Macro Narratives, Two Ways.

A summary thread looking at some strong bull & bear arguments for select macro asset classes, and where to look on twitter for more info on them.
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I've spent a lot of time consuming macro arguments, and one of the most useful things is to try and frame the best-in-class bull/bear arguments for any area of interest.

Here are the strongest ones, and where I encountered them.
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Equities, Bull: “The Blind Buyer”

Best equity bull case is one inferred from the work of @profplum99 - that many actors are just blind buying equities via 401k funds, target date funds, and various forms of financial sausage.
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This effect is increasingly concentrated in the megacaps (which is where you’d want to play it, if that’s your thing) and while it’s not clear how long the effect will last, you kind of need a compelling reason for it to *end* if you want to bet against it.
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Equities, Bear: “I mean come on…”

At first blush this seems ‘obvious’ but in light of the Bull case above, you really do need a trigger here, and the lack of one is perhaps why a bunch of shorts lie bleeding on the battlefield today.

So what’s the specific trigger?
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Currently tracking 3 things as potential triggers:

1) white-collar layoffs
2) corporate austerity (via decreased matching contributions)
3) anti-eviction policies squeeze landlords, who becoming forced sellers of other assets

@DiMartinoBooth and @TheBondFreak tweet on this

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USTs, Bull: “The beatings will continue until morale improves”

Obviously hats (crowns?) off to @MetreSteven here, with the bull thesis being that rates will continue to drop until lending picks up because… well, that’s how supply and demand works.
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In addition to very weak lending growth, we’re seeing banks stack USTs as financial conditions deteriorate, and there’s a massive short on the long bond (which seems like it may be people playing the steepener a bit too early) that has to unwind at some point.
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USTs, Bear: “The end of an era / organ rejection”

Many are predicting the end of an era for bonds as we approach the zero bound. As an overlapping thesis, some point to CBs stacking non-UST assets as evidence of global ‘organ rejection’ as regards US debt.
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This one often strikes me as a little... “grandiose” or something but still well worth tracking because, in the fullness of time, chances are it ends up being right.

@LynAldenContact has stellar data on things surrounding this view, and shares a ton of it on her blog.
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Gold, Bull: “I’m taking my ball and leaving”

Gold is the fan favorite of everyone who hates everything right now. Yes, there’s an inflation thesis lurking here, but the superior gold position at the moment is something more like “hey, at least this stuff holds value.”
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Quite sympathetic to this argument, and with the right time frame & stomach to hold through whatever madness awaits us, the Gold crew seems likely to be vindicated.

“Yay gold” is very much a consensus view, which brings us nicely to the bear narrative...
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Gold, Bear: “You can’t eat gold.”

Most gold bears (like me, at present) are ephemerally bearish. The bearish view is that you might get a better crack at this once the insolvency phase plays out.

People who need to buy things sell what they have to feed the fam.
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At minimum, it’s worth noting that being bullish on gold is an extreme consensus view, and one that might provide opportunity for contrarians.

Keep an eye on CPI: if that goes south, the increase in real yields could prove to be a sudden & uncomfortable headwind to gold.
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Bitcoin, Bull: “Like gold, but better / S2F”

BTC shares many of gold’s properties, but is advantaged by being early in the adoption curve (perhaps best modeled by @100trillionUSD stock to flow model)

One might think of the narrative as “BTC is a small cap version of gold”
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If you want a more sophisticated version of the thesis (and from the perspective of someone who has spent time in the traditional asset space) @RaoulGMI has great takes here and I’d highly recommend the recent “life raft” view as it’s an excellent macro take on the bull case
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Bitcoin, Bear: “It’s a valueless digital curiosity”

The bear case for BTC is extreme, with bears believing that BTC is some sort of big ponzi scheme.

It’s an understandable view, given the extreme hype, weird price action, and relative newness of the asset class.
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Dollar, Bull: “Take a shot at the king, you best not miss.”

The Dollar bull thesis requires knowledge of monetary plumbing & Eurodollars, but the short version is something like “a lot of people owe a lot of dollars, and their ability to access them is breaking down.”
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Obviously the reigning dollar bull champion is @SantiagoAuFund - he has a pinned tweet that offers an overview of the thesis, and has done numerous podcasts/videos on the topic, all of which are stellar.
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Dollar, Bear: “The napalm run already happened.”

The strongest Dollar bear thesis essentially holds that the ‘napalm run’ (h/t @JulianMI2 ) of the dollar already happened in March when it spiked, and global governments are busily to solving the problem because it’s painful
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DXY bears essentially believe that intervention (via FedCoin, Bretton Woods 2.0, etc) by The Powers That Be™ will be work 'too well' in saving us from deflation.

@LukeGromen is in the dollar bear camp, and frequently discusses how he sees this playing out.
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As a final note, my view thus far is that the Dollar & Bitcoin are the most noteworthy of all of these narratives. Why?

Because of the correlations in play amongst these various narratives.
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Right now almost everything else correlates with the dollar.

And while BTC ‘picks up’ correlations to other things, nothing about its bull narrative is *necessarily* correlated with any of the others, particularly as institutionals move into the asset.

Good luck out there.
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