First time reading Lykeion? Sign up here. Black Gold “When we think about commodities in physical markets, they’re what we call volume-metric markets. They’re driven by the quantity consumed. To be bullish on an oil market or a copper market, it’s really easy. You look at the
We explore last month's local news of global impact and remind readers of why we still like Brazil.
Jacob and Roger explain why the uncertainties around the Russia-Ukraine War and China's Re-Opening should make investors extremely conservative in Q1.
In a year of max uncertainty due to the divergence of outcomes possible, let's focus on what we know.
We highlight the six lessons we learned in 2022.
Deglobalization, U.S. Government Refinancing vs. Market Interest Rates, Global Food Prices, Texas Energy, 2022 Bubbles Bursting, Travel
The first publication of Lykeion Research lays the groundwork for the converging worlds of Geopolitics & Macro.
We lay out a four-step process that showcases how a US soft landing could materialize.
Wealth vs GDP, Deglobalization Rising, Structural Shifts in Sector Returns, The Shifting Semiconductor Landscape, The Idiocy of Climate Policy, and Black Friday Madness
Mystery brewing in China, a rising Poland, and politics aside, Brazil has a bright future
Natural gas fields provide some common ground for a maritime border agreement
We highlight a framework that helps us get a sense of what round of the current bear market we are in.
We clarify the bull and bear arguments you’re likely to hear about in this part of the cycle.
Operating Leverage, Supermajors, Global Oil Reserves, Cash Account Returns, Yield Games, China Exposure
Deep dive into the increasing tensions between the U.S. & Saudi Arabia.
Steven K.N. Wilkinson's guest post on the German industrial complex navigating a pivotal moment in history
We look back at what happened over the last 9 months of the year.
Currencies in Crisis, The Mother of All Macro Charts, Fed Funds and Crisis', Global Petroleum Production, Corporate Margins and Real Wages, The Wealth Gap, Demographics
How can we use Initial Jobless Claims to time the bottoming of equity markets?
With an energy crisis, elections, geopolitical risks and ramping inflation, policy makers will have plenty of tough decisions to make into year-end.
Inflation Reduction Act, CINE vs AMC, Concentration of PV and Semis, Oil Supplies, Elemental Power
Bridge protocols, Bitcoin's investment time horizons, and New addresses momentum.
What's happening in Taiwan and why does it matter?
Stock market rallies could be self-defeating, the likelihood of China rebounding in 2H, and the preference for direct commodities exposure.
Can the EU move away from Russian imports? We break it down for you.
We look back at what we've written over the past month.
Tesla vs. Toyota, PEs at Market Bottoms, Energy Arbitrage, Sovereign Defaults, Nuclear Reactors, Home Sales by Price Range, World Cup Spending
Natural Gas and LNG markets are top of mind for global geopolitics. What should we be aware of?
Are conditions tight enough to slow inflation?
We look back at what markets did in the first half of the year and highlight the main themes for the second half.
We look back at what we've written over the past month.
The BoJ Experiment, Policy Makers Constraint Framework, Particulate Emissions from Tires, Post Secondary Enrollment, Refiners and Crack Spreads
Deep dive into the current macro set-up, with a special focus on Europe, Japan, and the US.
Breaking down the Crypto Sell-Off, the MVRV, and the Ethereum Merge.
Covering energy, wealth creation and preservation, and deep-dives into a select few of their pieces.
A deep dive into what led the US dollar to become the global reserve currency, and what it'd take for that to change.
Quantitative Tightening, Market Sell-Off, and the Corporate Put is Back
We look back at what we've written over the past month.
Student Bailouts, Secretary of Energy, Oil & Gas Drawdowns, Lithium vs Hydrogen, US Crops for Fuel, Tech's Bloodbath, Bitcoin in 401(k)s, Inflation LEVEL
We look at what recent price performance implies for the future of BTC, and explain the Luna and Terra collapse.
Given where consensus stands currently, what are the options for investors?
We cover the latest developments around the Japanese Yen, and dissect its implication for Asia and the rest of the World.
We look back at what we've written over the past month.
US Budget, Netflix vs. Disney, Streaming Services, Owners of US Debt, Patagonia Supply Chains, Apple's Cash Hoard
The number of recessions has declined since the Great Depression - is this a good thing?
Recent global geopolitical developments might just be the necessary catalyst for the region to finally unleash its long-overdue potential.
Despite the range-bound price performance, there is plenty to learn from Q1.
We dive into the main themes coming out of Q1'22.
We look back at what we've written over the past month.
Gas Shortages, Oil Exports, LatAm VC Investments, YTD Sector Returns, GBTC Conversion, Impact vs ESG, and the Foo
Should we look at the yield curve or at inflation levels to assess the real risk of a recession?
The global food system today is at risk.
‘Temporary’ changes to the rule of law during times of crisis have rarely remained temporary.
Deep dive on the circular construction investment case.
We look back at what we've written over the past month.
Food Prices, Inflation, Natural Gas, Supply Chains, Share Buybacks
We analyse the potential for Bitcoin to decouple from the current macro narrative.
What if we already reached peak hawkish sentiment?
Why Does This Map Matter?
All you need to know about the current conflict between Russia and Ukraine.
We look back at what we've written over the past month.
Fed Funds Rate, Yields & Mortgages, The Growth Equation, Sustainability to Impact, Tennis
Peak profit margins and hawkish environment increase the downside risk of the liquidity trade, which still has a lot more to go.
The US is leaving the Middle East, whilst Asia is becoming more dependent on it.
Labeling impact funds correctly matters more than you might think.
We look at what Bitcoin and Web 3.0 did in 2021.
We look at what the USD did in 2021 and make the case for 2022.
We look back at what we've written over the past year.
Topic of the Year: Inflation, A Generational Shift in Fund Flows, Looking Forward to the US Dollar and Oil, and a Little Lykeion Fun
Understanding geopolitics matters much more now than it mattered 30 years ago.
We go beyond the headlines and highlight the good and bad of COP26.
Real Yields, Debt, Strategic Petroleum Reserve, S&P Concentration, Fundamentals
We look back at what we've written over the past month.
We're not interested in buying the China Tech dip - there's plenty of opportunities elsewhere.
Global per Capita Carbon Emissions and Why They Matter
Investing at new All-Time Highs has historically brought good results to investors.
How can monetary policy help solve the problem of higher input prices? It can't.
We look back at what we've written over the past month.
Fertilizer Prices, Capital Goods Orders, Nuclear to the Rescue, Gilt's on the Move, Concentration of Media and Batteries
This crisis centers on the intersection of bad weather for wind energy generation and decades of poor policy planning.
We might have the first US Bitcoin ETF being approved as early as next week.
Negative Interest Rate Swap Spreads and why they matter
The energy crisis is likely to get worse, and China risks will likely be contained.
We look back at what we've written over the past month.
Remittances, Revenue per FTE, CAPEX by Industry, High Yield Debt with Negative Interest, Dying From... , Sub 3-Hour Flights
We clarify the differences between trading and voluntary schemes, as well as point out what's great and less so about them.
Improving collateral will reduce BTC volatility going forward, and NFTs are an overheated market that might open up many future opportunities.
Whilst 'Tapering' in 2013 meant higher yields, this time around, if it does take place, it'll likely lead to lower yields.
US Spending vs. Income, SPX:TLT, TSA Traffic, Generational Debt-to-Income, Google & Apple, Share Buybacks
If you believe in inflation or deflation, chances are, you're somehow right. For now. But we need to dive deep to figure out what the future holds for this 'debate of our time'
Record-high equity inflows promise a continued liquidity bonanza for markets, while the oil supply and demand imbalance is likely to grow more acute than what consensus expects.
Why green bonds have a premium and what sustainability-linked debt is solving for.
Global PMIs are closely correlated with growth in the global money supply. So we asked our contributor network why this matters, and their answers range from fundamental, to techinical, to philosophical (thanks Sune!)
Despite a challenging Q2 price performance, BTC fundamentals continue to highlight healthy developments.
Debt-Driven GDP, Financial Industry Penalties, Nuclear Power, Declining Energy Intensity, Gross Output, GDP per Capita, Loan-to-Deposit Ratio
Economic and markets indicators are telling us two different stories about inflation.
A surging dollar could have significant implications for reflation, emerging markets, and volatility.
We asked our contributor network why they believe the Inverse Head & Shoulders forming in the DXY matters. Here are their responses.
CapEx and R&D to Earnings, Share Buybacks, Labor Participation Rates, Uranium Fuel, and Investor Led Rounds
Tapering is not yet an issue, growth is timidly coming back and oil is near 7 years high.
How different carbon programs mechanically work and what they are intended to actually accomplish
The Fed's Reverse Repo facility is at an all-time high. But "Why Does This Chart Matter?" Find out what our contributors think; Mike Green, Jeff Snider, Luke Gromen, Seth Levine, and Roger Hirst
The energy debate is not new and is brought up in every crypto market cycle.
Commodity prices and CPI subcomponents continue to flag an increased risk of inflation.
Energy, Copper, AirPods, Wealth Inequality, Transitory Inflation, Pandemic Spending
Claiming an ESG investment as an “investment for good” is, today, still an exercise of wishful thinking.
Does the correlation of Bitcoin to the ever-expanding Fed Balance Sheet matter?
Bitcoin’s still up +320% in the last 12 months.
Positioning in the market has become less extreme, especially ahead of what has historically been a lower return period for the stock market.
FinTech, Historic Equity Flows, OPEC Spare Capacity, Market Valuations, and Available Cropland
We find the increased focus on corporate taxes to be a fair and necessary discussion to have, especially given the number of loopholes that corporates are currently benefiting from.
The success or failure of this new investment framework will highly depend on data availability and accuracy, something that needs to significantly improve before sustainable finance can really become mainstream.
When the TIPS Yield Curve inverts, things tend to happen in a big way
The reflation trade is still alive, gold miners may provide an outsized opportunity, and the low carbon emission economy is becoming an important long-term economic driver of prices.
The long-term dollar shortage trend is the current monetary state we live in, where global economic growth is outpacing the supply of the global reserve currency.
We need to approach this space with an open mind and without being overly tribalistic.
Short-term vs long-term inflation expectations are telling two different stories about the fundamental strength of the economy.
Low rates are Not Inflationary, Commercial Bank Credit, Historical Inflation Subcomponents, Bridgewater’s Outlook, Steepening Yield Curve, and the US Debt Forecast
The Eurodollar Market is one of the most influential and least understood drivers of financial markets.
Asset price performance has been quite solid across the board and the Yield Curve has continued its steepening, with rates in the long end getting closer to 2%.
CPI vs. Real Inflation, Chile’s USD Situation, Operation Warp Speed, Oil Rigs & Productivity, Debts, Deficits & the Fed Balance Sheet, and Decomposition Rates of Marine Debris
The reflation narrative has become the overwhelming consensus view for 2021. This implies a weaker dollar, higher bond yields, and outperformance from emerging markets and commodities.
MicroStrategy Converting Fiat to Bitcoin, ZIRP and Intrinsic Valuations, Fed Balance Sheet, Labors Share of Output, Private Capital Flows, and Size of Fiscal Relief Packages
US Tech, Gold, and Bitcoin did very well, whilst the US Dollar and Crude Oil were the big losers of the year.
Whilst the potential for inflation has been on the rise recently, we still feel it’s unlikely that we’ll see any undesired increase in price levels at least for the next year.
S&P500 the Fed Balance Sheet, Bitcoin Correlations, Ford and GM Merge to Battle Tesla, Interest on Debt, Real Wage Growth, and ESG Holdings
What the US elections result has taken away from the reflationary narrative has been more than offset by the vaccines headlines.
The dollar bear case with insights from Luke Gromen, Juliette Declercq, and A.G. Bisset
US Dollar Bull Run, Lobbying Spending, US Debt-to-GDP, US Military Spending, and Peak Oil Demand
Extreme fiscal spending financed by unconventional measures (such as Modern Monetary Theory) is in vogue and a key proposition for the post-Covid world.
Election years have historically brought positive returns to markets, and since 1944 we only had two election years that were not positive… 2000 (Dot-com Crash) and 2008 (GFC).
Notes and key takeaways from Mervyn King's, The End of Alchemy
Given the recent $20 trillion of stimulus sponsored by governments and Central Banks all over the world to keep the global economy afloat amidst the COVID pandemic, we asked ourselves who and especially how are we going to pay for this spending regime.
The US market is still following the same Fed and Government stimulus narrative of the last months, which end ups benefitting the larger and already dominant companies of the US equity market (#tech).
Many global data points appear to be carving out a V-shaped recovery. This is deeply misleading, merely reflecting the depth of the economic decline, rather than the success of the rebound. Leaders are already preparing to add yet more stimulus.
The most important message coming out of the markets is not the overall severity of the economic crisis, but rather an indicator of the already in place fragile market structure that is being exposed.
U.S. government debt has grown to +$26 trillion today and for the first time in history, total debt to GDP will rise above 100% in 2021 (potentially 2020 depending on continued COVID response)
We’ve seen a huge amount of new retail investors joining the financial markets, with the ambition of finding opportunities to “buy the dip”. Whilst they have benefitted from the rebound, we question how much longer can this last.
The future could see both an increase in bankruptcies and an increase in zombie firms.
We are witnessing one of the largest divergences between the financial markets and the real economy, in history.
We can expect to see some level of inflationary bottlenecks, especially in heavy industries which are easily switched off but take time to switch back on.
Looking past the “Bailouts are the end of capitalism” debate, we focus on the fundamentals of what drove the airlines, and the broader market, to allocate capital in a very reckless way
Recommended posts
Max Geopolitical & Macro Uncertainty in Q1.
Laying the Foundations
Financial Conditions Index vs. Inflation
What Would It Take for the USD to Lose its Reserve Status?
The Weaponization of Money and Finance
What is Geopolitics, and Why Does it Matter?
Primer: The Eurodollar Market