extreme FX and interest rate volatility paints a picture of 2 very different worlds. which shall we step into? Let’s start with a question. If Japan has rock bottom risk-free rates, shouldn’t its companies command higher multiples? Shouldn’t Japan be a global hub of innovation - because low rates and structural deflation allow for investment in growth? To the first question - Japanese companies certainly do not command higher multiples. Japan’s TOPIX Index has a forward PE ratio is 12, while it has a 30-year bond yield of 1....

Previously I wrote about the evolution of media and how it ends in a poorly defined digital Colosseum. Here I write in detail about how/ why that Colosseum will entail the creation of financial eSports Financial markets are unique from politics, science, or other arenas of the media because they are accompanied by Timeseries. For the most part these timeseries consist of a price which implies a value (i.e. what you’re paying the price for) and an expectation (what that price implies - relative to historical prices, relevant comparables, consensus values and so forth)....

one last musing before the descent into the digital colosseum Digital assets and the political media have wrapped around each other, a double helix of increasingly epic proportions. It has not always been like this, but a glimpse of where we are today, before discussing the portal that’s opened behind my casomputer chair that I am about to step through - Central bankers posting their thoughts on the daily to the derision of random armchair Austrian economists on the internet....

A 35 point summary of how I define speculation, its 6 core components and thoughts around implementation Investors are not traders. Investors focus on the capital return potential of assets, adjusted for a discount rate. Traders focus on capturing the movement of assets. An investor may trade, to swap into a more appealing capital return or asset. But a trader would rarely invest - as that would suppose capital returns made up a higher percentage of an asset’s return profile than its movement....

reflections on recent price action, ARK investments, Palantir, and crypto

migration crises lead to populism lead to asset confiscation leads to crypto going up

Another day in the trenches Trades Going to load up on Snapchat. Capitulation on Baltic Dry index combined with monster guidance out of Macys makes me sympathetic to supply chain issues highlighted on their quarter being fixed Capitulation move in Turkish equities makes me favor a long Japan position hedged with EM debt. The risk premium should be compelling. Taking down some of the oil risk with a GBPCAD short as European problems/ destabilization / weak hand in brexit negotiatinos make that appealing General Summary Numbers out of Baba and Baidu make it look like China is actually going into a recession....

Thoughts

Responding to China data etc etc Trades I like owning EM today on the other side of some dow futures. Boeing not going to lift Dow again today, if anything we’re going to have dovish surprises and overnight move in China feels like it derisks EM into year end and could see ppl chasing it. I like that Dow doesn’t have Tesla in it / could see it being lagard / pain trade on other side of financials (remember Brainard likes the idea of forcing banks to cut divs) Also like owning fixed income futures (namely 5 years)....

Thinking about best risk reward opportunities General Market Take The week got started out with god awful Japanese data, and the drumbeat of war in eastern Europe. Given absurd dovishness of Central Banks and the fact Lagarde will be speaking all weak (she is going to be dovish) - it’s going to be hard to see the rate hike narrative last in spite of extreme inflation. This is obviously an explosive combination given the fact inflation is likely to be well above the 5% target throughout much of 2022, a clear legal violation of the Fed’s mandate....