Positioning Wars
Flows, IPOs, Max Stupid update, Trump, MSOS & other fun stuff!!!
“Value is nothing; Positioning is Everything.”
Old monkey proverb
Value is in the eyes of the beholder; Positioning is in the bags of the bagholder.”
Le Shrub, from “Reminiscences of a Shrub Operator”
RATE CUT WARS
Summary of the week: “That little outfit that sets interest rates”, otherwise known as the Federal Reserve, told us they really want to cut rates. But its other Central Bank friends around the world told us they also really want to cut rates. Everyone wants to cut rates! (except Japan, but they are on a different planet).
The ECB wants to cut rates before the summer and the BOE said that “Britain’s economy is moving towards the point where the Bank of England can start cutting rates”. For those that don’t speak “British English”, let me translate: “mate, our economy is buggered, the plebs are livid, we need to cut rates in a jiffy otherwise they’ll come after us with pitchforks”.
And then there’s the SNB. Bless. They just shocked everyone and cut rates, like there’s a First Prize for whoever cuts first. Jokers.
Japan raised rates and just ended negative rates after what seemed forever. It took 5% annual wage increases for them to get a move on. I remember as a young shrub when the Japanese Debt was the scariest thing in the world. Now the BOJ owns the whole lot and is inflating it away. Genius.
Guess what is the scariest thing in the world today? THE US DEBT!
I wonder how that will end. The suspense …lol!!! (for the kids at the back: “they gonna print again, mate”).
MARKET REACTION
Since the Rate Cut Wars have officially started, you would expect stores of value to outperform as even the last monkey figured out that the Central Banks will eventually devalue their currencies.
So how did the most credible stores of value perform since Fed Day?
I can picture Sam Bankman-Fried laughing in his cell that, like Thanos, he has balanced the Monetary Universe with proper stores of value.
You guys are laughing, but imagine in the next crisis when the Fed will be buying not only MBS, CMBS, CLOs, Private Credit, SPACs but also Elizabath Whoren, Retardio, Dogwifhat etc.