Bitcoin, what else ?

Geopolitics

• Stoltenberg announces Ukraine in NATO, knowing well this means WWIII, a nuclear conflict that will wipe out Europe. “The common people don't want war. But, after all, it is always a simple matter to drag the people along” H G?ring, abbreviated quote

• Another week another miss with a German warship mistakenly shooting at US drone in a mission around the Red sea. Adding insult to injury, the missile launched by the Germans failed and did not hit the drone …

• Meanwhile Macron French president declared not excluding troops in Ukraine. Immediately contradicted by other European leaders and the US. Is that really serious?
• As often, foreign policy declarations have domestic politics objectives, whether it is in France or the US. Don’t forget there also elections in Europe where pro-EU parties are in difficulty. Scaring people for them to fall in line is always an efficient tactic.
• No market reaction, even the markets didn’t take Macron seriously

• No major evolution on the Ukraine front, except little advances by the Russian forces
• No real evolution in the conflict in Israel, except positions bombed in Syria

Economy

• Q4 2023 saw a $334.5 billion increase in nominal GDP, for $834.2 billion of debt added. Said differently, it costs $2.50 of debt for every $1.00 of GDP (Zerohedge): not a good deal.
• Technically, the recession is being avoided at the cost of an ever stimulus, fueling inflation

• If you still wonder where inflation comes from: 80% of US$ have been created over the last 5 years

• Core PCE price index increased 0.4% in January, higher than expected and higher than December
• PCE inflation, watched by the Fed, falls to 2.4% in January, in-line with expectations (same for core PCE at 2.8%). Total disconnection with real prices (see last week newsletter).

• Fed's Bostic about PCE inflation data last week: different measures may point in disparate directions. In other words, "Never trust numbers you haven't doctored yourself" - Churchill
• Data shows inflation going up and spending down … not good.

• Meanwhile, Apollo Global Management says the US economy is not slowing down, and the Fed pivot has provided a strong tailwind to growth since December. They also note that many measures of inflation are pointing higher again including Supercore Inflation at 4.5%.

• The market is pricing ever lower number of rate cuts, it was 6 only 2 months ago, now barely 3

• Rents are rising

• Home prices are rising: home prices in America's 20 largest cities jumped 6.1% year-over-year in December (11th straight monthly jump in home prices despite new all time lows in housing affordability)

• Supply/demand: lower demand because of IRs but low supply as everyone sticks to its low mortgage interest rates
• Delinquency Rates on Office Building Debt are the highest in AT LEAST the last 5 years. Probably nothing ...

It is not because I'm not repeating the same problems over and over that they're miraculously gone (like sometimes the markets seem to think): US debt, unrealized losses at banks, Commercial Real Estate impacting banks as well, .... and the list goes on.

Meanwhile, NY Community Bancorp is collapsing further ...

Some day, everyone will wake up to the situation like it's the latest new thing no one could have seen coming.

Markets

• S&P & Nasdaq at all time highs
• March is the worst month for the VIX, only going up 20% of the time, which is a positive for the market

• AI Bubble: "The current AI bubble is bigger than the 1990s tech bubble" according to Apollo GM.

• The Dot-com bubble was just a preview: Forward P/E ratio for the top 10 tech stocks right now is ~40x. In 2000, at the peak of the Dot-com bubble, the Forward P/E on the top 10 tech stocks was ~26x.
• Other sign of a bubble: Cathy Wood with ARK is now making crazy predictions about AI contribution to GDP (analysts always jump on the train last ??)

• Large divergence between large cap stocks and small caps more representative of the US real economy

• Frankly, I'm a bit tired of talking about Mag4-5-6-7, so under a different angle, the concentration of international equity indices in limited number of stocks is a global phenomenon, and the US is by far not the worse. Taiwan and Korea are at another level !

• Excluding the NASDAQ 100, S&P 500 earnings are largely flat to down over the last two years

Cryptos, Bitcoin actually

• Bitcoin to the moon and beyond, up +XXX% since 2022 low (XXX because I can't keep up with the increase, but that was +275% Saturday morning for the LIVE), market cap more than ~1.2T and META
• Bitcoin ETFs volumes are breaking records: $2.6 BILLION in volume last Thursday

• If you need a single reason why Bitcoin is going up, it is always the same: more buyers than sellers. ~9,700 bitcoin bought vs 900 mined per day !

• Bitcoin seasonality is best in February, and yes, Bitcoin didn't disappoint last month. March does not look as strong, but the halving is around the corner

• Coinbase briefly crashed last week, erasing $100 BILLION of market cap in #Bitcoin in 15 minutes, triggering a Bitcoin fall from $64,000 to $59,000, as many Coinbase users began showing a $0 balance in their account. Some commented about trust issues with Bitcoin when it is actually a trust issue with Coinbase

If you thing about calling your broker about what you’ve read here, take look: Over the last 23 years, Wall Street Strategist stock market predictions have often been wrong by at least 10%.

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See you next week !

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