Market On Open, Wednesday 4 March
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Money Printer Go Brrrr in 5, 4, 3 ...
by Alex King, CEO, Cestrian Capital Research, Inc.
Here comes the stimulus. We cannot know its precise form and we cannot observe it directly. But we will see its effects even if we cannot see the thing itself. Whether through the fiscal route (increased defense spending) or purely monetary (increased capital available to money center banks as a credit impulse) I expect to see U.S. government intervention in the economy and market before too long. And I think that, coupled with the rather extreme levels of anxiety amongs some classes of investors right now, with the electoral cycle in the mix, will push US risk assets higher. One of our learned Inner Circle members, who asks to be known only as “Charlie”, was musing yesterday that software will lead the way up, and I think “Charlie” may be right here. Crypto - Bitcoin and Ether in particular - may climb in lockstep.
The Best Cloud Chamber I Know Of
When my colleague Yimin Xu started writing for Cestrian, my own understanding of securities markets began to expand and deepen considerably. This is because my own background has been in equities of various descriptions and to the extent I understood credit, it was primarily a result of a career in leveraged buyouts. Yimin joined us with experience in market-making in rates markets; that world requires a depth of knowledge about how the financial plumbing actually works. Since launching his YX Insights family of services, Yimin has dug deeper and deeper in his research, and shared with his many delighted subscribers, the way that government and money-center bank operations intertwine to create the ebbs and flows in securities markets that we all know and, er, ?love?. If you ask any of his subscribers they will tell you that even when the world is in a spin and markets getting whipsawed, they understand what is happening and why it is happening. CNBC et al will tell you “fears of X are causing Y”. Yimin will tell you “the Treasury General Account is trending this way, so equities are trending that way; this will reverse when a, b, or c happens at the TGA”. With understanding comes calm, with calm comes a low pulse rate, and with a low pulse rate comes sound investment decisions.
You can learn more about Yimin’s work here.
Alex King
Now let’s get into it. Today’s note is available to Inner Circle and Circle members alike.