eye on. It will be interesting to see how copper prices and previously uneconomic copper deposits are recharacterized and revalued on miner balance sheets when they adopt this technology. Tech like this also underscores the underpriced optionality in the royalty players’ structured royalty and streaming deals. Interesting stuff.
I’m looking forward to the interview with the VW technology strategist tomorrow. RV brings in a great many fine financial types, but I think there is value from hearing the candid views of industry participants. For example, the global miners have great content on their websites, like this 2020 review and outlook for commodities from BHP. If RV can find the author of this report and put him in front of a knowledgeable interviewer, we’d all gain a better view of the commodity markets from an industry perspective.
Great Daily Briefing tonight. Powell really does look like he is playing chicken with the markets. The elephants in the room here are the following surreal and grim facts (i) Treasury has to issue new debts and refinance old ones to the tune of a gazillion gazillion dollars between now and eternity, and (ii) yields are going higher. YCC with “American characteristics” seems inevitable. I think the Fed wants to pin the YYC-controlled curve at lower rates across the curve and will wait for a mini-crash to reset when rates are lower and the dollar higher. And then Treasury and the Fed will put their foot on the gas and let it rip into these completely destabilized markets. Against all this, equity vol is dropping. How low will the VIX go? At the same time, Virtu Financial - a public market making firm and a great early indicator over the past year of future volatility and mayhem (expressed via a pure play P&L derived from trading volumes and the size of bid/ask spreads), hit a new high this week. Vol looks like its cheap, although it may get a bit cheaper. Hold on to your hats!