Regular Fare:
Employment recovery in the wake of the COVID-19
pandemic
Bubble BitCoin Fare:
2020: The Year BITCOIN Became Investable for Institutions
Crypto’s Reverse-Minsky Moment
In economics, a
Minsky moment is the moment when reality catches up with an overly-optimistic
financial sector, leading to collapsing prices. It’s more concept than rule,
but useful in understanding how human nature has a tendency to overshoot.
…
Crypto is
currently experiencing a reverse-Minsky moment: the point at which years of
pent up skepticism — some of which was reasonable, most of which was willfully
ignorant — blows up. The importance of permissionless blockchain networks and
the digital currencies that they enable in broader society is no longer a
question of whether, but rather how much. The resulting repricing will be
extraordinarily volatile, but resolve to the upside.
Why now? Because
of the powerful combination of the macro situation coupled with all that is
increasingly unbearable with the digital domain.
Let’s start with
the more obvious driver: 2020 has been a signature year for borrowing and
printing.
…
The current
crypto rally has as much to do with the realization that the world needs a
different approach to digital interaction as it does with the macroeconomic
backdrop.
Every time I put
a position on, I always stop to think about what I’m trying to accomplish and
where my exit would be. Is this just an Event-Driven trade with a few-week
duration? Is this a value position where I’m hoping that some of the gap to NAV
closes or do I see this as something that could go much further? Micro-trend
inflections can multi-bagger in a spectacular way, but they tend to be volatile
and many of them flame out before hitting escape velocity—as a result, I
usually sell some on the way up. Meanwhile, true compounders build value
rapidly—I don’t need to fear the downside in the same way there.
What about
Bitcoin? Who knows what the right price is—in some ways that’s the beauty of
the product—it’s so worthless that any price is justifiable—it’s just
completely ephemeral; a quote on the screen. I invested on the thesis that
Bitcoin would become the first truly global Ponzi Scheme; why would I sell
after only a few thousand of upside? That’s the average daily range. I
personally expect something monumentally stupid to occur to the upside and
don’t intend to sell until then.
Bitcoin Explodes Above $33k As Supply Squeeze
Continues
Bubble Fare:
On Tuesday,
Interactive Brokers chairman Thomas Peterffy appeared on CNBC to discuss the
"explosion" in options trading, largely driven by retail investors...
What Peterffy said was remarkable: "A fantastically unusual thing happened
among our customers about a week ago" the head of Interactive Brokers
said.
"Our customers are traditionally long the market. A week ago it has
changed: our customers tend to be on the selling side of options and there is
such demand for out of the money options that our customers became sellers so
they overwrite their long position in stocks, and it's usually about Tesla,
Amazon and Apple - that's where most of the action seems to be."
"So the Robinhood folks are long these options, and IB customers
are short these options. It's a very interesting situation, it has never
happened in our history that our customers as a whole were net short the
market. But as of yesterday. that is the case."
In short, we are
now witnessing a historic clash where the relentlessly euphoric Robinhood
bullwagon has forced an entire brokerage catering to high net worth individuals
and professionals - Interactive Brokers - to turn net short, in revulsion to
the idiocy unleashed by the Fed and teenager traders.
Bubble Tweet Thread:
LESSON #2:
Calling bubbles is easy, making money is hard. In truth, the hard part about
the tech bubble wasn't noticing it. The hard part was timing it
Our equity
strategist tried in January 99... he was off by 14 months (and another 30 point
gap in value vs growth)
LESSON #3:
Nobody knew the bubble popped until months after it did. Nobody noticed in
March 2000 when it finally popped. Our equity strategist (who bet his career on
it!) didn't catch on until June
…
What's the
takeaway here? Be humble. For bears, it's easy to call a bubble. Anybody can do
that. Timing is the hard part. For bulls, it's easy to point to the
fundamentals. Historical investors weren't dumb. The hard part is matching
fundamentals with price...
Tweet of the Week:
Albert Edwards: It’s concerning that the author of this @MarketWatch opinion piece, Brett Anders, describes me
as “possibly the last bear left in the markets”. Surely I am not now all alone,
howling to myself on the icy Christmas tundra?!
MMT Fare:
Joan Robinson, in her book Introduction To The Theory Of Employment, 1933:
CREATION OF MONEY THROUGH A BUDGET DEFICIT
A budget deficit financed by borrowing from the
Central Bank has effects similar to those of gold-mining. We have already seen
how a budget deficit influences incomes. If there is an increase in government
expenditure without any corresponding increase in tax receipts there will be an
increase in incomes and activity. This is true equally whether the government
borrows from the public or from the Central Bank. If the borrowing is from the
public there is no further effect to be considered. But if borrowing is from
the Central Bank, then on top of the direct effect of the deficit upon income
there is the effect of an increase in the quantity of money. For the Central
Bank, in lending to the government, increases the ” cash” of the banks, just as
it does by buying securities or by buying gold. The direct effect of the
deficit comes to an end as soon as the budget is balanced, but the effect upon
the quantity of money remains as a permanent legacy.
The increase in the quantity of money, which takes
place cumulatively as long as the deficit is running, will tend to produce a
fall in the rate of interest and (unless confidence has been badly shaken) the
effects of an increase in investment, induced by lower interest rates, will be
superimposed upon the direct effects of the budget deficit in increasing
consumption.
At first there will be a drag upon the fall in the
rate of interest because the direct effect of the budget deficit in increasing
incomes raises the demand for money, since the requirements of the active
circulation depend upon the level of income. But the increase in demand for
money will be very slight (so long as money wages do not rise) compared to the
increase in supply, and it is a once-andfor-all effect, while the increase in
the supply of money is cumulative.
…
The whole difference between a budget deficit financed
by creating money and one financed by ordinary borrowing lies in this reaction
upon the rate of interest.
(not just) for the ESG crowd:
10 steamy signs
in 2020 that climate change is speeding up
Spiegel series: The World’s
Oceans in Distress. The Great Thaw. Thinning Crown. Heat Stroke.
Without Clearing
Any New Farmland, We Could Feed Two Earths’ Worth of People
A review of 2020 through Nature’s editorials
From the COVID pandemic to a momentous US election, Nature’s editorials
provide a lens through which to view an extraordinary year.
COVID-19 notes:
The Plague Year: The mistakes and the struggles behind America’s coronavirus tragedy.
The Mutated Virus Is a Ticking Time Bomb
There is much we don’t know about the new COVID-19
variant—but everything we know so far suggests a huge danger.
America’s Vaccine Rollout Is Already a Disaster
Epidemiological and economic consequences of
government responses to the COVID-19 pandemic
Going to Quit”: A Crush of Patients, Dwindling
Supplies and the Nurse Who Lost Hope
COVID Tweets of the Week:
The new virus strain is ~60% more infectious. We haven’t processed what
that means.
1.
Western countries that didn’t stop the
previous variant won’t be able to stop this one. It’s already in UK, US, FR,
NL... that we know. Probably many more places. The time to close borders was
this summer. Or a month ago. It’s too late now for most countries.
2.
If countries had a hard time stopping it
before, they will have a much much harder time now. If it’s 60% more
infectious, R0 has gone from 2.7 to ~4.3 on average. Countries that stopped the virus from
spreading got R from 2.7 to 1, a reduction of ~60%. Now, they need to reduce R
by ~75%. But remember: all the low-hanging fruit is already used (masks, social
distancing...). The next measures are all more expensive. …
"I don't believe we have the evidence on any of the vaccines to be
confident that it's going to prevent people from actually getting the infection
and therefore being able to pass it on”, says WHO Chief
Scientist Soumya Swaminathan
Steve Randy Waldman: the COVID intuition
freaking me out now is that half-assed suppression / vaccination is like shitty
use of antibiotics: not enough to kill the thing, but enough to teach it
resistance. if we don’t decisively vaccinate ourselves, will our efforts
basically vaccinate the virus?
Other Fare:
Corporate Power
and the Future of U.S. Capitalism. Shimshon Bichler and Jonathan Nitzan
Fun Fare:
The New History
of the Milky Way
Over the past two years, astronomers have rewritten the story of our
galaxy.
EXTRA [controversial or non-market-related] FARE:
COVID Fare:
In Far-Flung
Places, COVID-19 Is Being Treated Early And Well. Here’s Why Americans Don’t
Know This.
After Rushed
Development, Close to Half of Healthcare Workers Refusing COVID-19 Vaccines.
Yes to Masks. No
to Parties. 2021 Will Be a Lot Like 2020
How cancel
culture keeps COVID-19 lockdown doubters silent
Masks and Face Coverings for the Lay Public : A
Narrative Update.
Thomas Czypionka, Trisha Greenhalgh, Dirk Bassler, Manuel B Bryant,
Annals of Internal Medicine.
Concluding lines of the
Abstract: “Evidence suggests that the potential benefits of wearing masks
likely outweigh the potential harms when SARS-CoV-2 is spreading in a
community. However, mask mandates involve a tradeoff with personal freedom, so
such policies should be pursued only if the threat is substantial and
mitigation of spread cannot be achieved through other means.”
[COVID] Quote of the Week:
Dave Collum: You think you are following the science
when, in fact, you are following the media’s and politicos’ presentation of the
science. Follow the science is a rallying cry by all but the scientists.
[COVID] Tweet of the Week:
Incredible clip here. Dr. Kary Mullis winner of the 1993 Nobel Peace Prize for
Chemistry & inventor of the PCR test on the fraud who is called Dr. Fauci
Other Fare:
Slavoj Žižek: We
Need a Socialist Reset, Not a Corporate “Great Reset”
Slavoj Žižek writes that we've been given a choice
between a return to the old exploitative normality and a post-COVID corporate
"Great Reset" that promises to be even worse. We need a real
alternative, a socialist reset that can win justice for all and save the planet
from climate apocalypse.
The
Reconstruction of America: Justice, Power, and the Civil War’s Unfinished
Business
Monopoly Versus
Democracy: How to End a Gilded Age
The American
System Is One Big Grift
The Bidens, and even the
Clintons, are small-time players. The real corruption is much bigger, much
higher, and entirely unpunished.
Economics Nears
a New Paradigm
The Unspoken
Premise Of Modern Capitalism Is That The World Will Be Saved By Greedy Tech
Oligarchs
“2020 was the year socialism went mainstream,” psychopathic neocon
[Nikki] Haley tweeted today. “The dangerous ideology, which has failed
everywhere it has been tried and ruined countless lives, is on its way to
becoming the default economic policy of the Democratic Party. This terrifying
trend threatens the future of every American.”
Ah yes, America. The country where Republicans spend
all day screaming that socialism is happening and Democrats spend all day
making sure it never does.
After 2020,
anyone can be a nihilist: Covid was everything's Chernobyl—it tested
everything, and found it fake.
Gray Mirror is an unusual
publication for unusual tastes. You probably shouldn’t be here. But you are, so
why not keep reading? Here, as the banner says, we are nihilists—we believe in
nothing; and monarchists—we expect the next regime to be a monarchy…. Believing
in nothing just means we believe everything is fake. Or to be more precise:
everything in the United States is either fake, broken, a hack or a miracle.
Other Other Fare:
The Radicalism
of Charles Dickens
In his literary works, Charles Dickens told the story of a society
blighted by inequality — and the cruelty of a ruling class which kept so many
living in grinding poverty.
Pic of the Week:
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