Better later than never

I'm quite late for this week newsletter, but if you were there for the Croissant Files LIVE last Saturday, you got most of it already.

Here we go anyway ....

Geopolitics - Not much ...

• Alexey Navalny, a Russian citizen, has died in prison in Russia
• This is a very different treatment of information when a US citizen and journalist, Gonzalo Lira, died in a Ukrainian prison, a few weeks ago
• Assange is still rotting in a UK prison for reporting corruption in the West
• Hezbollah in Lebanon said Friday that it would escalate its fight with Israel after a series of tit-for-tat attacks

Politics

• Biden Homeland Security Secretary Mayorkas was impeached for failing to secure the border: no big deal, it will never pass the senate controlled by Democrats. Merely a PR stunt for Republican electors.
• Putin’s interview passed 200M views on X in a single week: MSM is a thing of the past
• Totalitarianism: France passes law that could punish citizens going against govt narratives with 3 years in prison and a fine of 45,000 euros. Not to mention the enforcement of the official truth with the Digital Security Act. Implementing a ministry of truth is never a sign of a healthy democracy

• The gap between so called "democracies" and autocracies is shrinking
• Betting markets project that Joe Biden has a just a 27% chance of being reelected US president in November. Former President Donald Trump has a 44% chance, according to Real Clear Politics.
• Most frightening sentence I’ve heard this week is by Kamala Harris. She declared: “I’m ready to serve” ??

Economy

• Inflation rises again more than expected. There was a much-larger-than- expected jump in producer prices, led by a rise in services. January CPI inflation rate falls to 3.1%, above expectations of 2.9%. This is the 34th consecutive month with inflation above 3% and first jump since September.
• The odds of a May rate cut were trimmed to just 29% on Friday morning last week from nearly 70% early Tuesday the same week.
• Examples of actual inflation experienced by Americans: 1. Car Insurance Inflation: 20.6% ; 2. Transportation Inflation: 9.5% ; 3. Hospital Services Inflation: 6.7% ; 4. Car Repair Inflation: 6.5% ; 5. Homeowner Inflation: 6.2% ; 6. Rent Inflation: 6.1% ; 7. Food Away From Home Inflation: 5.1%

• Real wage growth negative again meaning prices rising faster than wages

• Europe fears inflation as well: European Central Bank President Christine Lagarde this week cautioned against rushing to cut interest rates amid rising wage pressures.
• Barr says Fed closely watching banks’ CRE exposures. US regulators are “closely focused” on risks in commercial real estate loans and have stepped up downgrades of banks’ supervisory ratings and increased enforcement actions amid a continued downturn in the real estate sector, according to Fed Vice Chair for Supervision Michael Barr. On Thursday, the central bank issued guidelines for its annual stress tests that emphasize the risks inherent in commercial real estate.
• The CRE crisis continues to spill around the world, in Germany this time with Credit Spreads for some German bank bonds exploding

• The whole world appears to be exposed to the US CRE sector: banks in the US obviously, but also Japan, Germany and certainly others. One shoe dropping every week.

Markets

• Mag7 has become the market

• The Magnificent 7 are larger than the combined market cap of the stock markets in Japan, Canada, and the UK.
• Mag7 are the market, you can forget about the rest. In a market cap based index with Mag7, stock selection is dead, and passive ETFs surpassed assets invested in active management

• More NVidia insanity: now the 4th most valuable public company in the world, worth $1.84 trillion (even more than that tonight). On Monday last week, Nvidia's market cap passed both Google and Amazon for the first time in history.
• Since January 1st, Nvidia has officially added mare in market cap than the entire value of Tesla in less than 6 weeks.

Cryptos

• Talk of the last week was Bitcoin: it resumed its upward trend to reach 52,000, propelled by large inflows in bitcoin ETFs.

• Bitcoin market cap is back above $1T since December 2021 and the total market cap of cryptos is now above $2T
• Bitcoin ETFs are even catching up to Gold ETFs, and represent almost half of Gold ETFs market cap already after a month of existence

• Historically, Bitcoin has made most of its performance around halvings

• Fed Governor Christopher Waller said this week that there is no reason for a central bank digital currency in the United States as the banking system works well.
• A CBDC would likely be delegated anyway to a private company in a public-private partnership preferred by the WEF because the banking sector can not lose fractional reserve banking. Candidates are JPM Coin (hello Jamie) or even Tether that is backed mostly by US Treasuries (interesting ...)

The Algorithmic Advantage Podcast

• I would like to thank you for all the support received here on LinkedIn after my participation to The Algorithmic Advantage podcast, hosted by to Simon M and Richard Brennan.
• If you haven't already, I encourage you to check it below as I give a overview of my journey in finance and discuss my approach to quantitative systematic investment management

It's already Thursday night.

Time to get ready for Saturday's Croissant Files LIVE, 10:15AM EST here on LinkedIn.

Hope to see you there !

A bient?t !