MAD Macro - I Think I Heard a Bubble Pop?
“ In Essence, We Just Lever Up Bitcoin”
Buying Silver Using Leverage Is a Sure Thing
Happy Thanksgiving Everyone, the Next MAD Macro Will be Monday 12/2
I think I heard a bubble bursting yesterday. The Saylor bubble. I wonder when Bunker Hunt knew his silver trade was in trouble. There must have been a day in early 1980 when he bought silver aggressively and it went down. That must have been a surprise for Bunker. He was used to picking the wrong horse at the track. But silver was a sure bet. When you are the biggest buyer in a commodity market, at some point you become the market. I wonder what Michael Saylor thought when he spent last weekend buying $5.4 billion worth of bitcoin and it did nothing. Do you think he was betting on a football game, sitting next to a fire, while he was buying bitcoin? Over the long Veteran’s Day weekend, Michael bought $2 billion worth of bitcoin. That worked like a charm, bitcoin went from 76,000 to 88,000. I assume Michael buys on the weekends for the maximum price impact. Bunker used to buy the close of silver to mark the market for maximum price impact. I wonder what Michael was thinking Sunday afternoon when he finished buying the last of his $5.4 billion in bitcoin. He should have been thinking, “HOUSTON, WE HAVE A PROBLEM”. When you are the market, you can’t sell. If Michael is wrong about bitcoin there is nothing he can do about it. Except wait to appear in front of Elizabeth Warren and explain how and why he caused the biggest bankruptcy in U.S. history. The WSJ has a good article on Michael Saylor’s kamikaze corporate strategy, linked here. It’s titled, “”What’s Flying Higher Than Bitcoin? The Software Company Buying Up Bitcoin”.
Trump has already started his tariff war. Overnight he threatened to impose a 25% tariff on our biggest trading partners, Mexico and Canada, and an additional across-the-board 10% tariff on China. Apparently, he wants them to do a better job of controlling the flow of migrants and drugs into the U.S. Let the Art of the Deal games begin. We could call it the global Trade Hunger Games. The Democrats would love to compare Trump to Donald Sutherland in Hunger Games. It’s perfect, the evil ruler of the world imposing his random challenges and tortures on the unsuspecting masses. I can already see the Maureen Dowd NYT headline for her Thanksgiving opinion article. She usually lets her Republican brother write a Thanksgiving or Christmas article. I wonder if she lets him do it this year?
Scott Bessent is getting generally positive press as a good pick to be Treasury Secretary. I agree but there are big risks ahead. Controlling the debit and deficits will be the biggest challenge. Controlling Trump’s worst impulses will be a close second. The WSJ Editorial Board has a good opinion article outlining the challenges ahead for Scott. The article is linked here. It’s titled, “Scott Bessent’s Treasury Gauntlet”. Great title, Scott will be a star participant in Trump’s Trade Hunger Games.
Risk markets are steady to a little higher this morning. Bitcoin is lower, trading at 92,000. Michael Saylor needs to borrow some more money so he can average down from last weekend’s $5.4 billion buying binge of bitcoin at an average price of 97,800. The dollar rallied overnight on Trump’s tariff threats but is back to unchanged. As I said yesterday, I think the top is in for the dollar. 107.50 should be resistance, which was the overnight high for the Dollar Index. My favorite Fed uber dove Neel Kashkari says he is in favor of easing again at the December Fed meeting, which is December 17th and 18th. A Christmas easing. Today at 2 pm, we get the minutes from the last Fed meeting, could be market moving.
I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, bitcoin, S&P futures, NASDAQ 100 futures, DOW futures and GDX VanEck Gold Miners ETF charts below.
The dollar is unchanged and interest rates are close to unchanged after falling yesterday. The curve has flattened this week on hopes Scott can control the fiscal deficits.
Crude oil is a little higher and copper is unchanged. Gold is a little higher after a down day yesterday. Bitcoin traded down to 92,000 overnight.
S&P, NASDAQ 100 and DOW futures are all a little higher. GDX should open a little higher with gold prices.
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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.
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