Sweet Rotation
Reminiscences of July 2024
With so much nonsense going round, I don’t even know where to start. Here we go:
“Trump considered re-appointing Yellen as Fed Chair”
Game recognizes Game!!! And who else can better play this Game than our favorite financial criminal mastermind, aptly disguised as a nice old lady? After all, she wrote the playbook. We are just following in her footsteps.
“Zervos among 11 candidates being considered for Fed Chair”
Zervos is the perma-bullish Strategist of Jefferies, known for coining “Spoos & Blues”. I nicknamed him QEsus, for obvious reasons. If he gets the Fed Chair, just buy Spoos & Blues, short the Dollar and chill.
After the CPI print, Bessent said that “if you look at any model, [rates] should probably be 150-175bps lower”
Errr, I pulled up a chart of the CPI-ex-stuff-the-Plebes-need , and it’s still above 3%. Even worse, that line looks like it wants to go higher. Inflation re-accelerating would really put a spanner in the works …unless we make up the numbers going forward…. just like the previous guys 🤭
To give credit to Bessent, if there is one country that’s REALLY smoking something it’s JAPAN! Bessent just called out the BOJ that they are behind the curve, and rightly so. Lets do some simple mafs:
The US has a 4.5% rate with 3% inflation
Japan has a 0.5% rate with 3% inflation
—> I’m with Bessent on this one. You can argue all you want whether the Fed should cut 50bps or 150bps, but the BOJ is seriously taking the mick here!
But there’s a liiiiiittle problem …