Western interest rates starting going back up in the end.
Looks like the whole "new paradigm" is over.
Money is not free anymore.
To sum up:
- Boomers got 110% of the wealth (other generations are in debt), they are aging and getting more conservative, covid got them even more scared and conservative (risk averse);
- Generally investor outlook on the economy which was not even positive for the last 20 years (buybacks and money printing were the bulls) is now rather negative;
- Average people are starting to notice the money printing. Memes and permabears are doing their jobs. And those that do not notice want to go far right or far socialist even thought they have no clue why they want to. So central bankers cannot continue to print to infinity;
- All the indicators clearly show people are not spending or lending their money since early 2020, they are hodling, no arguing is possible (unless the data is somehow incorrect), it is necessary to somehow entice them (with higher rates) to get that money;
- And boy does the west need the money
Bonus (technical):
- Well just look at it go
I'm going to go straight to the point and not go into a lenghty explanation about every point. i doubt many beginners are reading about the bund anyway. A shame, might be easy money...
The TA/chart reminds me of the typical textbook stairs up elevator down chart. Reminds me of AUDJPY when the "housewives" were mass buying the AUD because of high rates, and then all ran for the exits in just months. In the case of bonds people are not running for the exits but it's the same idea mirrored.
People with $$$ are not as eager to lend it anymore, and euro governments need as much magical ponzi beans as they can get to bounce back from the whole covid thing, and maintain fake prosperity and power for a few more years... or months.
Well french president Emmanuel Macron said "abundance is over" and warned we should get ready, so at least he is honest.
Germany has been teaching its population to warm itself without electricity last year.
France relies on nuclear power but hey guess what french nuclear worker are on strike, french favorite national passtime.
People have been spending less as you can see in this chart. So it takes a bigger carrot on a stick to get them to lend it.
Reminder: velocity of money is the frequency at which it is spent. Lower value on the chart means people are holding tight on their liquidities more.
Hey, people thought the USD not going to zero with all the printing and government spending and usstock bubble getting inflated would have no downside.
Ye investors were buying us dollars because they were optimistic and just super bullish on this awesome not-a-scam currency and us economy right.
I am also short on oil price will go down but for all the bad reasons, I'm feeling like the barrel price will be low low low but price at the pump will be high high high which won't even matter since the gaz station probably won't even have gaz.
Boomers got all the money and boomers are aging, and scared to die soon, they are starting to not care about progress. Average humans stay in denial so long, but once panic starts to hit does it go fast. Any herd thing goes fast.
I mean ask anyone that studies crowds. Mindless reptilian brains (85% of the population) at a concert watch a dozen people dancing like they are martians, they think they are so weird, then a few zombies start to dance and it's like a nuclear chain reaction all the zombie-sheep dance in seconds, only a dozen people are not dancing and the zombies stare at them and think they are weird stuck-up psychopaths.
One could potentially take at least 5R, even 10-15 if it accelerates down (/up). Does it get harder and harder to find people to lend money (especially as high IR makes people/boomers scaaaared we are becoming Argentina)? Or will the increasing rates convince more and more people to lend?
No one actually holds cash do they? Apart from boomers people have between $0 and 50k in debt and I am not making that up (most experienced traders know this). A handful of people we call traders have cash and they definitely are going long the interest rate (short the bund contract) - a few hundred retail traders going countertrend is like a few hundred mosquitoes trying to stop a herd of thousands of raging elephants, ye good luck guys just #HODL.
They could continue to monetize the debt and rob poor people, but poor people even thought they have no idea what is going on are starting to get pissed, want to destroy everything and go socialist or far right. When I say poor people I really mean middle class, from low middle class to upper middle class. So every one except hobos collecting food stamps and Bezos & friends.
Plus with the democratization of trading in part because of crypto and Robinhood, as well as permabears Peter Schiff and Mike Maloney reaching millions of people on social media, people are starting to figure out what is going on.
Even the US socialists have mentionned taxing unrealized gains, I am scared, why do they know about this?
Guess what happens when old people hold all the money? Guess what happens when those were promised they would live forever with magical futuristic cyber hearts? Guess what happens when hospitals are getting more and more expensive and they might (immediately) need all the money they have to afford lifesaving intervention (or they could just stop overeating but we all know this is not going to happen).
I wonder if covid reminded them of their mortality and they are done investing for the long term, or at all. I wonder if some lost trust in the west capacity to pay back, but I do not have the answer to that it is not part of the analysis. I know "10/10 AAAA++++" France got downgraded years ago. They should all get downgraded really but will they? In 2008 junk bonds did not get downgraded... Well anyway... I don't want to predict the future or be a lifetime permabear I just want to make some money. We are traders we do not care if everything implodes do we?
Looks like the whole "new paradigm" is over.
Money is not free anymore.
To sum up:
- Boomers got 110% of the wealth (other generations are in debt), they are aging and getting more conservative, covid got them even more scared and conservative (risk averse);
- Generally investor outlook on the economy which was not even positive for the last 20 years (buybacks and money printing were the bulls) is now rather negative;
- Average people are starting to notice the money printing. Memes and permabears are doing their jobs. And those that do not notice want to go far right or far socialist even thought they have no clue why they want to. So central bankers cannot continue to print to infinity;
- All the indicators clearly show people are not spending or lending their money since early 2020, they are hodling, no arguing is possible (unless the data is somehow incorrect), it is necessary to somehow entice them (with higher rates) to get that money;
- And boy does the west need the money
Bonus (technical):
- Well just look at it go
I'm going to go straight to the point and not go into a lenghty explanation about every point. i doubt many beginners are reading about the bund anyway. A shame, might be easy money...
The TA/chart reminds me of the typical textbook stairs up elevator down chart. Reminds me of AUDJPY when the "housewives" were mass buying the AUD because of high rates, and then all ran for the exits in just months. In the case of bonds people are not running for the exits but it's the same idea mirrored.
People with $$$ are not as eager to lend it anymore, and euro governments need as much magical ponzi beans as they can get to bounce back from the whole covid thing, and maintain fake prosperity and power for a few more years... or months.
Well french president Emmanuel Macron said "abundance is over" and warned we should get ready, so at least he is honest.
Germany has been teaching its population to warm itself without electricity last year.
France relies on nuclear power but hey guess what french nuclear worker are on strike, french favorite national passtime.
People have been spending less as you can see in this chart. So it takes a bigger carrot on a stick to get them to lend it.
Reminder: velocity of money is the frequency at which it is spent. Lower value on the chart means people are holding tight on their liquidities more.
Hey, people thought the USD not going to zero with all the printing and government spending and usstock bubble getting inflated would have no downside.
Ye investors were buying us dollars because they were optimistic and just super bullish on this awesome not-a-scam currency and us economy right.
I am also short on oil price will go down but for all the bad reasons, I'm feeling like the barrel price will be low low low but price at the pump will be high high high which won't even matter since the gaz station probably won't even have gaz.
Boomers got all the money and boomers are aging, and scared to die soon, they are starting to not care about progress. Average humans stay in denial so long, but once panic starts to hit does it go fast. Any herd thing goes fast.
I mean ask anyone that studies crowds. Mindless reptilian brains (85% of the population) at a concert watch a dozen people dancing like they are martians, they think they are so weird, then a few zombies start to dance and it's like a nuclear chain reaction all the zombie-sheep dance in seconds, only a dozen people are not dancing and the zombies stare at them and think they are weird stuck-up psychopaths.
One could potentially take at least 5R, even 10-15 if it accelerates down (/up). Does it get harder and harder to find people to lend money (especially as high IR makes people/boomers scaaaared we are becoming Argentina)? Or will the increasing rates convince more and more people to lend?
No one actually holds cash do they? Apart from boomers people have between $0 and 50k in debt and I am not making that up (most experienced traders know this). A handful of people we call traders have cash and they definitely are going long the interest rate (short the bund contract) - a few hundred retail traders going countertrend is like a few hundred mosquitoes trying to stop a herd of thousands of raging elephants, ye good luck guys just #HODL.
They could continue to monetize the debt and rob poor people, but poor people even thought they have no idea what is going on are starting to get pissed, want to destroy everything and go socialist or far right. When I say poor people I really mean middle class, from low middle class to upper middle class. So every one except hobos collecting food stamps and Bezos & friends.
Plus with the democratization of trading in part because of crypto and Robinhood, as well as permabears Peter Schiff and Mike Maloney reaching millions of people on social media, people are starting to figure out what is going on.
Even the US socialists have mentionned taxing unrealized gains, I am scared, why do they know about this?
Guess what happens when old people hold all the money? Guess what happens when those were promised they would live forever with magical futuristic cyber hearts? Guess what happens when hospitals are getting more and more expensive and they might (immediately) need all the money they have to afford lifesaving intervention (or they could just stop overeating but we all know this is not going to happen).
I wonder if covid reminded them of their mortality and they are done investing for the long term, or at all. I wonder if some lost trust in the west capacity to pay back, but I do not have the answer to that it is not part of the analysis. I know "10/10 AAAA++++" France got downgraded years ago. They should all get downgraded really but will they? In 2008 junk bonds did not get downgraded... Well anyway... I don't want to predict the future or be a lifetime permabear I just want to make some money. We are traders we do not care if everything implodes do we?