September at Lykeion

Summer’s officially over, and Q4 is all about the grind. This suits well as Tim and I are finally meeting up after more than a year of trying to build this brand via zoom calls and a 10 hour time difference. I’m nervous, not going to lie. Loads of new stuff coming your way soon (if we manage to survive the first weekend together).

Markets

September marks the return of Roger’s Markets Updates. In his latest piece, he explains his contrarian take on the likelihood of tapering and its impact on inflation:

• In summary, he believes if stimulus continues to be reduced (large portions of US Stimulus packages have already been reduced in the last couple of months), inflation expectations are likely to fall, driving yields lower and not higher, contrary to 2013’s Taper Tantrum.

• That said, tapering is less likely to materialize to the extent of what the market is currently factoring in as the US economy continues to show signs of weakness (especially in the labor market).

As a reminder, Roger is in the camp of those who believe inflation is unlikely to continue higher for a prolonged period of time. He believes the reflation narrative was primarily led by lower quality drivers such as a weaker dollar and fiscal spending rather than harmonized global growth (true reflation), and with the US Dollar currently at key break-out levels, he might actually be bringing it home. This continues to be incredibly timely, and we urge you to revisit his key arguments here.

Sustainability

Manuel’s latest Sustainability Update dug deep into the Carbon Market and clarified the difference between Trading and Voluntary Schemes. The Carbon Market was already top of mind as ESG-focused narratives continue to polarize voters and market participants, but the volume on the discussion is likely to turn up significantly as we move into the winter months with some real, structural, Nat Gas shortages (who’s chart looks like GME and AMC spawned a love child). Many will attribute this outsized price movement as a direct result of poor energy policy, which is heavily influenced by those same ESG-focused narratives. If you have any strong views on these carbon trading schemes, tweet them at Tim here.

Crypto

I wrote about Bitcoin, Stablecoins, and NFTs in our latest Crypto Update. Whilst there’s always a ton happening in the crypto market (some of which we don’t fully understand), we’ve failed to identify any fully coherent argument that would lead us to turn bearish on Bitcoin over the long term. The key message of this Update is that collateral used across the market is moving from Bitcoin to Stablecoins, which should help reduce the overall volatility of the market. Please keep in mind that lower vol is very different than low vol… let’s keep absolutes and relatives in perspective.

Charts

Lastly, Tim opened and closed the month with our signature Charts of the Month (this last edition was the most shared piece we’ve ever written). Beyond finance-related stuff, he’s put some serious time into trying to assess which countries have the upper hand in terms of short-distance travel, and unsurprisingly, the Old Continent has prevailed. Tim and I often argue, respectively, in favor of the US and Europe… but at the end of the day, what else does the US have over Europe other than smoked briskets, Stevie Ray Vaughan, The Office, and Burning Man? [Tim’s note: after spending the last six weeks on Diego’s “old continent” (whatever the hell that means), I can, with full confidence, say that the US’s telco infrastructure is, conservatively, 10,000x better than Europe’s. I think our first-generation dial up’s have more bandwidth than the combined Wi-Fi power of this entire continent. That’s probably what he means by “old”.]

We’re always keen to know your thoughts on what we’re writing. Shoot me an email at [email protected] with your ideas on the above.

As always, thanks for reading.