138 Comments
User's avatar
Gene's avatar

Great article as always professor Alf!

I'd like to understand more about the final point regarding the dollar rally. I'm not an FX trader but I'd like to understand the macro better for USD. What does happen when the party stops?

Amazing stuff. Looking forward to attending your macro university!

Alfonso Peccatiello (Alf)'s avatar

Thanks, Gene! I should maybe cover the role of the USD more in depth

WildBoar945's avatar

For readers interested in bond price movement v. interest rate changes, and concepts of duration and convesxity, I thought you might like to read this 4-page from blackrock.

https://www.blackrock.com/fp/documents/understanding_duration.pdf

B Scott Chillemi's avatar

I’m sure this means I’m dumb, but what do you mean by “go fishing”? My guess is be willing to buy if it drops substantially or just “buy opportunistically”, but I’m not really sure and couldn’t get it from context. Thanks!

Alfonso Peccatiello (Alf)'s avatar

Hi! I should have specified indeed :)

Go fishing means: don’t look at the screen and do something else until the setup shows a better risk/reward

B Scott Chillemi's avatar

Thank you sir! Your online education is the best.

OttO's avatar

Rain check. Pass. No taking a position. Fishing rather than speculating.

At least that’s how I read it.

Bartski's avatar

I think it means stay out of the market and enjoy other things in life. I don't think it implies 'fishing' for opportunities, or "bottom fishing".

The real Enay's avatar

Alf means with "go fishing" do nothing!

Miguel da Fonseca's avatar

Alf explained what he means by “go fishing” in a recent YouTube video.

cairo's avatar

Agreed. It is very unclear what exactly he means by "go fishing".

Gerhard's avatar

Hi Alf, love your work. Would you mind doing a more in depth podcast on the dollar, would love to hear your thoughts on it.

J. B.'s avatar

What happens when the party stops?

Alfonso Peccatiello (Alf)'s avatar

If Central Banks are still tightening, H12022 again but on steroids.

Hector's avatar

Does the dollar milkshake theory ring a bell?

Sam's avatar

VIX to the moon.

Andrea's avatar

This is a great piece Alf! Thank you!

JW's avatar

Great perspective given succinctly and with real actionable recommendations. Best out there

Alfonso Peccatiello (Alf)'s avatar

Thanks, JW! Who would be the other top 3 macro research and portfolio constructions providers you think?

JW's avatar

I like to check in on Raoul Pal and you and than listen in to all the different perspectives I get from who Wealthion brings on. Lance Robert’s provides good overall insights and tactical portfolio ideas I respect.

E. Kierklo's avatar

Also remember on this Bastille Day nothing but Macron matters ....

John on the 3rd Marble's avatar

Here's a great rendition of 'Nothing Else Matters" by an all-women Polish group.

https://www.youtube.com/watch?v=09NqLjHJtGQ

Miguel da Fonseca's avatar

Thank you for sharing your views, Alf.

Jon Q. Holter's avatar

When QT picks up, shouldn’t interest rate volatility increase and the yield curve steepen as investors start to demanding higher yield to hold longer dated bonds? So wouldn’t this mean long bonds will underperform “this time” under that scenario. Thanks, great writing.

Alfonso Peccatiello (Alf)'s avatar

Hi Jon! The answer to this question is in an article about QT I wrote some months ago. Check it out!

Levy's avatar

Keep up the good stuff. These last two articles were A-grade.

Alfonso Peccatiello (Alf)'s avatar

Thanks, Levy! What did you dislike from previous articles?

Bonanza's avatar

I like especially "An Overview of Macro Asset Classes" part. Very appreciated Alf.

Yvdxhfl's avatar

Have you looked at the ratio copper/gold by McClellan, correlation with the 10 year notes it's indicating the a droop for notes in the short near term.

Will's avatar

Hi Alf! I’ve got a couple questions to which I’d really appreciate your response. 1) Since a bank creates a loan or deposit from thin air, and not from their own assets, why do people say that banks make money from only the interest on loans, and not the entirety of the loan repayment (principal plus interest)? Shouldn’t the assets of the bank ultimately increase by the principal of the loan they make plus the interest of the loan? 2) And consequently, also, if fractional reserve banking doesn’t occur at all, but rather banks have the right to create assets freely, shouldn’t bank-runs be very unlikely to ever occur, not a probable hazard that necessitates a “lender of last resort”?

Thanks so much, Will

Alfonso Peccatiello (Alf)'s avatar

Hi Will!

A) because when that loan is repaid, the principal is destroyed

B) correct, and they are indeed very rare; they mostly happen when banks have created too many loans without the adequate amount of liquid assets to back a quick rush of deposit withdrawals. The central bank can always provide reserves but it generally would require some sort of collateral against it.

Jonathan's avatar

Great article Alf. Really appreciate your views on the major asset classes. That’s really helpful, and also appreciate you give ideas for European ETFs.

Alfonso Peccatiello (Alf)'s avatar

Hey Jonathan! That’s what I strive for :)