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Sunday, June 22, 2025

2025-06-22

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

A data-driven analysis cutting through the noise to reveal the current state of the Aggregate Economy.



Summary
  • Trump’s trade war and disengagement from global trade is effectively ‘America's Brexit'.
  • For pound/dollar, ‘America’s Brexit’ will cancel out ‘Britain’s Brexit’.
  • Hence, a new structural position is long pound/dollar with a price target of $1.60.
  • Investors will also switch out of the ‘fiat’ dollar into ‘non-fiat’ gold and bitcoin.
  • But given bitcoin’s market value is less than one tenth that of gold, bitcoin has considerably more upside...
  • ...with our price target at $200,000+
.................... If investors switching out of US dollars do not have to switch into another fiat currency, then the strongest candidate on a multi-year horizon is bitcoin. Indeed, since ‘Liberation Day’ the biggest winner of the dollar exodus has been the world’s preeminent cryptocurrency.

Many investors that I speak with are still uneasy about owning bitcoin. They worry that bitcoin has no ‘intrinsic’ value. Yet these same investors have no qualms owning gold. This makes no sense given that gold has very little intrinsic value either. If gold were valued just on its intrinsic value as a precious metal, then it would be trading closer to $340/oz than its current $3400/oz.

The value of both gold and bitcoin come their so-called ‘network effects’. As I previously explained in Bitcoin Closes In On $100,000, But The Ultimate Destination Is $200,000+ | BCA Research, the network effect arises from the collective belief that gold and bitcoin are the non-confiscatable assets to own in a fiat monetary system. And that a certain proportion of total wealth must be held in these non-confiscatable assets as an insurance against hyperinflation, banking system failure, or government default or expropriation.

The upshot is that the nominal dollar value of the gold and bitcoin networks is the product of three terms:
  1. Global wealth in nominal dollars.
  2. The share of this global wealth held in the non-confiscatable asset-class
  3. The share of the non-confiscatable asset-class held in gold versus bitcoin
The evidence since ‘Liberation Day’ is that investors have lost faith in the dollar as a haven asset. They are fleeing to gold and the Swiss franc but fleeing even more to bitcoin. In which case, all three components of bitcoin’s value are going to trend much higher in the coming months and years. ........ 



Yves here. Most of you will recognize the headline’s nod to the book that propelled John Maynard Keynes to fame, his The Economic Consequences of the Peace. Keynes, who had been an advisor to the UK Treasury team participating Versailles Conference, which was negotiating what amounted to the detailed terms that would be imposed on Germany after World War I. Keynes had had to return to England while the talks were on due to a bout of bad health, and decided to resign because it was clear to him the the settlement would be unduly punitive. His book, which presciently argued that the attempt to impose a Carthaginian peace would backfire, became a best seller.

Note also that this is a heavyweight group of authors that is iproviding an overview to an e-book with contributions from 50 experts. But even this high-level recap seems a bit cautious. It seems loath to clearly say that Trump”s not-well-thought-out fight to prevent or delay the inevitable shift to a multi-polar order is making the transition more painful, and potentially much more bloody, than it need be. .................



............... Put simply, the markets are absolutely not discounting a recession of any consequence. Equity markets are well up, credit spreads are well down and the rates profile shows no signs of macro malaise. Sounds too good to be true? Feels that way. .......



I cannot remember a time in my career when the news has been noisier than it is now. If we are not careful, every headline and associated reaction becomes an opportunity to confirm the narratives that we have already written about the economy and the market. Perspective narrows, objectivity goes out the window and we ricochet off the walls of our echo chambers.

An antidote to this is to listen to the message of the market and let the data tell the story. We are now one month removed from the spike in new 20-day highs in mid-May that produced a breadth thrust signal for the first time since the end of 2023. While the past month has been anything but typical from a news headline perspective, the behavior of the S&P 500 has been consistent with what has been experienced after previous breadth thrusts over the past 40+ years. In fact, the 3% gain in the one month following the May 12, 2025 breadth thrust is somewhat stronger than the median one month gain following the previous 30 breadth thrusts.


The composite path laid out by previous breadth thrusts is up and to the right from here. One wrinkle to consider is that most previous breadth thrusts have come with the S&P 500 already at new 6-month highs. In the current case the S&P 500 has thus far failed to eclipse its early year peak. The bullish case would be bolstered by the S&P 500 eclipsing its February peak. Though (as we discussed shortly after the February peak), a new high in the index that is not accompanied by a robust number of stocks making new highs is not usually followed by strength.


The May breadth thrust suggests the path of resistance is higher, but bulls have some work to do. They have been dealt a good hand, but it still needs to be played. The positive set-up for the bulls begins with an expansion in the number of stocks making new highs and culminates with the S&P 500 breaking out to new highs of its own. A failure on either account cast doubt on the sustainability of the rally off of the April lows.







Vid Fare:

This recent 'raging bear' is now fully long the market




Bubble Fare:


While this isn’t exactly the conversion of Saul on the road to Damascus, I came to a realization recently that subtly changes the way I look at the potential for large cryptocurrencies, such as Bitcoin.

Historically, my attitude has been dismissive about the value of bitcoin itself. While I recognize the amazing reach of blockchain technology and the genius of using asymmetric key cryptography to secure the public record of private transactions, I’ve always thought that bitcoin didn’t really achieve the promised goal, which was to be a better money than fiat dollars. After all, bitcoin is not backed by anything more than the dollar is – nothing. Its value is based on scarcity, and scarcity by itself is not a source of value (if it was, my toenail clippings would be immensely valuable). So in my 2016 book What’s Wrong with Money? I wrote in a chapter on bitcoin:
“But is bitcoin money? Calling it a virtual currency, or a digital currency, or a crypto-currency doesn’t make it money. At some level, it is of course money in the same sense as cigarettes are to prison inmates. It serves as a medium of exchange, a store of value, and a unit of account – but only within the special community that already accepts bitcoin as credible…It is not yet broadly a credible currency. It doesn’t have universal value because not everyone believes that everyone else will accept bitcoin.”
Even in that chapter I recognized that bitcoin may someday be money-like. And I underwent a partial conversion and even worked for a while on a paper with my co-authors Kari Walstad and Scott Wald to define a measure (“Crypto Trust Index”) that would objectively measure how much like money the cryptocurrency world was becoming. [That paper ended up being overtaken by real-world developments, as stablecoins fully backed by fiat balances are obviously crypto money by identity, rendering the question moot.]

But in my mind bitcoin, eth, etc aren’t money but speculative vehicles – they are distinctly separate from USDC, USDi, and other fully-backed coins. It may be that they belong in a portfolio with stables and/or securities, but since bitcoin has no intrinsic value I have always held the view that I don’t want to own it as it can go to zero in a nonce.[1]

Recently, as I said, I’ve had a mild conversion as a result of two realizations.

The first realization is that even in the traditional securities world, we sometimes invest in things which have no intrinsic value in many states of the world. ...............

The second realization, though, relates to scarcity. Yes, scarcity alone cannot be the basis for value (see: my toenails). For scarcity to matter, there needs to be exogenous demand. And that demand need not be rational. If someone wants to hold bitcoin, not caring that it has no intrinsic value (or erroneously believing that it has some), then scarcity matters. The realization is that scarcity goes from not mattering at all, to mattering a great deal, as soon as there is any demand. To be sure, if that demand goes away, then scarcity again ceases to matter. ..........

So the case for speculating in bitcoin (no, I won’t call it investing) is that since the total supply is independent of price, the supply curve is vertical and moving to the right at an ever-slower rate. As this happens, it takes less and less increase in demand to push price higher.

It also takes less and less decrease in demand to push price lower. Since there is no slope to the supply curve, it means that oscillations in demand are responsible for all of the oscillations in bitcoin’s price. And we can say more about the volatility dynamics.  ...........



Charts:
1:



(not just) for the ESG crowd (Vid Fare):



Geopolitical Fare:


.......................... It is, of course, obvious that if Iran had nukes, much or most of this would never have happened. North Korean leaders do not worry about being murdered in their sleep by foreign missiles, drones and bombs.

The China Syndrome. All of the materials required to build drones and ballistic missiles are available, cheap, from China. China gets a lot of oil from Iran, uses Iran for transhipment, and is in general a major ally of Iran. It is also aware that taking out Iran is one of the steps before war with it. Just as I said that China would not allow Russia to be taken out by sanctions (and was right), I expect China in the case of any sort of duration of this war, and, indeed, after it, to supply Iran with everything it needs to ramp up production of missiles and drones. Since China’s production abilities exceed those of the West when it comes to these requirements, this is not a small thing.

No Army Means No Fall. Iran cannot be defeated by airpower alone unless there is a significant uprising in the country which the army is unable or unwilling to stop. One should never underestimate the CIA’s regime change abilities, of course, but if they don’t pull it off then this war is about reducing Iran’s power projection ability: doing enough damage that they surrender in spirit if not in fact.

The Khameini Problem. Nations rot from the top, and this is clearly the fundamental problem in Iran. Khameini is cautious, even timid. He has underplayed his hand ever single time during this crisis, most importantly when not sending ground troops to stop the fall of Assad. This caused great problems with the younger members of the Revolutionary Guard, who are hardliners almost to a man. The elimination of senior members of defense and government is not strengthening moderates, it is strengthening hardliners.

Israel has said that Khameini is not off-limits for murder. If they do so, it will be a huge mistake. It will end the non-nuclear fatwa (though the Iraniams will lie about that) and put hardliners in charge. Ironically, the best thing Khameini could do for Iran right now is be Martyred. If Allah Wills It, let it be so. I don’t want to get too down on him, in many ways he’s run Iran very well, but he is a victim of Machiavelli’s dictum that when times change most leaders can’t change with the times and the virtues that made them good leaders in the past make them terrible leaders in the present.

The Russia/China Issue. Iran could have had a full military alliance with Russia. If they did, they’d be in a lot stronger position. Iran really wants to be an independent major regional power. The other option is to be the junior partner in a tripartate bloc with China and Russia. I understand why they want to avoid that, but being #3 in the world’s strongest alliance (and yes, that’s what it would be) comes with an absolute ton of benefits. They need to reconsider this issue. They will get some support from Russia and China, indeed, a lot of support, but neither country is going to go all out for them. If either would, Iran would be in a lot less danger.



We are witnessing a joint Israeli-US attack on Iran. Claims by the Trump administration that it is not involved are false.

Israel’s far right government and the Trump administration are joined at the hip. Particularly so in air power. .............


Offensive realism, as advanced by theorists like John Mearsheimer, posits that great powers seek to maximize their security through dominance.


Twenty years ago, the US warned prematurely of the 'birth pangs' of a new Middle East. Now they have arrived in full force – and they will not end in Iran



President Trump is reportedly returning to Washington early from a G7 summit in Canada and has told his national security council to prepare for an urgent meeting in the situation room, apparently to discuss Iran.

The US president has taken to social media to terrorize Iranian civilians, telling Tehran’s millions of inhabitants that they must immediately evacuate the city and saying “Iran should have signed the ‘deal’ I told them to sign.”

Weirdly, the strongest indication that Trump has made a decision to attack Iran might be a recent post on Truth Social about former Fox News darling Tucker Carlson.

“Somebody please explain to kooky Tucker Carlson that,” IRAN CAN NOT HAVE A NUCLEAR WEAPON!” the president posted.

Carlson has been an outspoken critic of warmongering toward Iran, and was reportedly responsible for personally talking the president out of his Iran brinkmanship in the first Trump administration.

Antiwar’s Scott Horton is reporting that, according to his sources, the Trump administration has already decided to join in Israel’s war.

Capitol Hill is clearly worried that a war with Iran is imminent, with numerous lawmakers in the House and the Senate scrambling to get legislation in place that would stop the president from ordering such a war.

Benjamin Netanyahu has been speaking to the western press to argue in favor of assassinating Iran’s Supreme Leader Ali Khamenei. I keep thinking about the Mad King in Game of Thrones who went nuts and kept ordering everyone to be burned, until a member of his own court decided enough is enough and slit his throat.

A full-scale US war against Iran is one of the worst things that could possibly happen. Full stop. It would likely entail millions of deaths, massive worldwide economic suffering, chaos and devastation throughout the middle east unlike anything we’ve ever seen, and could easily wind up with an Israeli nuclear weapon exploding in Tehran. There is a reason even a lot of otherwise war-happy swamp monsters in Washington have resisted going down this path. I really, really hope it doesn’t happen.

If this is the direction the empire chooses to go, expect mass-scale psychological manipulation on an entirely unprecedented level to dupe the public into going along with this thing. Expect far more lies. Expect far more propaganda. Expect psyops. Maybe a false flag attack or two. It will be bad.

Don’t buy into the lies. Oppose their warmongering at the top of your lungs, with everything you’ve got. I will be doing the same.

Anyone who supports this war is an enemy of the human species.



......................... Absent the US getting involved, I put the odds in Iran’s favor, but it’s not a strong bet. It’s simply too hard to tell the actual situation. Some claim Israel has complete air dominance over Iran, others say that’s not true, and I don’t know. Likewise, lots of claims are made about how many launchers have been destroyed, but there’s no reason to believe either side on this. Attack volumes from Iran are way down, but is that because of strategy or capability? If it’s capability, they’re sunk. If its strategy, maybe not. It’s quite conceivable they’re holding back a lot as they degrade AD and force the Israelis to run thru their AD missiles.

Do bear in mind that Iran has the simplest advantage: it’s much larger than Israel and has a much larger population and it is an industrial state which has the ability to build its own weapons. China is not going to intervene militarily, but I’m sure they’ll sell Iran as much cheap materials it needs to build more missiles and drones, and China has the cheapest and most extensive supply network for both.

The elephant in the room, of course, is that if Israel decides it is losing, it does have nukes and if any country in the world other than US is psychotic enough to use nuclear weapons, it’s Israel.


Iran and the Permanent War Machine: The Modern State as Organized Crime
Lies and treachery have now become the explicit doctrine of the U.S. government

................. Throughout Trump’s presidential campaign, both the candidate and his big-name supporters earnestly promised the electorate that Trump was the guy who would not start new (‘stupid’) wars, unlike his Democrat opponents. During his inaugural speech, Trump repeated that promise.

Less than six months later, Trump has started a stupid war – what is more, he has started the very war that the neocons themselves have been clamoring for these past three decades ...............


Tulsi Gabbard Is A Warmongering Asshole

................... This fraudster has built an entire political career out of pretending to oppose war and militarism in order to win the support of Americans who are sick of pouring blood and treasure into the US slaughter machine, opportunistically drifting to whatever corner of the political spectrum would offer her the most power, and then when she got as high as she can go she sold all her stated principles to the furthest extent possible at the earliest opportunity.

Pee fetish porn stars have more dignity and integrity.

I feel so stupid for having bought into Gabbard’s antiwar schtick early on. Fuck this asshole, fuck Trump, fuck Israel, and fuck the US empire.



Sci Fare:





Other Fare:

Muslims grew fastest; Christians lagged behind global population increase



Pics of the Week:

Utah Drone Guy

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