Pump it up !

Pump it up !


Friendly reminder:

  • you can always sign up for the Public Croissant Files : I plan to deliver a link to the video in your mailbox if you were unable to join
  • accredited investors, you can also sign up for the Private Croissant Files

(please see the links to sign up in the comments of the corresponding post, as it appears the links do no seem to work in the newsletter. Sorry ...)

Looking forward to see many of you at either meeting, and I thank you for your continued support !


GEOPOLITICS

Terror attack on a concert hall in Moscow last Friday:

  • ISIS took responsibility for the terror attack in Moscow
  • US embassy in Moscow had hinted at upcoming terrorist attack one month before Crocus Hall shooting
  • Russian services dismissed the threat
  • Some commentators mentioned the possibility of a false flag, doubling down after Nordstream 2, discrediting MSM further if that was possible


The verbal escalation is continuing:

  • Putin warned the West on Monday that the planet was one step away from WWIII, but also said hardly anyone wanted such a scenario
  • The head of NATO's Military Committee, Bauer, stated that the alliance is ready for conflict with Russia
  • China's Ministry of Defense reportedly declared Beijing's readiness to intervene militarily should the United States or NATO launch an attack on Russia


Meanwhile, the United States called on Ukraine to stop attacks on Russian oil refineries. Discontent is growing in the White House as oil prices have risen by about 15% already YTD, to $85 per barrel.


Drone war is becoming a reality:

  • Ukrainian expert on drone warfare Serhii Flesh: “Within a year, both sides will produce enough FPV drones to target every soldier - all will be found & hit day & night in a zone of up to 8 km. Infantry will retreat underground & surface activity will belong to ground robots”
  • China is learning from the war in Ukraine and is now placing increased focus on teaching its soldiers to fly FPV drones even in the most challenging terrains

Ukraine has become a testing ground for all kinds of weapons. Drones, but also hypersonic missiles reaching Kyiv from Russia in less than 3 minutes, not giving the time for alert systems to warns civilians.


Nobody trusts MSM: according to a Gallup poll, trust in MSM collapses.

MSM still doubles down on every narrative though. Go figure ...


One concerning poll

Veteran pollster Rasmussen surveyed a group of Americans, or the elite 1% earlier this year, and discovered a startling number who say it’s OK to win an election by cheating.

The elite 1%—individuals who make over $150,000 a year, live in densely populated areas, and have postgraduate degrees—are overwhelmingly liberal. They give President Joe Biden an 82% approval rating, compared to his 40% average from the rest of Americans.

I guess they're not so much interested in saving democracy after all, as long as their side wins.

Among all Americans, just 7% said they would want their candidate to win by cheating. Another proof if necessary there is now 2 Americas.


ECONOMY

The stock market was expected to encounter a reality check with the Fed's interest rate forecast update, with Powell giving his remarks on the FOMC meeting in the context of inflation on the rise again.

As expected, the Fed decided to hold interest rates at 5.25-5.5%.

Despite now only 3 expected rate cuts in 2024 (down from 6 in January), the market cheered about the reaffirmation that 3 rate cuts are still projected this year.

A sense of relief that push Equity markets to new all time highs.


Debt

The current admin announced its budget previsions for the next 10 years, and the spending spree is not slowing down.

The net interest on the federal debt would average $760 per month for each American household over the next 10 years.

The debt would then reach roughly $370,000 per household in the fiscal year 2034. In 2034, the service of the debt would be 25% greater than what is spent on the department of defense (it already passed the defense budget recently).

The socialization of the US is on fast track with now the percentage of the economy running through the Federal government reaching nearly 25%.


Inflation

Obviously, such a budget will have dramatic consequences on inflation.

Over the last 30 years, the purchasing power of the US consumer dollar has been cut in half due to inflation. At the same time, the S&P 500 has gained 840% (7.8% per year) after adjusting for inflation. And this my friend is why you can not sit in cash and need to invest.

At least 23.98% of your wealth has been invisibly seized by the government since Jan 2020.

Americans are maxing out their credit card debt, that is currently rising faster than it was prior to the 2008 Financial Crisis.

Meanwhile, the US house just passed a $1.2 TRILLION spending bill (with thousands of pages delivered at 2am). At the current pace, the US deficit for this fiscal year will cross $3 trillion, nearly double the $1.6 trillion deficit that Congress estimated.

The US debt is still growing at a $1T per 100 days ... This is $10 billion per day, and we will likely see US debt hit $36 trillion this year.

Just another $1+ trillion added to the inflationary fire. Money printers will soon have to be working overtime to pay for this.


Banks - CRE

  • BTFP loans are coming due, and the next weeks should show how much stress this exposes the banking sector
  • Small banks still have over 30% of their assets in Commercial Real Estate. There is no clue about the magnitude of the losses on these bad assets


EVs are a failure and are simply not selling

  • NEW Ford Mustangs Mach-E vehicles are selling at a 30% discount below MSRP
  • Used Audi e-Tron GT with less than 10,000 miles are selling for $59,000. This same car sold brand new in 2023 for $120,000, which represents 50% drop in value
  • Hertz dropped its fleet of EVs: consumers are not renting these cars with limited autonomy and length of charge. These vehicles are also more expensive to maintain/service, and the big bet made by at the time CEO Stephen Scherr turned sour, leading to his resignation.


In other economic news

  • The Bank of Japan hiked rates for the first time since 2007, ending the negative interest rate era (0.1% increase from -0.1% to 0.0% ; still not positive either).



MARKETS

Jay Powell gave the green light for another push to new all time highs (see above) -> Stocks UP, Gold UP

The US$ was not impressed though and is calling Powell’s bluff


Stock markets are overvalued

  • financial stress recently plunged to lowest level since Jun '07; Current levels are lower than when interest rates were nearly zero during '20 and '21. Did you say complacency?
  • Warren Buffett's favorite market gauge has surged to a two-year high, indicating stocks are overvalued and could experience a correctionThe "Buffett Indicator" is the combined market cap of all actively traded US stocks, divided by the latest quarterly estimate for GDP (this compares the overall value of the stock market to the size of the economy)

  • The volatility term structure is normal (but we know it can change very rapidly), VIX around lows at 13
  • Note the bump in the term structure for the October surprise in an election year


In other words: the S&P500 volatility is compressed, and we have the ingredients for a perfect calm before the storm.


Meanwhile Cocoa is still shooting to the moon, and is a significant return driver for CTAs



It's only Monday, let's make this week count !


See you next week !!!


#quantaraxia #money #management #investing #markets #hedgefunds #business #entrepreneurship

Joris Bastien

Alpha Engines for #HNWI, #familyoffice, #hedgefund and RIA portfolios . Focus on macro and digital spaces. Stoic Epicurean (!) Atomist believing in duty. Fine art photographer.

11 个月

Private Croissant Files sign up https://subscribepage.io/SecretCroissantFiles

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Joris Bastien

Alpha Engines for #HNWI, #familyoffice, #hedgefund and RIA portfolios . Focus on macro and digital spaces. Stoic Epicurean (!) Atomist believing in duty. Fine art photographer.

11 个月

Public Croissant Files sign up ! https://subscribepage.io/croissantfiles

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