Really great article. I hope you occasionally continue to put out some free content, I’ll miss it when it goes behind the paywall (can’t afford it). But you do great work :)
very interesting as usual, I have a question though, if the BCE says that euro rates are going to raise to about 4% and stay there for a long time ( plus QT), how comes that in bce projections unemployment is 6.9 in 2023 and 6.8 in 2023? is it such a tightening of monetary policy possible without unemployment?
Shrinking reserves, shrinking tax receipts, while continuing to run huge deficits and with a duration of the federal debt ~ 58 months, being turned over at much higher rates. Not sure on the timing but this looks like an imminent debt death spiral.
For sure. It's an amazing time in terms of how the political corruption and fiscal irresponsibility, impacts the macro strategy. Sometimes it feels like my skills have been reduced to identifying the mismatch between what the market thinks and what Powell is going to do. Crazy.
Oh... I read all your articles, so I must have missed that part. Anyway, speaking of that and since they’re going away, thank you for all the knowledge you shared freely with this community. Have a wonderful Christmas and a Happy New Year, Alfonso! 🎄
Hi Alf, very interesting & timely as always, thx a lot. How do you think, this change will affect US treasuries, specially long yet ones? (I.e.: go down in sympathy or atract buyers?)
I certainly agree this was the most dramatic ECB meeting in history, at least the same as "whatever it takes." I also think that only a confirmed dove like Lagarde could have done this as if the ECB president was Holtzmann or Nigel, it would not have gone down nearly as well as the South of Europe would be screaming Germany is trying to destroy them. Seems like a Nixon to China moment.
Of course, it remains to be seen if she really does follow through!
Good morning Alfonso, thanks again for the great article. Looking very much forward to the Macro Compass platform starting in a couple weeks time. Question about the trade 2s10s flattener. Do you mean shorting both the Schatz and the Bund in this case and for Italy on the front end of the curve shorting the BTS and the back end shorting the BTP?
New to your website but have seen several great videos of your macro outlook on youtube.
I'm new when it comes to macro but I feel as if I already learned some important lessons watching your videos. Definitly also considering subrscribing to your paid service.
In light of Lagarde's speech may I ask what your outlook is for the Euro/Dollar in 2023? Should I be 'scared'of losing buying power against the dollar?
Currently 100% in Euros and feeling somewhat exposed while i'm trying to step up my macro game.
Really great article. I hope you occasionally continue to put out some free content, I’ll miss it when it goes behind the paywall (can’t afford it). But you do great work :)
Thank you! :)
very interesting as usual, I have a question though, if the BCE says that euro rates are going to raise to about 4% and stay there for a long time ( plus QT), how comes that in bce projections unemployment is 6.9 in 2023 and 6.8 in 2023? is it such a tightening of monetary policy possible without unemployment?
It's not, you are totally right :)
Hi Alfonso
I don't remember how I came across your content but I was captured by your writing and since I have been reading your newsletter...
I am a novice in Macro eco and I struggle to follow you always and will be more interested in taking a course before going further with subscription
Thank you!
Courses will be available (but at full price for non subscribers) from March 2023 - stay tuned!
Shrinking reserves, shrinking tax receipts, while continuing to run huge deficits and with a duration of the federal debt ~ 58 months, being turned over at much higher rates. Not sure on the timing but this looks like an imminent debt death spiral.
I wonder if they see it?
Private sector debt is an even worse problem.
For sure. It's an amazing time in terms of how the political corruption and fiscal irresponsibility, impacts the macro strategy. Sometimes it feels like my skills have been reduced to identifying the mismatch between what the market thinks and what Powell is going to do. Crazy.
I hope Giorgia Meloni has subscribed to your service for next year.
She will need all the good advice she can get.
Ahah I have to agree :)
I assume you’ve covered your EURUSD short by now, am I right? 😉
All my tactical trades including entry and exits are public in 2022 :)
Oh... I read all your articles, so I must have missed that part. Anyway, speaking of that and since they’re going away, thank you for all the knowledge you shared freely with this community. Have a wonderful Christmas and a Happy New Year, Alfonso! 🎄
Hi Alf, very interesting & timely as always, thx a lot. How do you think, this change will affect US treasuries, specially long yet ones? (I.e.: go down in sympathy or atract buyers?)
Francisco
Welcome!
It may drag US Treasury yields higher at the early stages of the move
In what way would a ‘‘reverse repo’’ facility ‘‘sterilize’’ QT as opposed to QE?
I meant the drawdown of the RRP would sterilize QT
Great as usual Alf 👍 Buon Natale e Felice Anno Nuovo! Merry Christmas & Happy New Year!
Grazie Woody!
Thanks for the analysis and guidance!
Look forward to learning from your more detailed guidance for the medium to longer term investor in 2023.
Thanks, Julian!
I certainly agree this was the most dramatic ECB meeting in history, at least the same as "whatever it takes." I also think that only a confirmed dove like Lagarde could have done this as if the ECB president was Holtzmann or Nigel, it would not have gone down nearly as well as the South of Europe would be screaming Germany is trying to destroy them. Seems like a Nixon to China moment.
Of course, it remains to be seen if she really does follow through!
Yep, I agree with the above Andy!
Hi Alf, small question, you've written:
"But excess reserves will be shrinking, and hence banks (amongst the largest buyers of peripheral bonds) will be taking a more conservative stance"
Can you please clarify who'se excess reserves will be shrinking and why exactly?
Hi! I wrote many pieces on how QE, bank reserves and markets interact.
Have a look in the past articles and you'll find answers :)
Good morning Alfonso, thanks again for the great article. Looking very much forward to the Macro Compass platform starting in a couple weeks time. Question about the trade 2s10s flattener. Do you mean shorting both the Schatz and the Bund in this case and for Italy on the front end of the curve shorting the BTS and the back end shorting the BTP?
Hi Alf, did you have time to look at this? Merry Xmas.
Alf,
Sooooooooooooo disappointed you are going to start charging for your news letter.
I thought this was for the novice and beginning investor, to help us understand the markets better.
https://finiche.substack.com/p/market-minutes-and-portfolio-update
Hello Alfonso,
New to your website but have seen several great videos of your macro outlook on youtube.
I'm new when it comes to macro but I feel as if I already learned some important lessons watching your videos. Definitly also considering subrscribing to your paid service.
In light of Lagarde's speech may I ask what your outlook is for the Euro/Dollar in 2023? Should I be 'scared'of losing buying power against the dollar?
Currently 100% in Euros and feeling somewhat exposed while i'm trying to step up my macro game.
Thanks, Tom