MAD Macro - Et Tu, Hassett?
Too Late Powell, “You Too, Hassett?”
It’s Kool-Aid Mike’s World, We’re Just Living In It
Kevin Hassett stabbed “Too Late Powell” in the back. He said Tariff Man Trump can fire Jay for cause over the inflated price of the Fed Building renovations. Poor Jay must be thinking, Et Tu, Hassett? I don’t think Jay is responsible for the exploding Fed building renovation costs, but he did help the Tin Man ignite the 2022 inflation fire by waiting too long to tighten policy. Nick Timiraos, the official Fed whisperer, has a front page WSJ article on the issue, linked here. It’s titled, “White House Seizes on Fed Renovations as Opening to Oust Powell”. I do think forcing Powell out before the end of his term or forming a shadow board by announcing his replacement early are both bad ideas. Last night, the Japanese bond yields started to breakout to the upside on spending and debt concerns. Apparently, the Japanese bond vigilantes are back and committing hara-kiri. Japan has had unsustainable debts for years, but now it’s a problem. Firing or forcing Powell to resign might cause the U.S. bond vigilantes to return like the White Walkers. Winter is coming for the U.S. bond market.
Bitcoin did it, it broke it’s correlation with risk assets last week and exploded to the upside. The NASDAQ 99 range traded last week on concerns over Tariff Man Trump’s new tariff threats. As a reminder, I refer to the NASDAQ 100 as the NASDAQ 99 because it’s 99 companies and Strategy, a levered bitcoin ETF. Bitcoin is spiking higher. It’s now up 30% year-to-date. Thankfully, gold is up 28% year-to-date and the NYSE Arca Gold Miners Index is up 55% year-to-date. Funny enough, I met Orange Kool-Aid Mike Saylor’s top executive over the weekend. We met randomly on the golf course. When he told me he worked for Kool-Aid Mike, my head was spinning and I made three straight bogies. He was a very nice person, I liked him, and he has a very nice family. He offered me a dixy cup of orange Kool-Aid but I did not drink it, although at $121,000, even I am getting bitcoin FOMO. I guess it’s Kool-Aid Mike’s world this morning, we are all just living in it. Kool-Aid Mike’s Monday morning bitcoin buying update is just out. He bought 4,225 bitcoin last week at an average price of $111,827, spending $472mio. Remember what Kool-Aid Mike says, “If you are not buying new all-time highs, you are leaving money on the table”. Strategy now owns 601,550 bitcoin at an average price of $71, 268.
Markets are a little lower this morning over Tariff Man Trump’s newest tariffs, which are getting very hard to keep track of. The market is still climbing the TACO wall of worry. I have been very wrong about the market. I keep thinking we are going to have a nasty summer sell-off. George Soros said when he sees a bubble, he buys it. I can’t do it. Tariff Man Trump is going to give a speech/statement/ramble about Russia today at 10 am. Crude oil is higher in front of the event.
I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, JGB 10yr yield, WTI crude oil, NY copper, spot gold, NYSE Arca Gold Miners Index, bitcoin, Strategy, S&P futures, NAASDAQ 99 futures and DOW futures charts below.
The dollar is unchanged and interest rates are slightly higher. The curve is a little steeper. If Powell resigns today it might steepen a lot more.
Crude oil is testing $70. Copper is a little lower And gold is higher. The NYSE Arca Gold Miners Index should open higher. Bitcoin has exploded higher over the weekend. I am tasting bitcoin FOMO. Strategy is due higher, testing the trading range highs.
S&P, NASDAQ 99 and DOW futures are all due lower but off of the overnight lows.
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Unless otherwise stated, Bloomberg is the source of all data and charts.
S&P 500 futures are a type of derivative contract that provides a buyer with an investment priced based on the expectation of the S&P 500 Index’s future value. Nasdaq 100 futures are commodities futures products traded within the equity futures sector. West Texas Intermediate (WTI) oil is a benchmark used by oil markets, representing oil produced in the U.S. Brent Crude Oil is a blend of crude oil recovered from the North Sea in the early 1960s, whose price is used as a benchmark for the commodity's prices. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. UBS Bloomberg Constant Maturity Commodity Index is a total return rules-based composite benchmark index diversified across commodity components from within specific sectors. Index performance is not illustrative of fund performance. It is not possible to invest directly in an index.
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