The Macro Outlook for 2025: BIG Moves Ahead

00:59:32
https://www.youtube.com/watch?v=rC2AXaD974Y

Ringkasan

TLDRConsensus Hong Kong 2025 is a vital gathering for the global crypto community, focusing on the emerging Web 3. Scheduled from February 18th to 20th, 2025, in Hong Kong, this event serves as a meeting point for leaders in finance, technology, and digital assets. Participants can expect exclusive networking opportunities, expert-led sessions, and valuable insights from top industry voices. The conversations will emphasize the significance of macroeconomic trends on investment strategies, highlighting the importance of the business cycle in determining asset performance. Attendees will also learn about the Macro Investing Tool, which simplifies market analysis for investors, enhancing their understanding and decision-making abilities. This event is not just a conference but a platform for forging partnerships and exploring new opportunities in the ever-evolving crypto landscape.

Takeaways

  • 🌍 Consensus Hong Kong 2025 is a pivotal crypto event.
  • 📅 Date: February 18-20, 2025 in Hong Kong.
  • 🤝 Key networking opportunities for attendees.
  • 🎤 Expert-led sessions on finance and technology.
  • 💡 Insights from leadership across digital assets.
  • 📈 Focus on understanding the business cycle impact.
  • 🔧 Introduction to the Macro Investing Tool.
  • 💰 Use code 'realvision15' for 15% discount.
  • 🔑 Aimed at shaping the future of Web 3.
  • 🌟 Opportunity to forge new partnerships.

Garis waktu

  • 00:00:00 - 00:05:00

    Consensus Hong Kong 2025 is a key event where global leaders in finance, technology, and digital assets will converge from February 18th to 20th. It offers networking lounges, expert-led sessions, and opportunities for partnerships and deal-making, marking a significant moment for the crypto community.

  • 00:05:00 - 00:10:00

    The host introduces the podcast and emphasizes the importance of liking and subscribing to enhance the show's visibility and improve the quality of guests.

  • 00:10:00 - 00:15:00

    The focus of the show is on the macroeconomic landscape as seen through the lens of the host's extensive experience in finance. The host discusses the significance of the business cycle and its impact on asset allocation, particularly as it relates to cryptocurrencies and digital assets.

  • 00:15:00 - 00:20:00

    The host introduces Julian Bell, a business cycle analyst, who has helped build a robust framework for understanding the correlations between asset classes and business cycles, enhancing clarity in financial market dynamics.

  • 00:20:00 - 00:25:00

    The macro investing tool developed by Real Vision is highlighted as a popular resource for users, providing insights into where investments should be made based on the business cycle and macroeconomic indicators.

  • 00:25:00 - 00:30:00

    The episode's focus shifts to insights gained from a recent trip to Miami, where the host met various clients and discussed ongoing macroeconomic data trends. Upcoming data from ISM (Institute for Supply Management) will be crucial for assessing current economic conditions.

  • 00:30:00 - 00:35:00

    A recap of macroeconomic metrics shows a mix of growth momentum with some countries transitioning to macro fall, driven by inflationary pressures. The host advises caution as corporate margins are under pressure due to rising costs, while these changes may be temporary rather than indicative of a longer-term downturn.

  • 00:35:00 - 00:40:00

    Analysis of growth momentum reveals a positive trend in expansion indicators, despite a slight uptick in macro fall classifications. The host believes that recent tightening of financial conditions will soon reverse, fostering an environment conducive to growth.

  • 00:40:00 - 00:45:00

    The presentation provides insights into recent global economic data, including an uptick in macro indicators and growth expectations. The speaker emphasizes the need to consider broader economic contexts when evaluating short-term data fluctuations.

  • 00:45:00 - 00:50:00

    The evolving dollar dynamics and financial conditions are explored, with a push for a lower dollar being identified as beneficial for risk assets in the face of market pressures, with historical parallels drawn to prior economic cycles.

  • 00:50:00 - 00:59:32

    The discourse wraps up with a look towards 2025, positing that significant changes in the macroeconomic landscape will lead to a favorable environment for risk assets, encouraging viewers to adopt a framework for better investment decision-making.

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Peta Pikiran

Video Tanya Jawab

  • What is Consensus Hong Kong 2025?

    A major event where the global crypto community gathers to shape the future of Web 3.

  • When is Consensus Hong Kong 2025 scheduled?

    From February 18th to February 20th, 2025.

  • What can attendees expect at Consensus?

    Networking lounges, expert-led sessions, and insights from industry leaders.

  • How can I register for the event?

    Visit coindes.com/consensusdhk to secure your spot.

  • What discount code can I use for registration?

    Use the code 'realvision15' for a 15% discount.

  • What topics will be discussed at the event?

    Topics include finance, technology, digital assets, and macroeconomic trends.

  • Who are the key speakers at Consensus?

    Industry leaders from finance, tech, and digital assets.

  • What is the Macro Investing Tool?

    A product designed to help investors understand macroeconomic dynamics.

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Gulir Otomatis:
  • 00:00:01
    consensus Hong Kong 2025 is where the
  • 00:00:04
    global crypto Community converges to
  • 00:00:06
    shape the next era of web 3 from
  • 00:00:09
    February 18th through the 20th Hong Kong
  • 00:00:11
    becomes the meeting point for leaders
  • 00:00:13
    across Finance technology and digital
  • 00:00:15
    assets this isn't just a conference it's
  • 00:00:18
    where deals are made Partnerships are
  • 00:00:20
    forged and New Opportunities emerge
  • 00:00:22
    consensus features exclusive networking
  • 00:00:24
    lounges expert-led sessions and
  • 00:00:27
    invaluable insights from Top industry
  • 00:00:29
    voices whether you're expanding your
  • 00:00:31
    network building your brand or closing
  • 00:00:33
    your next big deal this is the event
  • 00:00:36
    that moves markets visit coind des.com
  • 00:00:40
    consensus dhk to secure your spot and
  • 00:00:43
    use realvision 15 for 15% off don't miss
  • 00:00:47
    your chance to be part of the industry's
  • 00:00:49
    defining
  • 00:00:53
    moment hi everyone sorry to interrupt
  • 00:00:55
    but this is the cheesy podcast bit that
  • 00:00:57
    gets on everyone's nerves but it's
  • 00:00:58
    really important to me pleas please if
  • 00:01:00
    you can like the channel and also
  • 00:01:02
    subscribe it helps me a lot to get the
  • 00:01:04
    best guess in the world for you guys so
  • 00:01:07
    click like And subscribe appreciate it
  • 00:01:10
    thanks hi I'm R pal and welcome to my
  • 00:01:14
    show the journeyman as you know by now
  • 00:01:17
    the journeyman is my exploration into
  • 00:01:19
    that Nexus of macr crypto and the
  • 00:01:22
    exponential age of
  • 00:01:25
    technology today we're going to talk a
  • 00:01:27
    bit about macro you see macro is the
  • 00:01:30
    lens through which I see the world it is
  • 00:01:33
    my 35 years of experience working at
  • 00:01:36
    Goldman Sachs running a hedge fund and
  • 00:01:38
    writing Global macro investor my
  • 00:01:40
    research service I was one of the
  • 00:01:43
    pioneers of using the business cycle for
  • 00:01:46
    asset allocation and I found that it has
  • 00:01:48
    been the most invaluable tool of all
  • 00:01:52
    time so much so that I have even gone to
  • 00:01:55
    universities and lectured about it
  • 00:01:57
    because it's not usually taught
  • 00:02:00
    the relationship between asset classes
  • 00:02:02
    and the business cycle is the magic gift
  • 00:02:04
    that keeps on giving once you understand
  • 00:02:07
    where the econom is going you understand
  • 00:02:09
    where assets are going and that applies
  • 00:02:11
    to crypto technology Emerging Markets
  • 00:02:15
    the dollar bond yields everything all
  • 00:02:18
    fall within this magic cycle the
  • 00:02:22
    business
  • 00:02:22
    cycle now a global macro
  • 00:02:25
    investor I've always had a business
  • 00:02:27
    cycle analyst working along with me and
  • 00:02:30
    Julian Bell is my right-hand man he is
  • 00:02:34
    the greatest business cycle analyst I
  • 00:02:36
    think in the world
  • 00:02:37
    today he at Global macro investor along
  • 00:02:40
    with myself have built the largest
  • 00:02:43
    framework of understanding of the
  • 00:02:44
    business cycle the correlations and
  • 00:02:48
    forecasts of which how it's How it
  • 00:02:51
    drives the asset classes and what it
  • 00:02:53
    means to all of us he's built a
  • 00:02:55
    framework around where we are in the
  • 00:02:57
    macro and crypto Seasons what assets are
  • 00:03:00
    supposed to be good doing well at
  • 00:03:01
    certain times it basically demystifies
  • 00:03:05
    all the financial
  • 00:03:07
    markets and at real Vision we developed
  • 00:03:09
    a product called the macro investing
  • 00:03:12
    tool to help you in that journey to make
  • 00:03:16
    it easy to make it idiot proof to give
  • 00:03:18
    you conviction and understanding of
  • 00:03:20
    where things are going and why they're
  • 00:03:22
    going there it gets rid of all of the
  • 00:03:24
    noise the macro investment tool is
  • 00:03:26
    literally the single most popular thing
  • 00:03:28
    we've ever launched at real Vision it
  • 00:03:30
    comes out weekly and it's uh Julian does
  • 00:03:33
    both a video version and written
  • 00:03:35
    versions guiding you exactly where it is
  • 00:03:38
    and then there's the template of the
  • 00:03:40
    overall asset allocation and what you
  • 00:03:42
    should be looking at at various points
  • 00:03:44
    so what I'm going to do with something
  • 00:03:45
    special this week um Julian every month
  • 00:03:49
    does an update on the macro um with all
  • 00:03:53
    of his charts all of his business cycle
  • 00:03:55
    framework and I'm going to drop that
  • 00:03:57
    here for you you will find it
  • 00:03:59
    astonishingly useful and it will open
  • 00:04:02
    your eyes to the power of having that
  • 00:04:05
    kind of information from the macro
  • 00:04:07
    investing tool at your fingertips and
  • 00:04:09
    how it can help you in your journey and
  • 00:04:12
    you can get it either as a standalone
  • 00:04:14
    product or you can get it as part of
  • 00:04:17
    real Vision Plus but one thing I I know
  • 00:04:19
    for sure because this is the single most
  • 00:04:21
    common response of it this has changed
  • 00:04:23
    my life it will change your life anyway
  • 00:04:26
    enjoy the presentation by Julian join
  • 00:04:29
    join me Ral pal as I go on a journey of
  • 00:04:32
    Discovery through the macro crypto and
  • 00:04:35
    exponential age landscapes in the
  • 00:04:37
    journey man I talk to the smartest
  • 00:04:39
    people in the world so we can all become
  • 00:04:42
    smarter
  • 00:04:47
    together hey everyone and welcome back
  • 00:04:50
    to the first annual installment of MIT
  • 00:04:54
    for
  • 00:04:55
    2025 as many of you um may have noticed
  • 00:04:58
    this was supposed to be done last week
  • 00:05:01
    but with the trip to Miami and and
  • 00:05:03
    everything else I decided to push it
  • 00:05:04
    back a week because I'd have a bit more
  • 00:05:06
    time uh to put the pack together get the
  • 00:05:09
    flow right and also because you had the
  • 00:05:11
    written report you will have known the
  • 00:05:13
    signaling so it wasn't as crucial that I
  • 00:05:16
    do the video um and when I push it out a
  • 00:05:18
    week as well it's kind of helpful
  • 00:05:20
    sometimes because it means that we have
  • 00:05:21
    the ism data so we'll be going over the
  • 00:05:23
    latest report uh for January
  • 00:05:26
    today but before we get into the data
  • 00:05:28
    what I really just wanted to say was how
  • 00:05:30
    much of a blast it was getting to meet
  • 00:05:33
    so many of you in Miami over the weekend
  • 00:05:36
    you know I did a catamaran cruise around
  • 00:05:38
    50 people um oh here's is here's got
  • 00:05:41
    there that's the MIT uh update that was
  • 00:05:43
    a round table I did there's the round
  • 00:05:46
    table still um again the round table
  • 00:05:49
    I'll talk about that in a second and
  • 00:05:51
    then what comes next still me just
  • 00:05:54
    blabbering on then we had a thing for
  • 00:05:56
    GMI clients and it was more of just a
  • 00:05:58
    low-key meet out just because once the
  • 00:06:00
    party started I wasn't going to have a
  • 00:06:01
    whole lot of time to spend with them and
  • 00:06:03
    neither was Ral so we did that which was
  • 00:06:05
    a lot of fun then we did the wine
  • 00:06:07
    tasting with club uh divin and of course
  • 00:06:11
    there I am just schooling uh uh raal on
  • 00:06:14
    wine and and then uh the me and a golf
  • 00:06:17
    cart of course too many glasses of wine
  • 00:06:20
    and uh the bont blowing in the wind but
  • 00:06:23
    it was just such a blast and and before
  • 00:06:25
    and and the the pick just before that
  • 00:06:26
    you saw Sergio Silva with me talk in in
  • 00:06:30
    in at the party and he actually gave me
  • 00:06:32
    this hoodie just AI bit hoodie so I had
  • 00:06:35
    to throw it on had to Rock It for the
  • 00:06:37
    first show um and then I'm trying to
  • 00:06:41
    think oh yeah that that the MIT Round
  • 00:06:43
    Table was really great because I didn't
  • 00:06:45
    really know what I wanted to do with it
  • 00:06:47
    in the beginning whether it would be an
  • 00:06:48
    AMA no one wants to see me present
  • 00:06:50
    because I'm already presenting you know
  • 00:06:52
    monthly but um I decided to kind of peel
  • 00:06:55
    the curtain back behind MIT and show
  • 00:06:58
    both the model uh how it works and then
  • 00:07:00
    also some of the charting features on
  • 00:07:02
    data stream how it is that we use the
  • 00:07:04
    data how we optimize lags leads and so I
  • 00:07:06
    think it was really cool and um and it
  • 00:07:09
    might be worth doing a show about it at
  • 00:07:11
    some point so that you know all of you
  • 00:07:13
    can see it and the the only other thing
  • 00:07:15
    I'll say about that is if you didn't
  • 00:07:16
    come this year you got to come next year
  • 00:07:18
    because it just it was really a lot of
  • 00:07:21
    fun um and then as I was leaving uh I
  • 00:07:25
    put out a tweet on on Twitter or X about
  • 00:07:28
    how much fun it was got in the air
  • 00:07:30
    reviewed a lot of the macro stuff we're
  • 00:07:31
    going to go through now feeling good
  • 00:07:33
    about it landed still feeling good about
  • 00:07:35
    it landed as someone's like sir have you
  • 00:07:37
    checked your bags and not like did you
  • 00:07:39
    check your bags like have you checked
  • 00:07:40
    your portfolio I did uh got home plugged
  • 00:07:44
    in my ledger and added to my convictions
  • 00:07:46
    and
  • 00:07:47
    so what I'm hoping this presentation
  • 00:07:50
    does for you is um there's a lot of
  • 00:07:53
    noise out there I mean tariffs are not
  • 00:07:55
    just noise there's something in that but
  • 00:07:57
    when you zoom out and you look at the me
  • 00:07:58
    the bigger macro picture it's Noise
  • 00:08:01
    Within A a full cycle framework so I
  • 00:08:04
    think as I say you know I give you these
  • 00:08:06
    you'll have these charts like you always
  • 00:08:08
    do I'm going to run through them once
  • 00:08:09
    with you but then also you know in your
  • 00:08:11
    own time sit down with them and try and
  • 00:08:12
    think about them and I think it'll help
  • 00:08:14
    you um tone down the noise at least hi R
  • 00:08:19
    here listen I think we've got until 2030
  • 00:08:23
    before the economic Singularity arrives
  • 00:08:25
    now it might not be the exact date but
  • 00:08:27
    it's around then so we have about six
  • 00:08:30
    years to figure out how to unfuck our
  • 00:08:32
    future I've put together a report to
  • 00:08:34
    help you called prepare for 2030 it's
  • 00:08:37
    going to help you take the first steps
  • 00:08:39
    in that journey to make sure you're
  • 00:08:41
    secure past 2030 so just click on the
  • 00:08:44
    link below and start your journey now so
  • 00:08:48
    today slacking I don't know slacking a
  • 00:08:50
    little bit got 84 slides so we should be
  • 00:08:53
    able to get through it within the hour
  • 00:08:55
    uh but let's go I've got a lot I'm going
  • 00:08:57
    to end on something I think I think will
  • 00:08:59
    be really helpful for a lot of you
  • 00:09:01
    called 2021 bitcoin's truncated cycle
  • 00:09:04
    because I think a lot of people are
  • 00:09:05
    concerned about that cycle um and I'm
  • 00:09:08
    going to talk about exactly what was
  • 00:09:09
    going on and why I think this time it's
  • 00:09:12
    the opposite okay so let's uh get into
  • 00:09:15
    it as always for those of you who are
  • 00:09:18
    new to MIT this is just a little bit of
  • 00:09:20
    background around the different macro
  • 00:09:23
    regimes uh and then on on the right
  • 00:09:25
    you've just got some text that I put
  • 00:09:26
    together but you know as I always say
  • 00:09:28
    this is something for you to review
  • 00:09:29
    in your own time and if you have
  • 00:09:31
    questions you know please post them or
  • 00:09:32
    bring them to the amas uh but again this
  • 00:09:35
    is just for you to kind of make sense of
  • 00:09:37
    what I'm talking
  • 00:09:38
    about okay the data so at a global level
  • 00:09:42
    you know December data painted an
  • 00:09:44
    interesting picture because we saw an
  • 00:09:45
    increase in the percentage of countries
  • 00:09:47
    scoring in uh macro summer so that went
  • 00:09:51
    higher but then we also saw a rise in
  • 00:09:53
    those shifting into macro fall alongside
  • 00:09:55
    with a pretty clear drop of the number
  • 00:09:56
    of countries scoring in macro spring now
  • 00:09:59
    if you remember I had anticipated a
  • 00:10:01
    brief backwards cycle transition into
  • 00:10:03
    macros spring last year however as I
  • 00:10:05
    emphasized in the November report the
  • 00:10:07
    broader structural forces were always
  • 00:10:09
    pointing towards a rotation back into
  • 00:10:11
    macro
  • 00:10:12
    summer and regarding the pickup in macro
  • 00:10:15
    fall I see this as more of a red herring
  • 00:10:18
    than a genuine structural shift in macro
  • 00:10:20
    regime yes inflation has started to take
  • 00:10:23
    a little higher uh in some of the
  • 00:10:25
    countries currently scoring in macro
  • 00:10:27
    fall so there we have what UK Germany
  • 00:10:29
    Brazil Japan and a few others but if you
  • 00:10:32
    zoom out for a moment remember that
  • 00:10:34
    macro fall is a regime where growth
  • 00:10:36
    momentum is slowing while inflation and
  • 00:10:38
    momentum is accelerating and it's one of
  • 00:10:40
    the trickiest macro regimes to navigate
  • 00:10:44
    not so much in terms of what assets to
  • 00:10:46
    own but really how much beta risk you
  • 00:10:49
    want to run in your portfolio and the
  • 00:10:51
    reason being is growth is slowing and
  • 00:10:53
    inflation is rising which if you're
  • 00:10:55
    running a business means your Top Line
  • 00:10:57
    growth is falling so sales are falling
  • 00:10:59
    with the business cycle and
  • 00:11:00
    simultaneously costs are rising whether
  • 00:11:02
    that's inputs or wages input costs or
  • 00:11:04
    wages are going up so that creates a
  • 00:11:06
    double whammy for corporate margins
  • 00:11:08
    which then puts earnings uh Under
  • 00:11:10
    Pressure which can make it a tough
  • 00:11:12
    environment to navigate when it comes to
  • 00:11:14
    allocating to risk assets you know that
  • 00:11:17
    said I think the slight pick up in macro
  • 00:11:20
    fall is entirely a result of the recent
  • 00:11:22
    tightening of financial conditions which
  • 00:11:24
    as we've discussed before is something
  • 00:11:26
    we've been exped to reverse and in fact
  • 00:11:28
    that's already happening so my view is
  • 00:11:31
    that this isn't a key inflection point
  • 00:11:34
    into a more prolonged cycle of macro
  • 00:11:37
    fall um so a phase of that instead it's
  • 00:11:40
    more likely a temporary speed bump uh
  • 00:11:43
    and I'll break this down for you and and
  • 00:11:45
    put on the additional layers of you know
  • 00:11:47
    why I I think that it's that way as we
  • 00:11:50
    work through uh the slides okay so very
  • 00:11:53
    normal flow we'll go through glow growth
  • 00:11:55
    we'll go through inflation we'll talk
  • 00:11:57
    about macro summer and why dips are for
  • 00:12:00
    buying uh and then I'll go through the
  • 00:12:01
    2021 truncated cycle
  • 00:12:03
    okay so when we look at growth momentum
  • 00:12:06
    in December the percentage of countries
  • 00:12:08
    scoring an expansion bucket actually
  • 00:12:10
    ticked higher uh to
  • 00:12:12
    58.8% that's up from
  • 00:12:15
    52.9% uh just two months ago now the
  • 00:12:18
    shift is consistent what we saw with a
  • 00:12:20
    lot a lot of during the second half of
  • 00:12:22
    last year so a rotation out of recovery
  • 00:12:25
    and into expansion so very normal
  • 00:12:27
    business cycle phasing at the same time
  • 00:12:29
    and as I mentioned earlier we've seen a
  • 00:12:30
    slight tick uptick in the Slowdown
  • 00:12:33
    bucket but for now I'm really not
  • 00:12:34
    concerned about this I think um the move
  • 00:12:37
    higher will reverse soon the other key
  • 00:12:39
    takeaway is that the contraction bucket
  • 00:12:41
    remains at zero which is an important
  • 00:12:42
    signal in itself so from a pure growth
  • 00:12:45
    perspective there's just no need uh I
  • 00:12:48
    believe to panic at this stage you know
  • 00:12:49
    the business cycle still strugging uh uh
  • 00:12:51
    chugging along and the continued surge
  • 00:12:54
    in the expansion bucket is a very
  • 00:12:56
    positive sign so it's giving us clear
  • 00:12:58
    evidence that the under Ling Trend and
  • 00:12:59
    momentum remains intact without being
  • 00:13:02
    above let's say the 80th percentile
  • 00:13:04
    which is typically where you want to be
  • 00:13:06
    a bit more
  • 00:13:09
    contrarian then if we look at the
  • 00:13:10
    percentage of country scoring in what I
  • 00:13:12
    call favorable macro regimes so spring
  • 00:13:15
    sorry uh expansion and Recovery we
  • 00:13:17
    dipped a little bit to 70.6 in December
  • 00:13:19
    but when you step back and you consider
  • 00:13:21
    the 8mon lead time here I'm still very
  • 00:13:23
    confident that we're positioned well for
  • 00:13:26
    the global manufacturing PMI to Trend
  • 00:13:28
    higher this year and start closing the
  • 00:13:29
    Gap and in fact when you look at the
  • 00:13:31
    January PMI data this is the the beauty
  • 00:13:34
    of pushing this presentation out by one
  • 00:13:36
    one week is we saw the global PMI tick
  • 00:13:38
    higher to 50.1 from 49.6 in the
  • 00:13:42
    summer now as I mentioned earlier much
  • 00:13:44
    of the Slowdown we've seen in some lead
  • 00:13:46
    indicators like here for example uh we
  • 00:13:49
    have the oecd composite lead indicators
  • 00:13:51
    so the
  • 00:13:52
    clis um and the the Slowdown that we've
  • 00:13:55
    seen and I've talked about this is a
  • 00:13:56
    direct result of the tightening in
  • 00:13:58
    financial conditions we saw during Q4 so
  • 00:14:00
    think dollar up bond yields up okay
  • 00:14:03
    however as R and I have both laid out
  • 00:14:06
    independently and together across
  • 00:14:08
    various formats brings with raal uh you
  • 00:14:10
    know him and I doing our macro segment
  • 00:14:12
    together MIT we've been expecting
  • 00:14:14
    Financial conditions to start easing and
  • 00:14:16
    that's exactly what we've seen happen so
  • 00:14:18
    far this year so think dollar down bond
  • 00:14:19
    yields down oil down right all peaked
  • 00:14:22
    around the 13th of
  • 00:14:23
    January now let me show you some more
  • 00:14:27
    charts on this and walk you through our
  • 00:14:30
    thinking here just so that we're
  • 00:14:31
    absolutely crystal clear on how we're
  • 00:14:34
    thinking about this uh and and where we
  • 00:14:35
    stand with
  • 00:14:37
    it so as I included in the monthly
  • 00:14:39
    report the first thing that we need to
  • 00:14:41
    talk about is the dollar okay for some
  • 00:14:44
    time now R and I have been drawing the
  • 00:14:45
    parallels between the 2017 or the late
  • 00:14:47
    2016 2017 cycle uh and the current cycle
  • 00:14:51
    and the following chart makes obviously
  • 00:14:53
    that comparison crystal clear the
  • 00:14:55
    turning point for the dollar back then
  • 00:14:57
    was mid January 2017
  • 00:14:59
    when Trump just days before his
  • 00:15:01
    inauguration told the Wall Street
  • 00:15:03
    Journal that the dollar was too strong
  • 00:15:05
    and that single comment basically set
  • 00:15:06
    the stage for the dollar to move lower
  • 00:15:08
    for most of 2017 and now you fast
  • 00:15:11
    forward to today and we're seeing
  • 00:15:12
    history rhun right and Trump ever
  • 00:15:13
    attuned to the Dollar's impact hasn't at
  • 00:15:16
    all shed away from this issue you know
  • 00:15:19
    last year he was saying that the recent
  • 00:15:20
    dollar strength was a tremendous burden
  • 00:15:23
    to us businesses and Trump knows that a
  • 00:15:25
    strong dollar impacts the economy right
  • 00:15:27
    it suppresses exports hurts corporate
  • 00:15:29
    ings uh and it generally just slows
  • 00:15:30
    growth so he knows that and then a few
  • 00:15:32
    weeks ago Trump weighed in again saying
  • 00:15:34
    interest rates are far too high right
  • 00:15:36
    and something I posted on
  • 00:15:37
    xabout and here's why this matters
  • 00:15:41
    because a weaker dollar and lower bond
  • 00:15:43
    yields just as we saw in 2017 becomes a
  • 00:15:45
    massive Tailwind for risk assets to
  • 00:15:48
    Rally pretty much across the board
  • 00:15:49
    because it frees up
  • 00:15:53
    liquidity I also think this take from
  • 00:15:56
    Ral on X uh which he
  • 00:15:59
    posted uh I think on Monday is is
  • 00:16:03
    exactly right right the strong dollar
  • 00:16:04
    today puts Trump in a powerful position
  • 00:16:06
    to negotiate with other countries
  • 00:16:08
    particularly China who desperately needs
  • 00:16:10
    the dollar to weaken so the pboc can
  • 00:16:13
    start to step up liquidity additions so
  • 00:16:15
    this is why the dollar is so crucial to
  • 00:16:17
    the big macro picture because it's
  • 00:16:19
    literally the fulcrum of global
  • 00:16:21
    liquidity and as I outlined in the
  • 00:16:22
    monthly report are base cases that the
  • 00:16:24
    dollar uh you know grinds lower over the
  • 00:16:27
    course of the year you know not it's not
  • 00:16:29
    going to be a straight line it hasn't
  • 00:16:30
    been so far but you know the trend to
  • 00:16:32
    Trend
  • 00:16:33
    lower it's also important you know to
  • 00:16:36
    understand that the rise in the dollar
  • 00:16:38
    has already baked a soft patch into the
  • 00:16:41
    cake now what do I mean by that well
  • 00:16:43
    what I mean is that because the dollar
  • 00:16:45
    and bond yields basically went vertical
  • 00:16:46
    in Q4 of last year Financial conditions
  • 00:16:48
    tightened okay and that's why we've seen
  • 00:16:52
    us City economic surprises um off their
  • 00:16:56
    Peak levels back in November and we
  • 00:16:58
    expect that to continue lower over the
  • 00:17:00
    near term and I believe this setup is
  • 00:17:02
    exactly what paves the way for the FED
  • 00:17:03
    to soon step in and begin easing rates
  • 00:17:06
    further or at least adjust the language
  • 00:17:08
    right because in Q4 the thing is is the
  • 00:17:12
    Fed started with all this hawkish
  • 00:17:14
    rhetoric and bond yields and the dollar
  • 00:17:16
    both went higher the point being is that
  • 00:17:19
    the the fact that the dollar went higher
  • 00:17:21
    and rates went higher that's done the
  • 00:17:23
    tightening for them right so much so now
  • 00:17:26
    that the FED will need to B cool there
  • 00:17:29
    Jets a little in terms of the language
  • 00:17:31
    because we're going to see temporarily I
  • 00:17:33
    believe a soft patch in economic
  • 00:17:35
    surprises now that doesn't mean that
  • 00:17:38
    doesn't mean at all that the ism can't
  • 00:17:40
    work lower I think there was some
  • 00:17:41
    confusion about this it just means that
  • 00:17:43
    consensus estimates around the data
  • 00:17:45
    we've seen this this week actually even
  • 00:17:47
    with I just CL close boomberg uh even
  • 00:17:49
    with jobless claims and you know durable
  • 00:17:52
    goods they all came in below consensus
  • 00:17:54
    expectations right so that's when you
  • 00:17:55
    get a negative surprise is when someone
  • 00:17:56
    says durable goods orders are going to
  • 00:17:58
    rise at 0.2% month on month and instead
  • 00:18:01
    they're minus 0.3 see that's that
  • 00:18:03
    creates an economic surprise well at the
  • 00:18:05
    same time the data could actually still
  • 00:18:07
    be improving right so that's the the
  • 00:18:09
    gist here um and then here's the same
  • 00:18:12
    chart gist versus rates so last time I
  • 00:18:14
    had the dollar inverted Advanced by two
  • 00:18:16
    months and here we have 10year bond
  • 00:18:18
    yields again inverted and advanced by
  • 00:18:20
    two months but it gives you it helps you
  • 00:18:23
    understand how it is that economic s
  • 00:18:25
    prices can work lower and it's just
  • 00:18:27
    because Financial conditions work with
  • 00:18:29
    lead and interestingly we saw exactly
  • 00:18:32
    the same thing in 2017 triggered by the
  • 00:18:35
    dollar surge in the fourth quarter of
  • 00:18:37
    2016 this upswing in the dollar led to
  • 00:18:39
    title Financial conditions which in turn
  • 00:18:41
    tempered economic surprises for a period
  • 00:18:43
    of time pretty much mirroring what we're
  • 00:18:45
    seeing today but then the scenario
  • 00:18:47
    eventually flipped as both the dollar
  • 00:18:49
    and rates came in lower right which then
  • 00:18:52
    uh economic surprises started to come in
  • 00:18:54
    strong and actually growth rebounded uh
  • 00:18:57
    quite really
  • 00:18:59
    stronger I also believe and this will be
  • 00:19:02
    a chart you're familiar with now is here
  • 00:19:04
    looking at now we're looking at both the
  • 00:19:06
    dollar and rates right so combined and
  • 00:19:09
    and the deviation from Trend um that
  • 00:19:12
    will soon begin pricing in more rate
  • 00:19:14
    cuts into the forward curve now I said
  • 00:19:15
    earlier in the year when just one rate
  • 00:19:17
    cut was priced into the forward curve
  • 00:19:19
    for all of 2025 that that was a
  • 00:19:20
    shockingly low bar considering Trump's
  • 00:19:22
    return to office and we've since priced
  • 00:19:25
    in pretty much an additional cut right
  • 00:19:26
    so we we've got like two cuts priced
  • 00:19:29
    about to into the forward curve so
  • 00:19:30
    that's already doubled but I still think
  • 00:19:32
    that this's room and you can see the Gap
  • 00:19:33
    that opened up in 2024 so I think that
  • 00:19:36
    there's room for this now you know to
  • 00:19:38
    come down and while Trump well I should
  • 00:19:41
    say while the president isn't supposed
  • 00:19:44
    to interfere with the FED Trump has
  • 00:19:46
    shown in the past that he's got no issue
  • 00:19:49
    and is not shy of making his preferences
  • 00:19:51
    known and so I think that he's likely to
  • 00:19:54
    push rout relatively aggressively for
  • 00:19:56
    lower rates framing it as it's NE
  • 00:19:58
    necessary to boost growth especially
  • 00:20:01
    given um that he's looking to deliver on
  • 00:20:04
    you know all of his campaign promises
  • 00:20:06
    and then when we talk about Vance who
  • 00:20:07
    aligns very closely with Trump's broader
  • 00:20:09
    economic policies he's too been very
  • 00:20:11
    vocal on implementing policies to ease
  • 00:20:15
    Financial Comm conditions and even using
  • 00:20:16
    that word Financial conditions so I
  • 00:20:17
    think together they can exert
  • 00:20:20
    significant pressure uh political
  • 00:20:22
    pressure for the FED to act and then I
  • 00:20:24
    think the last point I'd kind of throw
  • 00:20:26
    in there is that
  • 00:20:28
    even though the FED is on paper
  • 00:20:32
    operating independently they don't
  • 00:20:34
    operate in a vacuum and so I think the
  • 00:20:36
    bottom line here is we're going to get
  • 00:20:38
    more cowbell this
  • 00:20:40
    year and speaking of more cowbell the
  • 00:20:43
    recent move lower in the dollar has
  • 00:20:45
    already triggered a fairly significant
  • 00:20:48
    uh Rebound in global M2 values it's
  • 00:20:51
    literally literally the mirror image of
  • 00:20:53
    the Trump 277 Playbook at this point and
  • 00:20:57
    as we pointed out previously
  • 00:20:59
    2017 being another prime example Global
  • 00:21:01
    M2 has just come back to retest the
  • 00:21:03
    breakout Zone before pushing higher and
  • 00:21:05
    so this is a pattern we've seen play out
  • 00:21:08
    uh uh many times over the years which
  • 00:21:12
    has always been an important signal to
  • 00:21:14
    watch when it comes to bitcoin and other
  • 00:21:16
    risk assets it's a signal we pointed out
  • 00:21:18
    in MIT back in July in the July report
  • 00:21:21
    um right as it was breaking out and
  • 00:21:23
    since then even taking into account the
  • 00:21:25
    current pullback that we've seen
  • 00:21:26
    bitcoin's up 76%
  • 00:21:29
    okay so not too shabby now let's come
  • 00:21:32
    back to growth um the absolute surge in
  • 00:21:37
    Philly fed new orders this Jam January
  • 00:21:39
    if you've been following this reports is
  • 00:21:41
    exactly what we have been expecting now
  • 00:21:43
    as I had been pointing out it's always
  • 00:21:45
    the expectations components within the
  • 00:21:49
    headline numbers for the in the regional
  • 00:21:51
    fed surveys that are leading right so
  • 00:21:53
    throughout Q4 especially after Trump
  • 00:21:55
    came in we saw expectations in the
  • 00:21:57
    regional fed surveys quite literally
  • 00:21:59
    explode higher at the same time as that
  • 00:22:02
    was happening whether we're talking
  • 00:22:03
    about manufacturing surveys whether
  • 00:22:04
    we're talking about consumer confidence
  • 00:22:06
    CEO confidence you know what whatever it
  • 00:22:08
    is investor confidence across the board
  • 00:22:10
    when you look at current conditions
  • 00:22:11
    versus expectations current conditions
  • 00:22:13
    were relatively muted but expectations
  • 00:22:15
    were skyrocketing but again as we had
  • 00:22:18
    emphasized at the time it's the
  • 00:22:19
    expectation components that you want to
  • 00:22:21
    focus on because that will eventually
  • 00:22:23
    feed filter through uh into current
  • 00:22:26
    conditions and then if we speak about
  • 00:22:29
    you know coming back to expectations
  • 00:22:32
    when you bundle all of the Philly fed
  • 00:22:34
    expectation subc components so here
  • 00:22:36
    we're talking about employment new
  • 00:22:37
    orders yada y yada the outlook for
  • 00:22:40
    manufacturing sector just hit a fresh
  • 00:22:42
    30-month high and in my view this lays
  • 00:22:44
    the groundwork for the ism to make a
  • 00:22:46
    strong comeback this year and we'll talk
  • 00:22:48
    a bit more about that when we come on to
  • 00:22:49
    the ism uh in a little bit additionally
  • 00:22:52
    Philly fed capex intentions absolutely
  • 00:22:55
    exploded higher as well and this is a
  • 00:22:56
    hugely positive signal because Rising
  • 00:22:58
    capex intentions across manufacturing
  • 00:23:00
    surveys like we're seeing here is a
  • 00:23:02
    clear indication of confidence returning
  • 00:23:04
    into the system you know when companies
  • 00:23:05
    start ramping up investment plans it
  • 00:23:07
    means they're positioning for future
  • 00:23:08
    growth driving productivity creating
  • 00:23:10
    jobs and injecting you know fresh
  • 00:23:12
    momentum uh into the economy so this
  • 00:23:14
    kind of spike in capex intentions is
  • 00:23:17
    exactly what we'd expect to see in the
  • 00:23:18
    early sign at the early stages of a c
  • 00:23:21
    cyclical recovery and it reinforces and
  • 00:23:23
    facilitates a broader economic rebound
  • 00:23:25
    because it starts to feed on itself
  • 00:23:27
    right it's like a recur feedback loop
  • 00:23:30
    Empire capex intentions you know also
  • 00:23:32
    moved higher not as dramatic as Philly
  • 00:23:35
    but still you know hitting the highest
  • 00:23:37
    confidence level since April of 2023 so
  • 00:23:39
    I think overall this is a hugely
  • 00:23:41
    positive sign and I fully expect this uh
  • 00:23:44
    strength to build uh as we progress
  • 00:23:46
    through the
  • 00:23:48
    year now then there's the this is now
  • 00:23:51
    then there's the nfib small business
  • 00:23:53
    survey which I mean surged right in
  • 00:23:56
    December and here again then this was a
  • 00:23:59
    move that we were anticipating why
  • 00:24:01
    because as I have been pointing out the
  • 00:24:03
    outlook for General business conditions
  • 00:24:05
    which is one of the subcomponents so
  • 00:24:07
    that would be um that would be the nfib
  • 00:24:10
    equivalent of expectations was going
  • 00:24:12
    higher months before this did what I
  • 00:24:14
    think is also interesting is the last
  • 00:24:16
    time we saw this kind of surge in small
  • 00:24:18
    business confidence was December of 2016
  • 00:24:21
    right after Trump's victory over Clinton
  • 00:24:22
    so you can see I've highlighted both of
  • 00:24:24
    them in those pink bars that that was
  • 00:24:26
    that was December 2016 this is December
  • 00:24:29
    uh 2024 so and then we just went a
  • 00:24:31
    little bit higher but the point is that
  • 00:24:32
    was for all of 2017 right confidence was
  • 00:24:35
    choppy but grinding
  • 00:24:38
    higher okay let's talk about the ism so
  • 00:24:43
    you you'll remember this chart um again
  • 00:24:45
    had you been reading uh MIT because
  • 00:24:49
    there was a a huge cohort of people that
  • 00:24:52
    were sounding alarm Bells when the ism
  • 00:24:54
    did it sort of P or this is ISM the
  • 00:24:57
    orders when the ism rolled over
  • 00:24:59
    temporarily very normal corrective phase
  • 00:25:01
    we see it all the time it results in a
  • 00:25:03
    higher low typically or a double bottom
  • 00:25:05
    but what I was telling you that this was
  • 00:25:07
    called at the time was a false dip and
  • 00:25:09
    so far this is unfolding exactly as
  • 00:25:12
    expected you know this kind of setup is
  • 00:25:14
    something much like with the global M2
  • 00:25:15
    chart we've seen play out time and time
  • 00:25:17
    again and I've only I've highlighted
  • 00:25:19
    what one well one two three four are the
  • 00:25:21
    times that this is happen but if you
  • 00:25:22
    extend this chart out this is a pattern
  • 00:25:25
    you know I've seen many many times
  • 00:25:26
    because don't forget this survey goes
  • 00:25:28
    all the way back to the 1950s so it's
  • 00:25:30
    just history repeating itself it it
  • 00:25:32
    rallies off the lows comes a little
  • 00:25:34
    lower and then kind of the big move in
  • 00:25:36
    the business cycle happens and now we've
  • 00:25:38
    seen in January we saw Isam new orders
  • 00:25:40
    rise to 55.1 which is the highest
  • 00:25:42
    reading since May of
  • 00:25:44
    2022 and what you could have also looked
  • 00:25:47
    at that the chart is less pronounced now
  • 00:25:49
    that we've actually have the results for
  • 00:25:50
    January ISM but had you been looking at
  • 00:25:52
    this survey prior to the release so here
  • 00:25:54
    I've just composited Dallas Philly
  • 00:25:57
    Empire Chicago and the other s uh and
  • 00:25:59
    then taking a zed score or the average
  • 00:26:02
    you know it was moving higher um and so
  • 00:26:04
    you could have said okay well I think as
  • 00:26:06
    a result of that in real time because I
  • 00:26:08
    have the I have all composite Regional
  • 00:26:10
    fed surveys that the ism uh should come
  • 00:26:13
    in
  • 00:26:14
    higher and then if we start to do this
  • 00:26:17
    business cycle dominoes thing and look
  • 00:26:19
    out into the future with ISM new orders
  • 00:26:22
    finally back into expansion territory
  • 00:26:24
    this is good news for the headline ISM
  • 00:26:27
    ISM number because new is typically lead
  • 00:26:29
    by around a
  • 00:26:30
    month pop the hood as well you know now
  • 00:26:33
    we have nine Industries reporting growth
  • 00:26:35
    is it super strong no but you also don't
  • 00:26:37
    want these things to be super strong
  • 00:26:38
    because if they're super strong it means
  • 00:26:39
    the business cycle is overheating so
  • 00:26:41
    this is like you know Goldilocks level
  • 00:26:44
    the thing I'm going to say about this is
  • 00:26:46
    back in January of 2023 if some of you
  • 00:26:48
    who will have attended I don't know if
  • 00:26:50
    it was January or February but Ral and I
  • 00:26:52
    and Andreas we did our thing in um in
  • 00:26:54
    New York and I of course came in
  • 00:26:56
    virtually but this is a chart that I
  • 00:26:57
    showed we fell to zero so zero
  • 00:27:00
    Industries reporting growth and my take
  • 00:27:02
    based on lead indicators and liquidity
  • 00:27:04
    is I had liquidity and the business
  • 00:27:05
    cycle positive and also I was looking at
  • 00:27:07
    all these charts and these charts are
  • 00:27:08
    contrarian indicators of the lows and
  • 00:27:10
    also you can't really do a whole lot
  • 00:27:12
    worse than zero can you you're at zero
  • 00:27:14
    can't go negative so this coupled with
  • 00:27:17
    our larger framework was why we were
  • 00:27:18
    scoring roow from liquidity positive but
  • 00:27:20
    really I and I say this
  • 00:27:22
    like I don't know humbly I mean we were
  • 00:27:25
    really I think scanning everyone the
  • 00:27:27
    only people that we're scoring that
  • 00:27:28
    positively and it's really about that
  • 00:27:30
    combination of leads plus extreme
  • 00:27:34
    readings like that and you're just like
  • 00:27:36
    this is this is the time to shift and
  • 00:27:38
    that's when we wrote our article that
  • 00:27:40
    the turn is near in November of that
  • 00:27:42
    year um of 20 what was it 2022 the right
  • 00:27:45
    year yeah I think so November 2022 so uh
  • 00:27:48
    in
  • 00:27:49
    GMI and then we we come out now so now
  • 00:27:51
    we're coming out so we went we were at
  • 00:27:53
    one month now we're at three months
  • 00:27:54
    right so in terms of new orders to
  • 00:27:56
    inventor so the business cycle dominoes
  • 00:27:58
    you know very good print so new orders
  • 00:28:00
    to relative to in inventories in January
  • 00:28:03
    uh new orders are outpacing so I think
  • 00:28:04
    this is a fabulous chart actually it's a
  • 00:28:06
    little bit volatile but you know it
  • 00:28:07
    gives you a sense of the overall
  • 00:28:09
    direction and it works as well if you
  • 00:28:11
    back it out even further I just CED my
  • 00:28:13
    KD5 because prior to 1985 the ism swings
  • 00:28:16
    could be pretty crazy and just makes the
  • 00:28:17
    chart look a bit messy um and then you
  • 00:28:20
    know you you go out even further and you
  • 00:28:22
    come to our GMI Financial conditions
  • 00:28:23
    Index right which is Advanced by 9
  • 00:28:25
    months and so yes Financial conditions
  • 00:28:28
    have tightened a bit recently but when
  • 00:28:29
    you zoom out and you look at the broader
  • 00:28:31
    macro picture specifically how much
  • 00:28:33
    Financial conditions have eased in
  • 00:28:34
    aggregate since Q4 of 2022 it paints a
  • 00:28:37
    much clearer story of what's to come and
  • 00:28:39
    so my view is after this brief hi brief
  • 00:28:42
    hiccup where economic surprises may come
  • 00:28:44
    in a little weaker over the next one to
  • 00:28:46
    two months um as a result of the recent
  • 00:28:49
    rise in the dollar and bond yields
  • 00:28:51
    finally taking its toll uh we'll see
  • 00:28:53
    strong support forming for the
  • 00:28:55
    manufacturing cycle to really kick in
  • 00:28:57
    gear uh later in the year I mean well
  • 00:29:00
    this year I even over the next coming
  • 00:29:01
    months
  • 00:29:03
    right and remember too that the ism in
  • 00:29:07
    January only just moved above 50 and
  • 00:29:10
    we're still nowhere near late cycle
  • 00:29:13
    levels that would typically trigger a
  • 00:29:15
    macro regime shift into macro fall so
  • 00:29:17
    the danger zone which I've highlighted
  • 00:29:19
    there which is across above the 80th
  • 00:29:21
    percentile meaning there's still plenty
  • 00:29:23
    of Runway left for the business cycle to
  • 00:29:25
    build momentum before the usual late
  • 00:29:28
    cycle checklist or my usual late cycle
  • 00:29:30
    checklist which I'm happy to go over at
  • 00:29:31
    some point but will start to flash
  • 00:29:33
    yellow and eventually red right which is
  • 00:29:36
    would be macro
  • 00:29:37
    winter and what we know as we've
  • 00:29:40
    discussed now many times the major moves
  • 00:29:42
    in crypto although I know it doesn't
  • 00:29:44
    feel like it this week but the major
  • 00:29:46
    moves you know zooming out happen when
  • 00:29:48
    the business cycle starts getting real
  • 00:29:50
    momentum okay particularly when the ism
  • 00:29:52
    pushes above 50 and continues to climb
  • 00:29:53
    towards its late cycle Peak so this is
  • 00:29:55
    where we are and you know if you look
  • 00:29:58
    look at Bitcoin relative to the ism
  • 00:30:00
    we're basically pricing in current ISM
  • 00:30:03
    numbers but nothing forward-looking
  • 00:30:05
    which is what I just highlighted for you
  • 00:30:07
    so basically we're just trading current
  • 00:30:09
    ISM it's the same thing with cyclical
  • 00:30:13
    equities so here we're looking at
  • 00:30:14
    Industrials materials Financial small
  • 00:30:16
    caps right current ISM but nothing
  • 00:30:18
    forward looking same thing with
  • 00:30:21
    commodities you know and and carbon too
  • 00:30:24
    right carbon finally showing some signs
  • 00:30:26
    of life and I could show you 30 other
  • 00:30:28
    charts but you know I didn't want to be
  • 00:30:30
    here for 4 hours showing you all the
  • 00:30:31
    relationships but you know it's the same
  • 00:30:33
    thing right cyclical risk is a function
  • 00:30:35
    of the business cycle okay um and then
  • 00:30:38
    once the ism continues it's slow grind
  • 00:30:41
    higher to close the gap with our GMI
  • 00:30:43
    Financial conditions index that's when
  • 00:30:45
    we'd expect alt season to really kick
  • 00:30:47
    off and by Alt season you know we mean
  • 00:30:49
    the real deal right when alt alts start
  • 00:30:51
    to seriously gain market share versus
  • 00:30:53
    Bitcoin like we saw uh in 2020 and 2021
  • 00:30:56
    now is it a straight line no no
  • 00:30:58
    absolutely not but again it's about
  • 00:31:00
    getting the trend the direction of
  • 00:31:01
    travel
  • 00:31:02
    correct another major tailwind and then
  • 00:31:05
    we're going to shift to inflation um
  • 00:31:07
    after a few extra charts here is uh
  • 00:31:10
    another major Tailwind I believe for a
  • 00:31:12
    sign C recovery in the global
  • 00:31:13
    manufacturing cycle is the complete and
  • 00:31:16
    utter collapse in Chinese bond yields
  • 00:31:18
    and I will have you guys will have seen
  • 00:31:20
    the comments I put around put out on
  • 00:31:23
    this both on X and I included in in an
  • 00:31:25
    MIT report I haven't agreed with a
  • 00:31:28
    single take on this and but my take is
  • 00:31:30
    just that this is a massive easing of
  • 00:31:32
    financial conditions from the East and
  • 00:31:34
    what this then subsequently allows is
  • 00:31:36
    once the dollar moves a little bit lower
  • 00:31:39
    the pboc can begin to ease again right
  • 00:31:41
    and they have the cover to do so because
  • 00:31:42
    there's no risk of the economy
  • 00:31:44
    overheating because the econom is still
  • 00:31:47
    extremely weak so and they have and they
  • 00:31:49
    can do it in a big way if you look at
  • 00:31:51
    this
  • 00:31:52
    chart finally with 75% of central banks
  • 00:31:55
    currently in easing mode the bank of
  • 00:31:57
    England is cut again today the setup you
  • 00:32:00
    know I feel looks extremely positive for
  • 00:32:02
    the business cycle this year looking out
  • 00:32:05
    and this will drive lead indicators
  • 00:32:07
    higher relative to coincident economic
  • 00:32:09
    indicators so this is what I this is the
  • 00:32:11
    this is the business cycle dominoes so
  • 00:32:13
    it makes total sense given how the leads
  • 00:32:15
    and lags of the business cycle tend to
  • 00:32:17
    play out so overall we see plenty of
  • 00:32:20
    reasons to be optimistic on growth for
  • 00:32:23
    2025 right so inflation let's do this
  • 00:32:30
    so with the cyclical recovery in the
  • 00:32:32
    business cycle finally now coming into
  • 00:32:34
    Focus I'd say inflation is something
  • 00:32:37
    that we now need to think about that
  • 00:32:39
    said unlike many out there who are
  • 00:32:41
    predict uh predicting a rapid
  • 00:32:44
    reacceleration inflation we're sticking
  • 00:32:46
    with our base case for 2025 which we
  • 00:32:48
    laid out back in Q4 the idea is this
  • 00:32:51
    we'll see inflation but it will be
  • 00:32:52
    driven by a recovery in cyclical demand
  • 00:32:55
    and this means it'll impact certain
  • 00:32:57
    areas of of CPI while leaving others
  • 00:33:00
    largely untouched so let me explain that
  • 00:33:03
    um for starters it's pretty clear
  • 00:33:05
    looking at the regional fed surveys that
  • 00:33:08
    price pressures are starting to tick
  • 00:33:10
    higher okay something we've been
  • 00:33:11
    highlighting over recent
  • 00:33:13
    months and you know it's particularly
  • 00:33:16
    evident when you look at the do or the
  • 00:33:18
    Empire manufacturing survey so we we're
  • 00:33:20
    looking at price prices paid well it's
  • 00:33:22
    not prices paid it's all of them it's
  • 00:33:23
    prices paid prices received and whatever
  • 00:33:25
    the other one is draw a blank but you
  • 00:33:27
    know it's those can all put together um
  • 00:33:30
    oh in Supply or delivery times uh it's
  • 00:33:32
    all those uh put together and you can
  • 00:33:34
    clearly see the trend is higher volatile
  • 00:33:37
    but the trend is higher another way you
  • 00:33:39
    can see that is if you look at the ism
  • 00:33:41
    non-manufacturing survey right so basing
  • 00:33:44
    slowly right and maybe a floor for how
  • 00:33:46
    much further uh inflation can fall but
  • 00:33:50
    on the other hand inflation typically
  • 00:33:53
    moves in stages and and the usual flow
  • 00:33:56
    which I've discussed you know many times
  • 00:33:58
    here which just helps me
  • 00:33:59
    compartmentalize the cycle um and it's
  • 00:34:02
    it's the equivalent of business cycle
  • 00:34:04
    dominoes but for inflation is commodity
  • 00:34:06
    inflation is early cycle which leads to
  • 00:34:08
    good inflation which is mid cycle uh
  • 00:34:10
    which leads to Services inflation in
  • 00:34:12
    late in the cycle in generally the EM
  • 00:34:15
    PPI numbers are the first to move so
  • 00:34:17
    when you look at Emerging Markets the
  • 00:34:18
    link between PPI numbers um and
  • 00:34:21
    commodity prices is pretty clear and you
  • 00:34:23
    can see that on on the chart just
  • 00:34:24
    without doing any work but you know
  • 00:34:27
    these economies are often net exporters
  • 00:34:29
    of Commodities so when commodity prices
  • 00:34:31
    rise the cost of production uh in these
  • 00:34:34
    countries follows suit right and as raw
  • 00:34:36
    material costs climb the prices of goods
  • 00:34:39
    that rely on these materials be it you
  • 00:34:41
    know Industrial Metals energy so on also
  • 00:34:44
    rise which then shows up in their PPI
  • 00:34:46
    numbers so essentially these countries
  • 00:34:49
    um feel the price pressure sooner just
  • 00:34:52
    because they're directly tied to the
  • 00:34:54
    global commodity cycle so this m makes
  • 00:34:56
    em PPI numbers an early indicator of
  • 00:34:58
    broader inflation so you can see that
  • 00:35:00
    this is already ticking
  • 00:35:02
    higher now the rise in commodity prices
  • 00:35:06
    is also starting to spill over into core
  • 00:35:11
    Goods inflation it's still early days
  • 00:35:14
    but as commodity prices push higher this
  • 00:35:16
    year driven Again by a cyclical recovery
  • 00:35:19
    in the business cycle uh one of the
  • 00:35:21
    first places that we'll start to see
  • 00:35:23
    inflation show up is in Goods prices
  • 00:35:28
    and goods prices lead headline CPI by
  • 00:35:31
    around you know four months however for
  • 00:35:34
    now if we look at the base effect it
  • 00:35:37
    remains relatively muted and that's
  • 00:35:39
    likely to change if Commodities once
  • 00:35:41
    Commodities start to pick up but for now
  • 00:35:43
    if we look at what's happened over the
  • 00:35:44
    recent weeks oil is still coming down
  • 00:35:48
    and that makes me feel like Goods
  • 00:35:50
    inflation can remain relatively muted
  • 00:35:53
    for now until the ism let's say pushes
  • 00:35:56
    above 55 or so and I think that this is
  • 00:35:58
    the really key Point here when we're
  • 00:36:00
    talking about overall headline inflation
  • 00:36:02
    numbers for the headline number to move
  • 00:36:05
    higher we'll need to see Goods
  • 00:36:08
    move you know Spike significantly um
  • 00:36:11
    especially since Goods inflation is only
  • 00:36:14
    18% of total headline
  • 00:36:18
    CPI food is another area we need to
  • 00:36:21
    watch this here because fertilizer
  • 00:36:23
    prices again a function of the business
  • 00:36:25
    cycle have started to rise and they lead
  • 00:36:27
    food crisis by around 8 months however
  • 00:36:29
    once again food is only 133% of total
  • 00:36:33
    headline CPI it matters
  • 00:36:35
    sure but there's a major offset which
  • 00:36:38
    I'm about to show you
  • 00:36:41
    now okay here we go business cyle Domino
  • 00:36:44
    so the Caboose of the business cycle
  • 00:36:45
    train is always core Services which lags
  • 00:36:48
    the business cycle and here when I'm
  • 00:36:49
    talking about the business cycle I'm
  • 00:36:50
    talking about the ism by around 15
  • 00:36:53
    months and makes up a massive 62% of
  • 00:36:55
    total headline CPI on its own it's
  • 00:36:57
    incredibly slow moving and while most
  • 00:36:59
    old school economists like to refer to
  • 00:37:02
    Services inflation as sticky meaning it
  • 00:37:04
    still stays elevated for long periods of
  • 00:37:06
    time before it starts to come down
  • 00:37:08
    that's not really what's going on here
  • 00:37:10
    it's simply so far behind in the cycle
  • 00:37:12
    that it takes time for the Slowdown of
  • 00:37:15
    in inflationary pressures to hit
  • 00:37:16
    Services inflation which as I mentioned
  • 00:37:18
    before is largely a function of unit
  • 00:37:21
    wage
  • 00:37:23
    costs and speaking of wages right
  • 00:37:26
    there's still zero sign
  • 00:37:28
    that wages are going to be picking up
  • 00:37:30
    just yet you know our R GMI wage growth
  • 00:37:32
    tracker did a fantastic job last year at
  • 00:37:36
    cutting through the noise especially
  • 00:37:37
    when you had most macro strategists out
  • 00:37:40
    there talking about a rise based on
  • 00:37:41
    small business confidence or wages
  • 00:37:43
    accelerating um we of course immediately
  • 00:37:47
    shut that down and these reports based
  • 00:37:49
    on you know quite a few of these
  • 00:37:51
    indicators and then when you look at the
  • 00:37:53
    nfib survey on compens compensation
  • 00:37:55
    changes over the past 3 to six months
  • 00:37:57
    wages continue to
  • 00:37:58
    collapse but then I can already hear and
  • 00:38:01
    I included this MD report someone say
  • 00:38:02
    yeah but Julian compensation plans are
  • 00:38:05
    leading and therefore aren't we going
  • 00:38:07
    higher here and I'm like it's like
  • 00:38:10
    no I'm just not buying that right here
  • 00:38:12
    largely because of our league indicators
  • 00:38:14
    and the the one I showed you earlier the
  • 00:38:15
    GMI wage gr trucker of course it's not
  • 00:38:17
    the only one we have but to me this is
  • 00:38:19
    already the beginning of the fourth head
  • 00:38:21
    fake we had the first one second one the
  • 00:38:23
    third one by the way was the one when
  • 00:38:27
    everyone was talking about wages
  • 00:38:28
    reaccelerating on the basis that
  • 00:38:30
    compensation plans for small businesses
  • 00:38:33
    uh were heading higher and again we were
  • 00:38:35
    focus on the leads and we said now it's
  • 00:38:37
    not quite the right time and that's the
  • 00:38:38
    point it's just not the right I've
  • 00:38:40
    explained this in in detail in the RO
  • 00:38:42
    but it's just not the right environment
  • 00:38:43
    for a material uh and sustainable
  • 00:38:47
    reacceleration of wage growth it comes
  • 00:38:49
    it will come but it comes uh typically
  • 00:38:51
    much later in the
  • 00:38:53
    cycle now coming back to core Services
  • 00:38:56
    inflation sh shelter inflation is the
  • 00:38:58
    largest subcomponent of core services so
  • 00:39:01
    it makes up 37% of total CPI and and
  • 00:39:04
    accounts for around 60% of that core
  • 00:39:05
    Services number so it's a really really
  • 00:39:08
    big chunk what we also know about
  • 00:39:10
    shelter inflation is that it typically
  • 00:39:12
    lags home prices by around 17 months
  • 00:39:15
    meaning that for 37% of total CPI it's
  • 00:39:19
    pretty much going to be one-way traffic
  • 00:39:21
    for all of
  • 00:39:22
    2025 and we see a similar picture where
  • 00:39:25
    we look at the Cleveland fend uh new
  • 00:39:27
    tenant rent index which absolutely nose
  • 00:39:29
    dived in
  • 00:39:31
    Q4 the point being and why this all
  • 00:39:34
    matters is I believe we'll see core
  • 00:39:36
    Services decline from most of 2025 which
  • 00:39:39
    will drag the core CPI number lower as
  • 00:39:42
    well and this will give the fed the
  • 00:39:45
    cover that they need to lower interest
  • 00:39:47
    rates further and remember that the FED
  • 00:39:49
    is focused on the most lagging elements
  • 00:39:51
    of inflation which is why they're almost
  • 00:39:53
    always late to hike they're always late
  • 00:39:54
    to cut and they continue cutting well
  • 00:39:57
    into the initial rebound of inflation
  • 00:39:59
    where inflation is essentially a
  • 00:40:00
    byproduct of stronger growth driven by a
  • 00:40:03
    cyclical recovery in the business cycle
  • 00:40:06
    so and another thing to to note here is
  • 00:40:09
    the base effect is also quite favorable
  • 00:40:11
    over the next one to two months so the
  • 00:40:13
    base effect is that dotted line so
  • 00:40:15
    sharply lower and base effects aren't
  • 00:40:18
    everything and they're never a guarantee
  • 00:40:20
    which is why I don't use them to
  • 00:40:21
    forecast the quadrants so I mean I use
  • 00:40:23
    them as like an assistance if I need
  • 00:40:24
    them which can be help helpful but you
  • 00:40:28
    know if you think back to as I say q1 of
  • 00:40:32
    2023 you know the main people that do
  • 00:40:35
    that because the base effect was still
  • 00:40:38
    negative we expecting growth to continue
  • 00:40:41
    lower and so it it's it's difficult but
  • 00:40:44
    the point being is that it helps when
  • 00:40:46
    dealing with probabilities but there's
  • 00:40:47
    no certainty but just to highlight that
  • 00:40:49
    the base effects quite
  • 00:40:52
    negative a few final points on inflation
  • 00:40:54
    that we're going to skip onto the next
  • 00:40:55
    section you know firstly
  • 00:40:57
    if we exclude shelter from Headline CPI
  • 00:41:00
    so the most lagging stuff which by the
  • 00:41:01
    way is still propping up the headline
  • 00:41:03
    number CPI is already below the long run
  • 00:41:06
    average of
  • 00:41:07
    2.4% secondly there's still no signs of
  • 00:41:10
    CPI breath taking higher for the time
  • 00:41:13
    being so with respect to policy makers
  • 00:41:15
    and higher interest rates I've discussed
  • 00:41:17
    this before the time to worry is when
  • 00:41:19
    inflation breath starts to broaden out
  • 00:41:21
    so we see you know a huge a larger
  • 00:41:23
    number of the components accelerating so
  • 00:41:25
    above that average line and this is
  • 00:41:27
    typically a macro signature of macro
  • 00:41:31
    fall but not of macro spring or
  • 00:41:35
    summer thirdly the FED have given
  • 00:41:38
    themselves a huge range to maneuver this
  • 00:41:41
    year so I think as long as we don't see
  • 00:41:43
    a significant re acceleration in core PC
  • 00:41:46
    and a move beyond the high estimate uh
  • 00:41:49
    of 3.2% for for for 2025 I don't really
  • 00:41:52
    think Rising inflationary pressures will
  • 00:41:54
    be a roadblock for the FED to ease rates
  • 00:41:56
    further this year year especially if we
  • 00:41:58
    see weaker economic surprises over the
  • 00:42:00
    next uh one to two months based on what
  • 00:42:03
    we've discussed earlier be it the dollar
  • 00:42:05
    in rates and that being leading uh you
  • 00:42:08
    know two months versus
  • 00:42:11
    surprises however and here's the big
  • 00:42:13
    picture based on again zooming out the
  • 00:42:16
    significant easing of financial
  • 00:42:18
    conditions since Q4 of 2022 I do expect
  • 00:42:21
    us to see some inflationary pressures
  • 00:42:23
    building later this year um you know
  • 00:42:26
    there might be some short pullbacks in
  • 00:42:27
    the second derivative of CPI like we saw
  • 00:42:30
    last year which nudged us back into
  • 00:42:32
    macro spring when the second derivative
  • 00:42:34
    moved lower driven by patches of
  • 00:42:35
    tightening and financial conditions
  • 00:42:36
    which you can clearly see on the chart
  • 00:42:38
    which I had Illustrated at the time yet
  • 00:42:40
    once the white line crosses above zero
  • 00:42:42
    it indicates that CPI numbers are going
  • 00:42:44
    to begin to rise again but considering
  • 00:42:48
    everything I've just outlined along with
  • 00:42:50
    the various dynamics of inflation in all
  • 00:42:52
    the moving Parts I'd say this is
  • 00:42:55
    becoming I would say this will become a
  • 00:42:59
    more meaningful story in the second half
  • 00:43:02
    of this year than for right now either
  • 00:43:05
    way it's it's definitely something that
  • 00:43:06
    we'll be tracking and keeping an eye on
  • 00:43:08
    both in the video updates uh and the
  • 00:43:10
    written reports right so we'll just
  • 00:43:11
    track this month by month but you know
  • 00:43:13
    for now based on what I've just outlined
  • 00:43:16
    with shelter I think this is a story for
  • 00:43:18
    for later in the
  • 00:43:19
    year um but at the end of the day right
  • 00:43:22
    a rising second derivative in our
  • 00:43:24
    inflation score coupled with a modest
  • 00:43:26
    rise in in our composite growth score
  • 00:43:28
    for December Keeps Us in macr summer you
  • 00:43:30
    know for now and I believe that this is
  • 00:43:32
    precisely what classic cyclical Equity
  • 00:43:35
    recovery plays are starting to pick up
  • 00:43:37
    on so I mentioned a few earlier
  • 00:43:39
    Industrials materials energies Financial
  • 00:43:42
    small caps that you know starting to
  • 00:43:44
    react to this and all of these Styles
  • 00:43:46
    and sectors have outperformed the S&P
  • 00:43:48
    500 year to dat and
  • 00:43:51
    historically these Styles and sectors
  • 00:43:53
    tend to be the biggest beneficiaries
  • 00:43:55
    during periods of macro summer when the
  • 00:43:58
    business cycle right is improving
  • 00:44:00
    because now earnings are starting to
  • 00:44:01
    improve so it won't be a straight line
  • 00:44:04
    obviously but macr summer is typically a
  • 00:44:06
    favorable environment for
  • 00:44:09
    risk-taking so next section in macr
  • 00:44:12
    summer dips are for
  • 00:44:15
    buying so I updated all these charts
  • 00:44:19
    from when I released the original
  • 00:44:22
    written report and you know what we saw
  • 00:44:24
    at the time was bullish sentiment
  • 00:44:27
    collapse when looking at the AI survey
  • 00:44:30
    it's since recovered but by no means are
  • 00:44:32
    we extended so you know we're not overly
  • 00:44:34
    bearish we were at the time uh we're not
  • 00:44:38
    overly bullish either it's sort of like
  • 00:44:40
    neutral which I think fits really well
  • 00:44:43
    if you look at the cftc positioning on
  • 00:44:45
    the S&P 500 it's basically flat which
  • 00:44:47
    means that speculators are neutral beta
  • 00:44:51
    risk meaning that they're not really
  • 00:44:53
    taking a view on the direction of
  • 00:44:55
    markets they're pretty much flat we were
  • 00:44:56
    slightly short uh last week lucid's
  • 00:44:59
    covered that short so we're at 0.2% but
  • 00:45:02
    the point is this is flat so there is no
  • 00:45:05
    real view being expressed here which I
  • 00:45:08
    think is interesting based on kind of
  • 00:45:09
    everything I think nothing changes
  • 00:45:11
    sentiment like market price okay so the
  • 00:45:13
    fact that you know crypto's a little bit
  • 00:45:15
    lower or well came down a lot lower uh
  • 00:45:18
    and then equities rebat you know
  • 00:45:19
    corrected a little bit which I'll talk
  • 00:45:20
    about just a second I think has people
  • 00:45:22
    neutral on risk but if I outline the big
  • 00:45:23
    picture Mac as I've done for you here
  • 00:45:26
    you know I think it's we're in a
  • 00:45:28
    positive
  • 00:45:30
    environment now this chart again is one
  • 00:45:33
    of the ones I included in the report at
  • 00:45:34
    the time I released it I think where
  • 00:45:37
    what do I have here January 9th so the
  • 00:45:39
    January 9th MIT update we were at 22%
  • 00:45:43
    which if you think about RSI or sorry
  • 00:45:46
    this is 50-day moving average anything
  • 00:45:48
    below 30 like the RSI would be oversold
  • 00:45:52
    okay so 22% and since then you know
  • 00:45:55
    equities are still if we're talking
  • 00:45:57
    about the S&P 500 and the NASDAQ they're
  • 00:45:58
    still up 5% from that oversold oversold
  • 00:46:00
    reading So currently we're at 50% but
  • 00:46:02
    again 50% looks exactly like speculative
  • 00:46:06
    positioning and exactly like the AI
  • 00:46:08
    survey we're basically neutral so
  • 00:46:10
    there's no ex screaming Buy Signal here
  • 00:46:14
    uh I mean there was as I say on the
  • 00:46:15
    ninth right if you're if we're talking
  • 00:46:17
    about equities but there's also no
  • 00:46:18
    overbought signals in place so I just
  • 00:46:20
    wanted to outline that but then if we
  • 00:46:22
    zoom out right um you know our our GMI
  • 00:46:26
    Bitcoin top finder is just still nowhere
  • 00:46:29
    near signaling a peak in Bitcoin prices
  • 00:46:33
    and nor do some of our other indicators
  • 00:46:35
    you know so here's you know core risk
  • 00:46:37
    indicator which is basically just a
  • 00:46:38
    series of oscillators grouped together
  • 00:46:40
    and and ranked in a zed score again I
  • 00:46:42
    always make fun of this name who names
  • 00:46:43
    these things me um our Bitcoin valuation
  • 00:46:47
    model again here it's just a percentile
  • 00:46:49
    model with a bunch of factors and from a
  • 00:46:51
    quantitative perspective it's not the
  • 00:46:53
    cross above the 90th percentile that
  • 00:46:55
    gets you forces you risk off right it's
  • 00:46:59
    actually the cross above the 90th and
  • 00:47:00
    then something like a cross below the
  • 00:47:02
    85th percentile and that will then flash
  • 00:47:04
    red but you know just not there and then
  • 00:47:07
    returning to this analog I still believe
  • 00:47:09
    it makes a lot of contextual sense for
  • 00:47:12
    this year you know expect frequent
  • 00:47:14
    pullbacks some of which could even last
  • 00:47:16
    a couple of months if you look at 2017
  • 00:47:18
    cycle because this is actually is the
  • 00:47:19
    2017 cycle just shifted by a couple of
  • 00:47:21
    weeks but this is the road that I think
  • 00:47:24
    you know R and I have in our heads for
  • 00:47:25
    this year choppy at time
  • 00:47:27
    yet ultimately a slow grind higher and
  • 00:47:30
    this doesn't only apply to bitcoin it it
  • 00:47:33
    it it applies to risk assets more
  • 00:47:36
    broadly and so here's the 2017 cycle so
  • 00:47:38
    a rewinder of what we did back then
  • 00:47:40
    which mirrors exactly what I just
  • 00:47:41
    described choppy at times but ultimately
  • 00:47:44
    it was a slow grind higher so very much
  • 00:47:48
    as I say the pattern we're anticipating
  • 00:47:49
    this time
  • 00:47:50
    around and then there's this chart I
  • 00:47:52
    like to bring this back now and again
  • 00:47:55
    because everyone's tweeting about
  • 00:47:58
    valuations and historically as I as I
  • 00:48:01
    said before valuations within a
  • 00:48:03
    quantitative framework have only flashed
  • 00:48:05
    red 1 two 3 four five times since 1980
  • 00:48:11
    so they've only been a problem five
  • 00:48:12
    times historically looking back uh uh to
  • 00:48:15
    1980 and
  • 00:48:17
    so as the ism moves higher earnings we
  • 00:48:21
    know will begin to improve and this will
  • 00:48:24
    justify the 2023 202 for valuation
  • 00:48:28
    premium which has been baked into
  • 00:48:29
    equities over the last couple of years
  • 00:48:32
    so what that does is that if if if
  • 00:48:34
    earnings start to rise that then pushes
  • 00:48:36
    that teal line higher as I've discussed
  • 00:48:38
    before the problem you know with within
  • 00:48:42
    the macro process that I'm running when
  • 00:48:44
    this when those two lines intersect or
  • 00:48:46
    they cross each other that my valuations
  • 00:48:48
    component flashes red we're not there
  • 00:48:50
    yet but as earnings start to improve and
  • 00:48:53
    we justify the valuation premium that's
  • 00:48:55
    baked in equities here because are rich
  • 00:48:57
    that the teal line will start to blow uh
  • 00:48:59
    grind higher and that'll give us more
  • 00:49:01
    run sorry more Runway uh for risk assets
  • 00:49:04
    to Rally I believe you know as we
  • 00:49:06
    progress through the
  • 00:49:08
    year so you know this is probably the
  • 00:49:12
    most important segment of the entire
  • 00:49:15
    deck and I specifically put it together
  • 00:49:16
    for you guys because I got a lot of
  • 00:49:17
    questions about this and I also had to
  • 00:49:19
    make sense of it for myself and this is
  • 00:49:21
    the way I've made sense of it so you'll
  • 00:49:24
    be familiar with the foure Cycles um
  • 00:49:28
    that we put together okay a lot of
  • 00:49:30
    people have have talked about this right
  • 00:49:32
    so you have spring summer fall winter so
  • 00:49:35
    the crypto Seasons now in 2013 and 2017
  • 00:49:40
    we had a big run right then if you look
  • 00:49:42
    at 2021 this was the cycle
  • 00:49:45
    that you know a lot which caught a lot
  • 00:49:48
    of people off guard because a lot of
  • 00:49:50
    people were thinking that we're going to
  • 00:49:51
    have a Redux of the 2013 2017 cycle
  • 00:49:54
    instead it ended up being this truncated
  • 00:49:56
    cycle so in Q4 of 2020 I remember being
  • 00:50:00
    in Geneva and giving a present wish I
  • 00:50:01
    talked about this giving a
  • 00:50:03
    presentation um at the Four Seasons
  • 00:50:05
    Hotel titled dancing on a volcano so the
  • 00:50:07
    time I was still managing money but I
  • 00:50:09
    could see lead indicators were rolling
  • 00:50:11
    over I'm going to show you this in a
  • 00:50:12
    second and because it was my job to take
  • 00:50:14
    risk uh as an investment manager I had
  • 00:50:17
    to still dance but I knew something was
  • 00:50:19
    coming um and and as I say I'll show you
  • 00:50:21
    this in in a minute um and really what
  • 00:50:25
    happened is that that because of covid
  • 00:50:29
    the base effect you you have to remember
  • 00:50:30
    that the ism is a diffusion index but it
  • 00:50:33
    behaves like a year- on-year comp so the
  • 00:50:35
    fact that the ism fell to
  • 00:50:37
    41.8 like that means that from a
  • 00:50:41
    year-on-year comp perspective all the
  • 00:50:43
    comps when you look at all of them and
  • 00:50:45
    then it went to went to 63.8 like this
  • 00:50:47
    it it just shot back which meant that
  • 00:50:50
    the ism accelerated from 41.8 to 63.8 in
  • 00:50:54
    basically record time which shortened
  • 00:50:56
    the business cycle okay and when we look
  • 00:50:59
    at the last three times so here we're
  • 00:51:02
    looking at exactly those three Cycles
  • 00:51:03
    right 2013 2017
  • 00:51:07
    2021 Bitcoin and and I capped the um the
  • 00:51:11
    white line a little earlier because that
  • 00:51:13
    was actually the peak so it peaked just
  • 00:51:15
    a little bit before the I sign but the
  • 00:51:16
    point here is that Bitcoin actually did
  • 00:51:18
    an
  • 00:51:19
    85x wow right in 2017 it did a 46x and
  • 00:51:23
    here we're talking about the from the
  • 00:51:25
    minute the ism crossed 50 to the late
  • 00:51:27
    cycle peak in the ism and then in the
  • 00:51:30
    2021 cycle it did an 8X so it's like all
  • 00:51:33
    right well well what gives well what
  • 00:51:36
    gives and the reason you know I had
  • 00:51:38
    already seen that this was that we were
  • 00:51:41
    going to get a peak in liquidity is
  • 00:51:42
    because I was again here using base
  • 00:51:44
    effects and I could see that in q1 of
  • 00:51:47
    2021 based on the projection in the rise
  • 00:51:50
    in Glo Global liquidity and then the
  • 00:51:52
    subsequent Peak and the deceleration
  • 00:51:54
    plus I mean this was like four
  • 00:51:56
    deviations historically that liquidity
  • 00:51:59
    would start to Drake right and look at
  • 00:52:01
    this in March of 2021 liquidity peaked
  • 00:52:05
    and went down on a straight line here
  • 00:52:07
    we're still negative and actually we're
  • 00:52:08
    starting to base now so this is not the
  • 00:52:11
    updated chart so that we we're actually
  • 00:52:13
    a little bit higher than we are uh a
  • 00:52:15
    little bit higher today than we are
  • 00:52:16
    right here and then look at this guess
  • 00:52:19
    what else peaked in March of 2021 the
  • 00:52:21
    business cycle so the business cycle and
  • 00:52:24
    liquidity the two most important drivers
  • 00:52:27
    of as I pointed out you know uh crypto
  • 00:52:32
    uh uh equities credit Commodities right
  • 00:52:35
    across the board right risk assets
  • 00:52:37
    across the board had peaked and was
  • 00:52:39
    slowing okay and here was another reason
  • 00:52:44
    why in Q4 of of uh uh 2020 but you could
  • 00:52:49
    see that the business cycle was about to
  • 00:52:51
    decelerate so here we were at 60.2 this
  • 00:52:54
    is actually a snapshot from back then
  • 00:52:56
    right if we were have if we had been
  • 00:52:57
    sitting together in Q4 of 2020 this is
  • 00:53:00
    the chart that we would have you would
  • 00:53:02
    have seen in the pack and it was
  • 00:53:04
    suggesting that the ism was about to
  • 00:53:06
    quite literally fall off a cliff whereas
  • 00:53:10
    today the ism is just now moving above
  • 00:53:15
    50 and financial conditions suggest that
  • 00:53:18
    we're going higher additionally
  • 00:53:21
    liquidity right we're expecting based on
  • 00:53:23
    our views around the dollar uh also what
  • 00:53:26
    happens with with China as I mentioned
  • 00:53:27
    earlier that Global liquidity Global M2
  • 00:53:30
    both from a private and public
  • 00:53:31
    standpoint will improve you know as we
  • 00:53:33
    regressed through the year let's also
  • 00:53:35
    not forget that during the last Trump
  • 00:53:38
    cycle you know there was that air pocket
  • 00:53:40
    in January something we've discussed
  • 00:53:42
    where crypto fell like 27% in 7 days and
  • 00:53:44
    then it just went on the
  • 00:53:46
    23x I think I said crypto Bitcoin went
  • 00:53:49
    on to 23x over the course of that year
  • 00:53:52
    now I'm not telling you that Bitcoin is
  • 00:53:55
    going to 23x what I'm telling you is
  • 00:53:56
    that if we're right about the backdrop
  • 00:53:58
    in this environment of weaker Dollar
  • 00:54:00
    Rising liquidity ISM moving higher right
  • 00:54:03
    we're the same time feds backward
  • 00:54:05
    looking so they're focused on core
  • 00:54:06
    inflation instead of commodity inflation
  • 00:54:09
    and they're also not focused on the ism
  • 00:54:10
    they're focused on labor market
  • 00:54:12
    indicators which lag the cycle by you
  • 00:54:13
    know four to five months this is a good
  • 00:54:15
    environment for risk
  • 00:54:17
    ticking
  • 00:54:19
    so of course I have to show this chart I
  • 00:54:22
    think taking all of this work into
  • 00:54:24
    consideration We Believe 2025 is going
  • 00:54:27
    to be a good environment for risk
  • 00:54:29
    assets and that we're still in the early
  • 00:54:32
    stages of the banana zon so you're going
  • 00:54:33
    to look at you're you're going to look
  • 00:54:34
    at this past week how can it be the
  • 00:54:36
    banana Zone look at this chart I mean if
  • 00:54:38
    you zoom in you can see that right
  • 00:54:40
    around now we always get these pullbacks
  • 00:54:42
    and it's the banana zone is never a
  • 00:54:44
    straight line and at times it's going to
  • 00:54:45
    feel like the end of the world you know
  • 00:54:48
    but the banana Zone officially kicked
  • 00:54:50
    off last year right on the on the
  • 00:54:52
    breakout of global L 2 which we had been
  • 00:54:55
    showing you at the time now
  • 00:54:57
    I'm going to Echo what I said in the
  • 00:54:58
    monthly report and R and I have said
  • 00:54:59
    this many times 20 to 30% Corrections
  • 00:55:02
    are the norm here this is a 70 ball
  • 00:55:05
    asset expect them embrace them well you
  • 00:55:08
    don't have to embrace them but expect
  • 00:55:09
    them and if you're you're in a position
  • 00:55:12
    to you know add on dips do so that's
  • 00:55:15
    what I did on Monday now as I said do we
  • 00:55:17
    retest the low that happens okay so I I
  • 00:55:20
    add it to my core convictions if we go
  • 00:55:22
    lower but I didn't deploy all of my cash
  • 00:55:24
    right that's that's you don't do that
  • 00:55:26
    well if you got really big cahonas you
  • 00:55:28
    could do that but I've got you know
  • 00:55:30
    medium siiz cahonas but so I deployed a
  • 00:55:32
    little bit not all of it so if if we
  • 00:55:34
    come back to the low I'll I'll add
  • 00:55:36
    because of this framework right because
  • 00:55:37
    of where I believe we are on the
  • 00:55:38
    business
  • 00:55:39
    cycle so you know I hope that this video
  • 00:55:43
    update has been as as always helpful for
  • 00:55:46
    some of you in in thinking about this
  • 00:55:48
    week and thinking about where we're
  • 00:55:50
    heading this year um you know it gives
  • 00:55:53
    you an idea of what we're thinking in
  • 00:55:55
    terms of growth inflation liquidity the
  • 00:55:57
    fed and kind of how that all plays out
  • 00:55:59
    and why and also just illustrating some
  • 00:56:01
    of the market dynamics and illustrating
  • 00:56:03
    why it is that we maintain our bullish
  • 00:56:05
    stance you know for the year um now you
  • 00:56:10
    know rest assured that R and I revisit
  • 00:56:12
    this
  • 00:56:13
    data I mean whatever whatever it's
  • 00:56:15
    coming out we're we we're looking at it
  • 00:56:17
    right so we're going to
  • 00:56:18
    be constantly reassessing our view of
  • 00:56:21
    things as we progress through the year
  • 00:56:24
    in these video updates and in the
  • 00:56:25
    written reports right that's what we're
  • 00:56:27
    doing that's I said this in my in the
  • 00:56:29
    round table as well you know Perfection
  • 00:56:32
    isn't isn't the aim here it's
  • 00:56:34
    consistency it's coming back to the same
  • 00:56:36
    set of indicators month in and month out
  • 00:56:38
    saying okay where are we what's changed
  • 00:56:41
    and and and then it really something I
  • 00:56:44
    got a lot of uh at the crypto Gathering
  • 00:56:47
    was this this is a kind of framework
  • 00:56:48
    which which helps people sleep at night
  • 00:56:51
    and that's this I put this framework
  • 00:56:53
    together for me and the thing is is that
  • 00:56:57
    I mean if I wasn't writing this and
  • 00:56:58
    doing this for you I'd be doing it for
  • 00:57:00
    me on a monthly basis anyway and so
  • 00:57:03
    writing and talking about it is is
  • 00:57:05
    helpful right because I'm actually I've
  • 00:57:06
    never really been a writer I've just
  • 00:57:07
    been an investor but that it's focused
  • 00:57:09
    me to flush out some of my thoughts and
  • 00:57:11
    what I realized is that you know when I
  • 00:57:12
    originally joined R and I had to make
  • 00:57:14
    sense of crypto within a macro framework
  • 00:57:16
    I had to really simplify things for me
  • 00:57:17
    to for me to make sense of it and this
  • 00:57:19
    is what I I feel like we've done here um
  • 00:57:23
    so again we'll we we'll assess this as
  • 00:57:25
    we go through the year you know I say
  • 00:57:28
    this all the time that you know this is
  • 00:57:30
    MIT so as the data changes so too with
  • 00:57:33
    our views so anyway look uh good luck
  • 00:57:36
    out there take care no fomo no leverage
  • 00:57:40
    uh and see you all next time for the
  • 00:57:42
    next monthly MIT video update take care
  • 00:57:45
    bye so listen you can see the quality of
  • 00:57:49
    work that Julian does and why I'm
  • 00:57:51
    immensely proud to work with him Global
  • 00:57:53
    Micro investor and then within real
  • 00:57:55
    Vision Pro
  • 00:57:56
    um and also uh within the macro
  • 00:57:59
    investing tool itself this kind of
  • 00:58:02
    framework will literally change your
  • 00:58:04
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