Macro Confessions Part XXX, the Acid Capitalist is joined by his trusted lieutenant, @ToStRo and together with The Sweeney Alchemist, they brew a heady mix of Putin Put Downs and attempt re-set the global macro chessboard. Chris busies himself with a meaty cheese burger..
Convexity has jumped from our computer screens to the theatre of war. The asymmetry of urban war was well understood by all those not intoxicated by the greed and fear of fascist states. Urban assaults favour the defenders, but like a Bloomberg scenario analysis, convexity has leapt from the city to the surrounding fields and outer limits of the metropole. Anti-tank and anti-aircraft technology supplied liberally to the democracy of the Ukrainian statehood is making this war more asymmetric than any one could ever have hoped for.
Putin hasn't lost his marbles. Rather his gangster political system has left him bereft of proper intelligence. State corruption has fostered an almighty state failure in intelligence. It's as though the former KGB has been transformed into mammoth PR agency intent on amplifying the wishes of its only client.
Ok, enough war-war. Bretton Woods died in the 1960s. Those that seek to right off the hegemony of the dollar collateral system owing to the escalation in the world's first truly global war are mistaken. Is the world shifting, tilting on its axis? You bet! But not as the apologists and doomsayers would have you imagine.
The axis has always been defined by the supposed might of the current account surplus nations versus the receding power of those nations succumbing to current account deficits. Think again...
Channel all your paradoxical thinking. It's been a Wizard of Oz illusion all along. To quote the mighty Wizard, My people have been wearing green glasses so long that most believe this really is the Emerald City. The Acid Capitalist spells it out. Having assets that people crave, that they must own, gives you power. If you can't create enough assets in your own currency that outsiders really want then you never had wealth in the first place. This chimera of wealth is simply the confiscation of other nation's benevolence.
The world is changing, hallelujah! The mighty Sampson like China. What should it do? It should revalue its currency higher to the dollar. It should promote economic policies that promote trade deficits. It should abolish capital controls. It should celebrate individual liberty and a rules based, transparent legal system. Never gonna happen. The elite leaders of mercantilist nations surround themselves with the same corruption and fear that is responsible for the debacle in the balkans.
Bitcoin? The problem is almost the same. It's one of distribution. The price needs to crash to liberate the distribution and promulgation of the digital system. Presently, The Bitcoin represents another form of wealth confiscation. BTC and the CCP billionaires, hmm? All of the early adopters hold all of the system-wide wealth. To buy today you have to pay a deadweight rent that requires cash money. Is the Russian state going to buy with rubbles?
The acid Cap portfolio. I'm long as much gold as volatility constraints would permit, maybe its 25pc of the fund. I'm long the corrections. EU Carbon Permits, the price is a steal. Facebook, Paypal, Shoprite, Snap, I'm making this up (!) but 60% drawdowns in serious businesses are magnetic like.
I'm long agricumtural equities. This is really simple. It’s just fertiliser - Russia exports all 3 nutrients. No need to be too clever - Nutrien, Mosaic, CF, OCI, K+S. There’s aren’t formal sanctions on Russian/Belarusian potash - it’s 30% of global supply combined - but Yara did just say they stopped buying, hmm, I'm a buyer. You set up to buy Jordan?? Arab potash looks great.
So far, so short vol so I would bet against the Arab oil princes. A line is being drawn in the sand.
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