Are us financial conditions becoming too easy to tame inflation ?
Source: Bloomberg, Steno Research, Macrobond
Below central bank holdings of government bonds...
Greece was excluded from ECB QE under Draghi, but was included in COVID QE, giving it a big boost (pink). Greece then undermined the G7 cap on Russia at every turn, protecting its shipping oligarchs at the expense of the EU. If you can't behave properly, there should be no QE... Source; Robin Brooks
US Treasury issuance has expanded in recent years, sending the size of the US government bond market to a record ~$27tn.
Up ~70% since the end of 2019 & nearly 6x larger than before the ’08-’09 GFC. That is making some Wall Streeters nervous. Source: HolgerZ, WSJ
Debt
Source: Hedgeye
Goldman: "The institutional Bitcoin net long and hedgefund Bitcoin net short lengths are at record levels".
Is another epic squeeze coming? Source: www.zerohedge.com
The race continues...Bitcoin is up a 'modest' 237% in the last 12 months.
Cocoa is up 310% and NVIDIA 350%. Source: Bloomberg, Jeroen Blokland
In recent years, India’s economy has continued to boom, just as China and other fast-growing countries have endured a post-pandemic slowdown.
But, the country has a long way to go to replicate China’s success, after the economic fortunes of the two diverged dramatically some 30 years ago. Indeed, as recently as 1992, the GDP per capita of the 2 countries — which share a 2,167-mile border — was roughly equivalent: today, India’s is roughly one-fifth of China’s reported $12.7k. The International Monetary Fund (IMF) predicts that India made up 15% of global growth in 2023, and, having overtaken the UK as the world’s 5th largest economy in 2022, it’s now on track for 3rd place behind the US and China by 2030. Source: Chartr
As highlighted by Tavi Costa, today’s US infrastructure spending is likely to dwarf what we experienced during the rebuild period post-WWII by the US and the rest of the world.
Escalating geopolitical tensions and growing disagreements among nations are incentivizing countries to bolster their self-reliance in domestic operations. These circumstances are poised to catalyze what could evolve into one of the most ambitious infrastructure initiatives in history, with the potential to be highly inflationary. The last major infrastructure push in the United States occurred in 1956 with the National Interstate and Defense Highway Act under President Dwight D. Eisenhower. Initially budgeted at $25 billion, equivalent to approximately $207 billion in today's currency. This initiative pales in comparison to the recent Infrastructure Investment and Jobs Act, which authorizes government spending nearly six times that amount, totaling $1.2 trillion. The chart below also considered the Inflation Reduction Act passed in 2022, expecting a significant portion of those funds to be directed towards new infrastructure projects, including those associated with the green revolution and other initiatives. Sources: Tavi Costa, Crescat Capital, Bloomberg
