Daily Insights

28 Oct 2021

To begin with we are seeing wild speculation at crazy levels - none more so than in the crypto space. In this opening picture you can see an Uber driver checking his crypto portfolio while taking a fare.

By the way it's my moms 75 birthday today - happy birthday mom. 

This tweet by the President of El Salvador highlights the recklessness of the current mania around crypto. I am long Bitcoin so there is no sour grapes on my side, but I would like to punch this guy in the face for the way he is behaving, so un-Presidential.


Speaking of buying the dip - can you see the dip? This guy is gambling with the nations life savings.


It turns out that the battle between the bond market and the RBA has just intensified. Inflation came out higher than expected placing annual CPI at 2.1% still lagging the rest of the world. This is within its 2 - 3% inflation target. The question now is whether the wage inflation picks up pace (1.7%) and ensures that the inflation is more than transitory and is likely to remain. I will write more on Sunday about further challenges high Inflation poses to an economy. The 2yr bond yields are having nothing of what Dr Lowe at the RBA has to say.


Something to keep your eye on is the compression happening in the US bond market. I am showing the spread between the 10yr and 2yr which is flattening. This means short term rates are climbing more relative to the long term 10yr. Bond holders see inflation lasting longer than they suspected a year ago. In fact in late August last year the yield curve inverted. Usually this is a sign of a recession. Frankly speaking with all the intervention going on with Covid stimulus packages and MMT I am not surprised it was a false positive. I will keep you all posted on this front if it starts to look inverted again.


The new all time high on the equity markets was not a normal new bull market high. Check this chart by Goldman Sachs. Wow giving politicians and central bankers near unlimited printing ink does provide a tsunami of buying power.



Just when you thought everything was heating up, Coal futures seem to be Cool Futures now.

Daily Insights