Not at the table, on the menu
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.
GEOPOLITICS
USA
Did the US actually kept its gold in Fort Knox vaults after abandoning the gold standard in 1971? The last time the gold at Fort Knox was actually audited was in 1953. After that audit followed some “show audits”, not actual ones, with journalists and politicians, the last in 1974, only 3 years after the abandonment.
Trump and his administration with DOGE and Musk continue their full audit of the US nation and are ready to find out. This audit of the gold reserves is expected to be public, and it is difficult to imagine they don't have the answer to the initial question. A public audit is certainly part of a bigger plan: either re-establish the trust in the US Dollar, or expose the treason of former administrations with unfathomable consequences for the world financial system.
This is the reason why the higher likelihood is that the gold is present, and the gold repatriation from the UK and Switzerland to the US is part of the plan to assert the dominance of the US Dollar as the world reserve currency. Gold is the globally accepted collateral, while Bitcoin might come as a second step.
The US Dollar is a part of Trump's vision to reshape imperialism into a US centric vision contrasting with the previous globalist agenda led by the United States.
In this context, Trump and Putin both have incentives to force peace in Ukraine: avoid an anti-Russian state on Russia’s borders for Putin, and expose Trump’s political enemies. Ukraine is at the center of operations run by Obama, Biden, and the US Deep State over the last two decades.
Eastern Europe
Ukraine peace talks have started between the US and Russia in Saudi Arabia, in the absence of both Ukraine and Europeans who were not invited.
Trump's plan is to get US' money back, demanding access to Ukraine's critical minerals, ports and infrastructure to oil, gas, and the broader resource base of the country. The U.S. would take 50% of Ukraine's current resource extraction revenues and 50% of the financial value of all new licenses issued to third parties for future resource monetization. Russia would even grant rights to Ukraine minerals in territories newly acquired by Russia !
Trump's plan would actually be worse for Ukraine than the Versailles treaty imposed on Germany after WWI.
Europe
Europeans understand they are now on their own, as expressed by JD Vance’s speech at the Munich security conference which left European leaders in shock.
The US is not only abandoning Ukraine, the US forces Europeans to face their responsibilities, in the EU Orwellian superstructure which suppresses freedom of speech and manipulates unfavorable election results (Romania) as a form of “democracy”.
The consequences for Europe of Trump's plan for Ukraine are devastating: European countries will have to support the financial cost of Ukraine's reconstruction, while having to increase their military spending and develop their defense capabilities, and also send peace forces in Ukraine that would not be protected by NATO's article 5.
Offended by not being invited to negotiations in Saudi Arabia, Europe organized an emergency counter summit in Paris to reaffirm unrealistic demands in Europe's position.
Europe without the US doesn't have the means of its ambitions: Europe doesn't have the resources, military and financial, to provide security guarantees to Ukraine and cover the costs generated by the new situation.
In a total delusion move, the European Union reaffirmed it has no plan to lift sanctions against Russia, even if the US does, when it is the economy first hurt by these sanctions.
Trump's plan is so heavy to bear for European countries that it could actually lead to the end of the EU and NATO, which was formed as a block to counter the eastern Europe communist block that collapsed in 1989.
European have chosen value politics, when real politics always prevails.
"You can ignore reality, but you can't ignore the consequences of ignoring reality" - Ayn Rand.
Asia
A new coronavirus was discovered in China, which sparked concerns around the world, concerns that spread to financial markets on Friday afternoon in the US.
ECONOMY
The US inflation materially accelerated in January, with Supercore inflation jumping year-over-year, as well as the the 3-month annualized rate and the 6-month annualized. The 1-month inflation rate annualized would put inflation at the second-highest level since 2022. It has now been 4.5 years since the Supercore inflation has been now above the Fed's 2% target !
The recession is felt by white-collars, as jobs in the US professional and business services sector have contracted for 17 straight months, the longest streak since 2008.
White-collar hiring levels are now even lower than during the 2020 pandemic, a weakness usually taking place during economic downturns.
Who said the S word, Stagflation !!!???!!!
Meanwhile, Musk and DOGE continue to track fraud, abuse and waste in every corner of the US government as social security may go insolvent by 2034. According to new DOGE data, ~21 million people aged 100+ in the SSA database are listed as alive in the US.
Internationally, Japan’s inflation rate rises to 4.0%, its highest since January 2023, and puts pressure on Japanese interest rates. If the current trends continue, interest rates in Japan may become higher than interest rates in Switzerland, which may have consequences on the carry trade involving JPY and CHF.
Friday also saw a shower of poor economic statistics, with the University of Michigan inflation expectations rising, services PMI data being dismal and housing data ugly.
This only added to the poor picture already painted by the US Macro Surprise Index nearing its 6-month-lows.
MARKETS
US markets were closed on Monday, and DOGE is officially investigating the Securities and Exchange Commission (SEC) for fraud, abuse, and waste !
One can note the current positive correlation between the S&P 500 and the US Aggregate Bond Index, limiting diversification for long only portfolios including these 2 asset classes such as the classic 60/40 or the Equity/Bonds risk parity portfolio.
In terms of correlation as well, Digital gold, aka Bitcoin, doesn't trade like gold with a correlation maintained within a narrower range around 0, which can provide interesting diversification at reasonable levels for Bitcoin considering its volatility.?
All the US Majors were down on the week, led by Small Caps and The Dow, that have been under performing the general index S&P 500, and of course Nasdaq 100.
Indices were hammered on Friday on weak data, and this accelerated lower on reports of a new coronavirus discovered in China, except for Pfizer that surged on the news ....
Furthermore, retail euphoria on Equity markets appears to be vanishing according to JPMorgan, removing yet another leg supporting the market.
Also this week comes with NVDA's earnings, and the market implied volatility is pricing in a possible surge in volatility… (first thing markets don't like is uncertainty !)
Also I introduced the Market Dashboard in the Croissant Files LIVE last Saturday with some quant and technical indicators that I comment on live. This is somewhat too long to detail in this newsletter though.
So here is a couple of screenshots here and I encourage you to join the live show on Saturday if you have interest in this.
You can view the replay here on YT. The market dashboard starts at 47:23.
Please read the image captions to know what it is about.
I'm currently building a platform to have an educated conversation about the markets to help you better understand them and help you make better investment analysis and decisions.
The dashboard will evolve to always share more information.
This discussions will happen in the live for now, but may require another form of communication dedicated to discussing the markets.
In the meantime, enjoy your week, and happy investing !!!
Quantaraxia believes the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.
RISK CONSIDERATIONS