Read on Twitter
THREAD
1) Long Debt Cycle @RayDalio
2) Global Dollar Shortage
3) April Report "The Unfolding" @RaoulGMI
4) Depression? Recession? Stagflation? Bullish?
5) Real Estate Values During Depression
6) Gold, Cash, and Bitcoin
1) Long Debt Cycle @RayDalio
2) Global Dollar Shortage
3) April Report "The Unfolding" @RaoulGMI
4) Depression? Recession? Stagflation? Bullish?
5) Real Estate Values During Depression
6) Gold, Cash, and Bitcoin
1/ In @RayDalio's perspective, we are at the very late stages of the long term debt cycle. These long term debt cycles typically take 50-75 years to play out and this one began in 1945 when World War II ended and we began the US dollar-dominated world order.
2/ Or in the words of @RayDalio, "Right now, the world’s major central banks have the least fuel in their tanks since the late 1930s so are now in the later stages of the long-term debt cycle." https://www.linkedin.com/pulse/help-put-recent-economic-market-moves-perspective-ray-dalio/
3/ "Because they come along about once in a lifetime most people aren’t aware of them; as a result they typically take people by surprise, which hurts a lot of people." -
@RayDalio
https://www.linkedin.com/pulse/money-credit-debt-ray-dalio/
@RayDalio
https://www.linkedin.com/pulse/money-credit-debt-ray-dalio/
4/ And as we come towards the end of the long debt cycle the fed has increased their total assets / nominal gdp similar to how they did at the end of the last cycle.
Chart @DTAPCAP
Chart @DTAPCAP
5/ All of this stimulus in response to covid19 will lead to the largest US federal budget deficit since WWII.
Chart @DTAPCAP
Chart @DTAPCAP
6/ Corresponding with the end of the long cycle, we also see an all time low in the value of Real Assets vs Paper Assets.
Chart @DTAPCAP
Chart @DTAPCAP
7/ And this wealth in paper assets of the stock market is extremely concentrated at the top.
Chart @DTAPCAP
Chart @DTAPCAP
9/ This is all happening on the backdrop of an ongoing global dollar shortage. So despite unprecedented printing by the fed, the dollar continues to rise.
Chart @RaoulGMI
Chart @RaoulGMI
10/ This leads to a bloodbath of currencies versus the USD, which has not gotten any better since the fed began the money printing.
Chart @RaoulGMI
Chart @RaoulGMI
11/ Further reading on the dollar shortage concept below by @dlacalle_IA https://mises.org/wire/why-world-has-dollar-shortage-despite-massive-fed-action
12/ And a thread about the dollar shortage by @nlw https://lrs.substack.com/p/long-reads-sunday-91
13/ And a strong dollar is not good for US equity prices.
As seen in March 2009, when the US stock market bottomed as the dollar topped.
As seen in March 2009, when the US stock market bottomed as the dollar topped.
14/ The fed has taken unprecedented monetary and fiscal action this time--and quickly in comparison to the 2008 GFC.
15/ With how much quicker and more aggressively the fed has responded this time there is cause for optimism for bulls. Central banks clearly did not do enough in 2008, global equities fell right through the floor of their money printing efforts.
@TaviCosta
@TaviCosta
16/ As @RaoulGMI has outlined in his April report "The Unfolding", the financial data the world is seeing due to covid19 is the type of generational demand shock that many will only experience once in a lifetime.
https://twitter.com/RealVision/status/1253433996723187712
https://twitter.com/RealVision/status/1253433996723187712
17/ And by most measures, he's right, the financial data is staggering.
18/ So lets pull up some charts from the Great Depression to get a better understanding of what happened then.
If you had bought the first rally of the 1929 downturn, your investment would drop 85% over the next two years and it would take twenty-three years to break even.
If you had bought the first rally of the 1929 downturn, your investment would drop 85% over the next two years and it would take twenty-three years to break even.
19/ In other words, the money you had in the DJI in January of 1930, wouldn't break even again until October of 1952.
20/ Harvard shared some research about how Manhattan real estate values were impacted during the depression. In short, real estate lost 60% of it's value and took thirty years to return to break even.
https://www.hbs.edu/faculty/Publication%20Files/Anna_tom_59f6af5f-72f2-4a72-9ffa-c604d236cc98.pdf
https://www.hbs.edu/faculty/Publication%20Files/Anna_tom_59f6af5f-72f2-4a72-9ffa-c604d236cc98.pdf
21/ Meanwhile, central banks have spent the last decade increasing record net purchases of gold and many institutional investors are sitting in cash positions not seen since the GFC.
22/ So is the end of the long debt cycle? Are we about to go through a recession, depression, stagflation, or was that the bottom?
No one knows for sure, but headlines like this are never good.
No one knows for sure, but headlines like this are never good.
23/ Nor is the influx of tens of millions of brand new traders / investors on-boarded via apps like Robinhood. Nor do markets tend to bottom with consumer expectations of record optimism.
Chart @EconguyRosie
Chart @EconguyRosie
24/ While all assets might take a tumble with another leg down of the stock market, there are more and more reasons to be bullish about Gold and Bitcoin.
And @RaoulGMI does a great job of explaining why in his April report. He also shares some extremely bullish views of Bitcoin.
And @RaoulGMI does a great job of explaining why in his April report. He also shares some extremely bullish views of Bitcoin.
25/ Bitcoin is hyper-deflationary in a world of increasing inflation.
26/ Over the last decade, Bitcoin has gone from nine pages on a white paper to the world's largest tech companies and central banks around the world building their own digital currency imitations.
27/ Bitcoin is a generational mega trend as Baby Boomers are set to pass on a the largest wealth generational wealth transfer ever, $68 trillion, to their Millennial and Gen-Z children over the next decade.
28/ Facebook plans on introducing it's Calibra cryptocurrency wallet in 2020, making cryptocurrency storage and transfers available to it's 2.4 billion users across Facebook, Instagram, and Whatsapp. https://finance.yahoo.com/news/facebook-crypto-calibra-libra-coin-2020-launch-090007870.html
29/ The world's first decentralized, hard-capped, open-source, non-sovereign, censorship-resistant, permission-less, store of value, and medium of exchange. In short, internet money, continues to gain wider appeal.
30/ And #Bitcoin 
still only represents a drop in the bucket of global wealth. In a world of increasing money printing and stock markets disconnected from earnings.
Is it time for internet money to take off?
Real Estate: 230T
Stocks: 70T
Money Supply: 90T
Gold: 9T
Bitcoin: .15T
still only represents a drop in the bucket of global wealth. In a world of increasing money printing and stock markets disconnected from earnings.Is it time for internet money to take off?
Real Estate: 230T
Stocks: 70T
Money Supply: 90T
Gold: 9T
Bitcoin: .15T
