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Hosts: Ansel Lindner and Christian Keroles Listen To This Episode:  Apple / Spotify / Google / Libsyn / Overcast / RSS Charts for episode can be found on BitcoinandMarkets.com/fed99 If you enjoy this content please SHARE, LIKE, SUBSCRIBE, and REVIEW on iTunes if you listen! Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currencies. In this episode, CK and I listen and react to highlights from this month’s two central bank press conferences, Federal Reserve Chairman Powell and ECB President Lagarde. Central banks are one of the most misunderstood institutions in our modern world. Many analysts simply tell you what the Fed or the ECB thinks and what they do to disrupt the global economy, but on our show, we like to give you primary source material from which you can start to form your own educated opinion. We live stream most of our shows on the Bitcoin Magazine YouTube channel on Tuesdays at 3pm eastern. Mark your calendars! Federal Reserve Chairman Powell’s highlights and reaction Chairman Powell’s comments were highlighted by a few narratives. These are simply what they say they are doing, not our analysis.  Their primary concern is inflation fighting They will be adaptive to new data A tight employment market threatens to exacerbate inflation They cannot affect the supply side, so they will tamp down demand to bring down prices The main metric guiding the Federal Reserve’s course of rate hikes is CPI and “inflation” expectations. There are several ways to measure this, the Fed uses consumer surveys. This is a critical distinction between surveys and market-derived expectations, because surveys will not distinguish sources of price increases where the market-derived measures will do that. Below is the Fed’s survey of inflation expectations. You can see, the median prediction is above 8%. However, the market-derived data, namely the 5 and 10-year Breakevens and the 5y-5y Forward, are showing inflation expectations around 2.5%. What accounts for this huge difference? It is because the market-derived data is measuring actual money printing, or in other words, actual inflation. The survey data on the other hand is measuring generic price increases which are much more highly affected by supply shocks; in this case, self-imposed supply shocks. ECB President Lagarde highlights and reaction We also listen to a few clips of President Lagarde’s press conference. Here we get a flavor for the ECB’s formative narratives. Inflation is the fault of Covid and Putin Their governing council has expertly formulated a journey to normality They will begin to raise rates and tighten their balance sheet in July They are dedicated to “anti-fragmentation”, or in other words, avoiding a European Debt Crisis 2.0 and keeping the Eurozone together They have all powerful tools The ECB faces a different challenge than the Federal Reserve. The ECB must raise rates with some more indebted countries, already with anti-Euro parties growing, facing uneven effects, as we can see with credit spreads in Italy for example. Links Powell’s speech https://youtu.be/IojU0hD3A_A Lagarde and the ECB https://youtu.be/d_utpAxGMYo Reuters article https://www.reuters.com/markets/europe/ecb-hold-unscheduled-meeting-discuss-market-rout-2022-06-15/ That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, REVIEW on iTunes, and SHARE! Written by Ansel Lindner Economist, bitcoin specialist, and author of the Bitcoin Dictionary and the free weekly Bitcoin Fundamentals Report. Find more from Ansel at the bitcoinandmarkets.com

Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currency matters. In this episode of the Fed Watch podcast, I get to sit down with Tone Vays, a true bitcoiner and long time price and macro analyst in Bitcoin. Our discussion ranges from the current conditions, to Bitcoin cycles, to broader macro topics including the state of Europe, Euro, and US politics. You can follow Tone on Twitter, instagram and YouTube. You can find the charts for this episode on BitcoinandMarkets.com/fed98. And watch the live stream on Bitcoin Magazine’s channel. Current Bitcoin Market Conditions In the first segment of the podcast, Tone talks about the psychological state of the Bitcoin market. Paraphrasing: “I was around for the last two bear markets. 2013 was the classic bubble chart, you were mentally prepared for what’s to come. 2017, again, the ICOs, it was an unreasonable exponential rise, so you were mentally prepared. I wasn’t mentally prepared for this one. Because, when the top came in April 2021, we had an incredible amount of good news. Michael Saylor, Elon Musk, Jack Dorsey leaving Twitter to go all in on Bitcoin with Square (Block), El Salvador, then El Salvador buying bitcoin. “That turned into a sell the news event. 50% correction, no big deal. Everyone was mentally fine with it. Then, this is where it’s all about your mental state. When we went back and broke that top, in November, that was THE breakout. Everyone thought we were going higher, I thought we were going higher. That fakeout in November was mentally brutal. We crashed back the $30,000 low, broke down to $20,000, and over the last 3-6 months people have been very very concerned. “This prolonged move has made people tighten their belts. Mentally, they feel like they were cheated and don’t think bitcoin should be at these lows. Bitcoin was built for this world we are seeing right now with all the uncertainty. They are stealing bank accounts from not just individuals, like in Canada, but from sovereign countries. Bitcoin was built for this, but the price keeps going down. People are starting to throw in the towel. Everyone is saying lower, lower, lower. This is where I have to believe that the majority is always wrong.” Bitcoin Cycles I asked Tone about bitcoin valuation models and 4-year cycles, whether they are all broken and if we need to find a new model. He says he thinks models always fail. Stock-to-flow is theoretically correct in Tone’s mind, but it cannot be successfully used as a technical indicator. As for the 4-year halving cycle, Tone believes that it is partly due to hype and partly due to actual supply shocks. That is my position here on Fed Watch as well. It has its own hype cycle, completely separate from the overall bitcoin hype. Kind of similar to how altcoins try to hype their hard fork upgrades, bitcoin accomplishes that naturally through the halving. However, I think the hype is lessening with each cycle, along with the supply shock aspect. That is why I now believe we have a 2-year cycle of sorts. A smaller effect from the halving, but which still causes an echo a couple years later. Tone insightfully points out that there is much less of a clear distinction between bull and bear markets. Price action in the years 2020 and 2021 do not lend themselves to a clear dividing line. Going forward therefore, it will become harder to delineate these cycles. Europe Crisis and Global Macro We started running up on our hard time limit before we got into the juicy stuff. So, hopefully we can have Tone back on in a few months to continue this discussion. But we did get Tone’s opinions on Europe and the Euro. Paraphrasing again: “I will say that I have a very low opinion of Western Europe. It’s nice, you go there it’s safe, you can walk around the street, you feel fairly safe. It has remnants of collapsing capitalist soci

Supply Chains by the Numbers - FED 97 If you enjoy this content please SHARE, LIKE, SUBSCRIBE, and REVIEW on iTunes if you listen! Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currency matters. In this episode of the Fed Watch podcast, I discuss supply and demand, demand destruction, supply chain bottlenecks, shipping and inventory in the US. I take a look at a few representative charts you can find below, including lumber futures, lithium futures, Baltic Dry Index, 40-foot container rates, US inventory glut, and others. Demand Destruction The below simple graph shows supply versus demand during a supply shock and follow on demand destruction. What we are about to see in the US is a huge spike in demand destruction, so the demand curve will shift to the left. This will cause a dramatic lowering of prices and shrinking of the economy. Don’t be worried though, because most people can’t afford to keep the economy (demand) at current levels, and a lowering of demand will allow people to reallocate and get into a better place.  Supply Chain Charts These are a few charts I use to show the relaxation of supply chain problems, and to demonstrate that prices will normalize. Lumber is coming down. Lithium is a market that combines many disparate aspects of the economy right now, all unique affected in this crisis: supply chains since it is mined mainly in Australia, Chile, and China; semiconductors since batteries are used in electronics; and electric cars whose demand is affected by oil prices and globalists agendas. As you can see, lithium prices are coming down for the first time in over a year. The Baltic Dry Index ($BDI) is the rate for bulk raw materials like steel and coal. It too, is coming down, and far past the peak of mid-2021. Freightos is an index for 40-foot container shipping rates. It is falling off a cliff, despite the China lockdowns in Shanghai and Beijing. Inventory Glut The following charts can be found in a recent post by Jeff Snider on Alhambra Partners blog. It shows the unprecedented increase in inventories that has occurred in the US over the last 6 months. It is already starting to affect retailers like Target, who this week announced stopping purchasing orders and slashing prices to fight glutted inventory. What happens when demand softens (as it has been) and inventories start to get liquidated. Prices will fall dramatically. This was the largest and fastest increase in inventories on record in the US. Compared to other periods of big inventory gains, like 2003-2005, which was a 7% increase over 20 months, this spike is 11.5% in only 6 months. Lastly, I read through an article from FreightWaves which details the armageddon that is faced right now by shippers. “This steady decline in volumes from China to the U.S. has also put significant downward pressure on spot rates from the demand side. As capacity remained relatively consistent in the first few weeks post-lockdown (March 28 onward), the drop in volumes caused a decline in both the Freightos Baltic Daily Index and the Drewry World Container Index spot rates from China/East Asia to the U.S. West Coast (down 41% per FEU month-over-month [m/m] – $9,630), as well as from China/East Asia to the U.S. East Coast (down 36% per FEU m/m – $11,907).” Those numbers should perk anyone up, 41% month-over-month. Recession is coming, meaning tightening by the Fed is closer to the end than the beginning, and easing is just around the corner again. That is very good for bitcoin. That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, REVIEW on iTunes, and SHARE! Links US Import demand is dropping off a cliff https://www.freightwaves.com/news/us-import-demand-drops-off-a-cliff Written by Ansel Lindner Economist, bitcoin specialist, and author of the Bitcoin Dictionary and

In this episode of the Fed Watch podcast, Christian and I sit down with Dylan LeClair, Head of Market Research at Bitcoin Magazine Pro. Each week, he and Sam Rule, write nearly daily updates for subscribers, and once a month they release a large bitcoin market report. That is what we are covering for the most part in today’s episode, Bitcoin Magazine Pro’s May 2022 Report.  You can find the slide deck we use for this episode here, or you can see all the charts at the end of this post. Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currency matters. Market Cycle Before we get into the awesome charts brought by Dylan, I want to get an idea of where he sees bitcoin in its market cycle timing. I ask, somewhat facetiously, if we are in a bear market, because we are definitely not in a typical 80-90% drawdown.  Dylan responds by saying we are in a classic bear market, not necessarily a classic bitcoin bear market. He points out that the upswing of this cycle didn’t have the classic parabolic blow-off top we’ve seen previously in bitcoin, as well as there being more technical and fundamental support in the mid-$20k’s up to $30,000, so drawdown pressure will also likely be limited. LeClair also adds that the Average User Cost Basis was hit by the wick to the recent lows. All in all, there is significant support under the price, and it remains to be seen if there is enough bear momentum to break to new lows. Lastly, on the market cycle timing questions, Dylan points out a very underappreciated market development, that being the collateral type on exchanges has mostly switched from bitcoin in previous cycles, to now being stablecoins like Tether and USDC. In other words, the dominant trading pairs and cash deposits on exchanges have changed from bitcoin to stablecoins. In the past, the most important trading pair for any altcoin was versus BTC, that has changed to being versus a stablecoin like USDT. This is a monumental shift in market dynamics and will likely lead to much more stable prices for bitcoin, because less bitcoin will be forced to liquidate in the hyper-speculative shitcoin bubbles. Bitcoin Magazine Pro Charts “This is Coinbase spot volume, being the dominant American exchange, and the Perp [perpetual futures] volume aggregated over a bunch of different derivatives exchanges. What we can see is various volume spikes. Historically, when bitcoin is trading hands in that size, signals some sort of market top or bottom, some significant change in market structure.” - Dylan LeClair The next chart shows the difference in market structure due to stablecoins. Back in the summer of 2021 sell off, Dylan says that 70% of the derivative market was still collateralized by bitcoin, today, it is much much smaller than that. Therefore, we should expect there to be fewer liquidations in bitcoin when shitcoin bubbles pop, and that’s exactly what we see. What is great about the Bitcoin Magazine Pro newsletters is they not only look at the bitcoin market but also how macro could be affecting bitcoin. The next two charts are about CPI and interest rates. Dylan does a great job breaking these down during the podcast. I ask Dylan the required question about his thinking on Fed monetary policy, and he focuses his analysis around real interest rates. He says real rates will have to say negative in order to erode the massive global debt burden. Therefore, if the Federal Reserve hikes even to 3.5%, real rates will have to stay negative, meaning the CPI will have to stay above that. Next up is CK’s favorite indicator, the Mayer Multiple, or the 200-day moving average price divided by current price. When the price is below the 200-day, this ratio is below 1, and has historically been a good way to time the market. One of the most dense informational charts on Bitcoin Magazine Pro is up next, and that is Reserve

In this episode of the Fed Watch podcast, we focus on important macro charts. We cover Bitcoin’s chart, currencies like the dollar, the euro, the Hong Kong dollar, and gold, and energy commodities. We don’t have time to get to all the charts I prepared, because the live show has time constraints. I will attempt to get a Part 2 out this week, to cover the rest of my commodity charts, as well as supply chains and shipping costs. You can find the slide deck of charts here. Other topics covered in today’s episode include Biden and Powell’s meeting yesterday, where I try to flesh out the importance of this Wall Street (Powell) vs Globalists (Biden) showdown; and we get into a couple of things from Davos last week, particularly the Kissinger comments about Ukraine. Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currency matters. Currencies First currency up is Bitcoin. I discuss the recent pop in price on Memorial Day in the US, and how it is simultaneous with a growing bullish divergence in the indicators. However, I also go back in time to roughly one year ago, when there was a very similar situation. In June 2021, there was a bullish divergence in these two indicators and a breakout of a descending wedge. That move was a fake out, cut short by the Grayscale (GBTC) unlock wave in July. The current situation is similar on the chart, but not similar in the fundamentals. I just wanted to point out a previous example where a breakout like this week failed.   I make an effort to dislodge the bitcoin rise = dollar collapse false narrative here. The dollar and bitcoin can rise together due to deflationary pressures pushing people to cash and away from counterparty risk. Next up is the dollar. On the live stream, I show the following chart and discuss how we could be headed for a new higher range on the dollar. Perhaps, we see another 5-7 years of the DXY in a range of 100-110, kind of like how it jumped into the 90-100 range in 2015.   For many who don’t like the DXY because it is too narrow (Euro 57.6%, Yen 13.6%, and Pound 11.9%), I provide a chart of the trade-weighted dollar that includes 30+ currencies including Yuan and Mexican peso. In the below chart, we see the same consolidation beginning, but the high that the dollar achieved (excluding the corona crash highs) is a new high. I think this symbolizes a stair step function higher for the trade-weighted dollar as well. Remember, a strong dollar is the Fed failing and it also provides massive stress to the rest of the world’s economy.   Source: FRED The Euro is nearly the inverse of the DXY. It also shows a recent breakout, but in this case downward. If the dollar rally is to consolidate before heading higher, the Euro is going to consolidate before heading lower. One thing is for sure, the Euro has broken its two decade support trend line, it’s in big trouble of crashing much lower.   The next two charts are of the Hong Kong Dollar versus the US dollar. There is a peg in place that is plainly obvious on the first chart; it is a range between 7.75 and 7.85. Recently, the exchange rate has raced to the top of this pegged range, signaling massive dollar pressure in the Asian economies like China, Hong Kong, Taiwan, Japan and South Korea. The dollar squeeze rapidly set in starting this year. The second chart of the Hong Kong dollar is a close up of the daily timeframe. The peg was defended successfully this time, by the authorities selling US dollars and buying HK dollars, but the big question is do they have enough reserves to continue defending this peg for the rest of the year, like in 2018? The HK authorities publish their reserve data, so we can get a clue to the severity of their predicament. At the end of April, prior to the peg experiencing its greatest pressure, their reserves stood at $465.7 billion, $16 billion less than March

In this episode of the Fed Watch podcast, we get interactive with the livestream team, talking about the history of Davos and the World Economic Forum, as well as getting into some Q&A about my Federal Reserve predictions. This week was a slightly slower news cycle in macro and bitcoin, so I took the opportunity to begin a new series of discussing the history of important international institutions, like central banks, the IMF, and this week the World Economic Forum. The history portion take up about 50% of the show this week, and the rest is the probing Q&A mentioned above. Fed Watch is the macro podcast for bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currency matters. Beginnings of Davos and the World Economic Forum Davos is the name and place for the yearly meeting of the World Economic Forum. Originally called the European Management Forum, it was founded in 1971 by a business professor in Geneva, the infamous Klaus Schwab. That should be a familiar year to bitcoiners, because it is the same year President Nixon took the US off the remnant of the gold standard. At first, Davos was a small conference of European businessmen discussing Klaus Schwab’s ideas of “stakeholder capitalism''. Compared to unbridled capitalism, this new stakeholder idea expanded the ethical duty of the corporation from serving customers and shareholders to also serving employees and suppliers in a socially responsible way. Schwab took this idea further down the slippery slope outlining an ethical duty to the community and “society”, as well. Shareholder capitalism is simply a subtle way to make capitalism more socialist. In 1987, the European Management Forum changed its name to the World Economic Forum and its yearly meeting to Davos. Achievements of Davos One would expect an institution as famous and well-regarded as the World Economic Forum would have many achievements to its name. However, it is a very short list, even after 50 years! It claims a hand in stopping a Turkish/Greek war in 1987, a role in German reunification, and helping to end apartied in South Africa by hosting a handshake between Nelson Mandella and Frederik de Klerk in 1992. And that’s about it. Recently, they have claimed some victories on the  environmentalism front, too. Then what has the WEF been up to all these years? This is where it gets interesting. In 2004, Klaus Schwab created the Forum of Young Global Leaders. It is a program that graduates roughly 100 rising young leaders from around the world who are destined to high offices, either in government, business or culture. The program boasts 1400 alumni that include Presidents and Prime Ministers, along with some of the wealthiest, most influential people in the world, like Elon Musk and Mark Zuckerberg. These young leaders are indoctrinated into the WEF’s brand of Marxism, which you will commonly hear called “globalism”, the modern incarnation of stakeholder capitalism. You know something is pushing a global Marxist agenda when you hear terms like, “socially responsible”, “global governance”, “climate action”, and “management” of all sorts. Covid and The Great Reset Covid-19 gave the World Economic Forum and Klaus Schwab the break they were waiting for. He rapidly released his new book called the Great Reset, making headlines around the world. If you didn’t know about the WEF prior to Covid, you do now.  The Great Reset is a call for a complete remaking of our world along the lines of stakeholder capitalism and the WEF’s brand of Marxism. Its famous marketing tagline is, “You will own nothing and be happy.” Yet again, a conspiracy theory becomes a conspiracy fact. “As we enter a unique window of opportunity to shape the recovery, this initiative will offer insights to help inform all those determining the future state of global relations, the direction of national economies, the priori

In this episode of the Fed Watch podcast, due to popular demand, I welcome Tom Luongo back on the show! Tom is one of my favorite writers due to his entertaining prose and deeply refreshing insight on global macro, geopolitics, and currency markets. He is also a long-term bitcoiner, discussing it for many years in his writing and podcast. Fed Watch is the macro podcast for bitcoiners. In this episode, we start by getting a big picture view from Tom on the global situation, then dive into some specifics about Europe, the US, the Federal Reserve, Ukraine, and much more. We wrap up the show talking about what Tom sees for the US in the short to midterm, so, the next 3 to 24 months. Below, I’ll provide a little more detail on what was said, but this is a MUST LISTEN episode! The Sick Man at the Table The first question I ask Tom is, is he as bearish as everyone else? It seems everywhere we look people are screaming about bear markets and collapse, from macro to geopolitics to bitcoin. However, I think this collapse narrative is overdone, especially for the United States. I ask Tom to give us his broad picture of the state of the markets. He starts in by identifying the sick man at the table, that being Europe. Europe is hit the hardest by the forces that have been unleashed right now, rising commodities prices, rising inflation, loss of confidence in institutions, et cetera. As Europe struggles and begins to cannibalize itself, all that capital in investment portfolios in Europe will eventually have to flow somewhere, and it’ll flow to the United States. The conflict that has started in Ukraine is on Europe’s doorstep, and specifically on the doorstep of the best economy in Europe over the last decade, Poland. Tom asks rhetorically, “is Warsaw or New York closer to Ukraine?” As investors realize that this new conflict is not going away, and to fight it with economic weapons as they have been, they must destroy their own economies, money will rapidly flee Europe to the US. I’ll add, it will also flow into bitcoin. The Federal Reserve is Serious I ask Tom if he thinks the Fed will go through with uber-hawkish rate hikes. His answer eloquently lays out that Powell’s plans to raise rates back in 2017 was interrupted by Covid, and now, Powell is going scorched earth to raise rates to break the back of every other central bank and rival currency. The reason the Fed will do this according to Tom Luongo is that the Fed, owned by Wall St banks and US monied interests, is trying to wash out the decade of malinvestment that’s built up since the GFC. He also frames it as a fracture in the relationship between US monied interests and the globalists in Europe. We can’t understand the Fed without understanding the Davos crowd’s intent to rule the world or burn it down. According to Tom, the Federal Reserve will raise rates continually until 2024, to break the back of Davos and the radical globalist/communist objectives. I tend to agree with him, perhaps I wouldn’t put it as colorfully as Tom does, but the globalists are “global communists” and will burn the global economy down before they admit defeat. Bitcoin and US Fates are Intertwined The last part of the episode, I ask Tom about my theory that, what is good for the US economy is good for bitcoin, at this moment in time. A majority of the bitcoin supply is likely held by US entities, the US has the largest share of mining, the largest share of bitcoin interested people, the most venture capital money, and some of the most lacks regulation. So, if bitcoin is to thrive in a major economy, it will be the US.  Tom tends to agree with me on this, but breaks it down in more detail, saying there is a segment of Wall St that likes bitcoin, and those are the same people fighting Davos. They are planning a SWIFT replacement, and are friendly to Proof-of-work coins because they have money in it now, with mining taking off in the US. I can’t cover all his commen

Market Mayhem and Calling the Bitcoin Bottom - FED 92   Keywords: Hosts: Ansel Lindner and Christian Keroles Listen To This Episode: Apple Spotify Google Libsyn Overcast If you enjoy this content please SHARE, LIKE, SUBSCRIBE, and REVIEW on iTunes if you listen!   In this episode of the Fed Watch podcast, CK and I, along with the livestream crew, discuss macro developments relevant to bitcoin. Topics include the recent 50 bps rate hike from the Federal Reserve, a CPI preview (recorded live on Tuesday before data release), discussion on why Owner Equivalent Rent is often misunderstood, and wrap with an epic discussion of the bitcoin price. This could be a pivotal episode in the history of Fed Watch, because I’m on the record that bitcoin is “in the neighborhood” of the bottom. This is in stark contrast to the mainstream uber-bearishness in the market right now. I rely heavily on charts in this episode that didn’t always line up during the video. Those charts are below with a basic explanation. You can see the whole slide deck I used here.   Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. Federal Reserve and Economic Numbers for US On this first chart, I point to the Fed’s last two rate hikes on the S&P 500 chart. I wrote in a blog post this week: “What I'm trying to show is that the rate hikes themselves are not the Fed's primary tool. Talking about hiking rates is the primary tool, along with fostering the belief in the magic of the Fed.” Remove those arrows, and try to guess where the announcements were. Same goes for the next chart, gold. Lastly, for this section, we looked at the Bitcoin chart with QE and QT plotted. As you can see, in the era with “No QE”, from 2015 to 2019, Bitcoin experienced a 6000% bull market. This is almost the exact opposite of what one would expected. To summarize this section, Federal Reserve policy has little to do with major swings in the market. Swings come from the unknowable complex ebbs and flows of the market. The Federal Reserve only tries to smooth the edges. CPI Mayhem It’s hard to write a good summary of this part of the podcast, because we were live the day prior to the data dropping. Basically in the podcast, I cover Eurozone CPI going slightly higher to 7.5% in April year-over-year (YoY), with a month-over-month rate of change dropping from a staggering 2.5% in March, to 0.6% in April. That is the story most people are missing on CPI, month to month changes rapidly slowed in April. I also covered CPI forecasts for the US on the podcast, but now, we have hard data for April. US headline CPI dropped from 8.5% in March to 8.3% in April. Month to month change was from 1.2% in March to 0.3% in April. Again, a big decline in the rate of CPI increase. Year-over-year CPI can be very confusing. This chart looks like inflation in April was measured at 8.3%, when in fact, it was measured at only 0.3% (second chart below). Year-over-year CPI Month-over-month CPI Source: FRED   Next topic we cover in the podcast is rent. I very often hear total misunderstandings of the CPI measure on shelter and specifically Owner Equivalent Rent (OER). For starters, it’s very hard to measure the impact on consumers of increases to housing costs in general. Most people do not move very often. We have 15 or 30 year fixed rate mortgages that are not affected at all by current home prices. Even rental leases are not renewed every month. Contracts typically last a year, sometimes more. Therefore, if a few people pay higher rents in a certain month, that does not affect the average person’s shelter expenses, or the average landlord revenue. Taking current market prices for rentals or homes is a dishonest way to estimate the average cost of housing, yet n

In this episode of the Fed Watch podcast, CK and I discuss the evolving economic situation in China and Japan, China’s lockdowns and real estate developments, and Japan’s monetary outlook. It’s been a while since we’ve discussed this part of the world, so we endeavor to give a broad overview. I recommend checking out the links below for more information as well. Of course, we also cover upcoming events for the Fed with their rate decision coming on May 4th, concerns over CPI and GDP in the US, and talk about how bitcoin fits into this revolutionary era. Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. Federal Reserve and Economic Numbers for US The first few minutes of the podcast we cover economic matters occurring in the US. The Federal Reserve is coming out with their rate decision on May 4th and it is expected to be 50 bps. We do not expect any surprises in this regard at the time of writing, but we’ll find out very shortly. The consensus view according to CME’s FedWatch tool is 99% that we will see a 50 bps hike, to a range of 75-100 bps on the Fed Funds rate. CPI for April is also due out on the 11th, which is more likely to be a surprise than the Fed Funds decision. We think the CPI could unexpectedly drop following the weak Q1 GDP numbers from last week, showing a -1.4% GDP growth. China’s Lockdowns Continue China’s economic troubles started long before the recent Shanghai lockdowns, but the regressive pandemic policy will only serve to exacerbate the problems. After a brief 2 days of zero and hope that the end of lockdown was near, new omicron cases outside quarantine have once again been detected in the besieged city. These new cases have occurred in areas where lockdowns were less strict, so we could see a total reversal from a light at the end of the tunnel, to an increasing the strictness of the lockdowns. Economic numbers out of Shanghai and China are horrible. Freight traffic in Shanghai is down 81% YoY for the last 3 weeks, and freight traffic in all of China is down 15% in the same period.  Many of the results of the lockdown have not yet hit consumers. Ships that left the area days before the lockdowns are only now completing their round trips. That means delays on orders, parts, and products will become much more noticeable. Far from ending, lockdowns are spreading. 46 cities in China now have some form of restrictions, totalling 340 million people and nearly 80% of their economy. Beijing itself is bracing for Shanghai style lockdowns as 2 days of city-wide testing is causing residents to stock up on food and limit daily travel to areas closer to home. They don’t want to be caught unprepared if Beijing institutes rapid lockdowns like in Shanghai where some parts of the city only had a matter of hours to comply. China Economic Troubles We cannot trust CCP economic numbers, but we have some private statistics that in the same ballpark. For example, Caixin’s Purchasing Managers Index (PMI) continued its contraction, down to 46 from 48 last month, which is similar to the official CCP report of 47. Anything under 50 is contraction. It is noteworthy that the decline in PMI started back in 2020, not just with the lockdowns. When forecasting the Chinese economy, the saying, “you cannot taper a Ponzi scheme” is very appropriate. As the Chinese economy slows, it also becomes much more fragile. China Real Estate Woes If you think lockdowns, shipping, and growth stats in China are bad, wait until you see the real estate sector. Sales by the 100 largest real estate developers fell 52% measured in value YoY in the period right before the lockdowns began. Of course, with the lockdowns very little real estate is being bought and sold, but after this period of depression and collap

If you enjoy this content please SHARE, LIKE, SUBSCRIBE, and REVIEW on iTunes if you listen! In this episode of the Fed Watch podcast, I play the important clips from the IMF roundtable that we talked about on FED 90. CK and I talked about them on the livestream, but were unable to play them directly for you. So, here they are with a bit of commentary to guide the episode. Our original episode goes into much more depth on each of the points raised by Jerome Powell and Christine Lagarde. In general, this event was meant to convey a specific message of unity and control by our overlord central planners. However, CK and I stress all the places where that messaging misses the market, and also how bitcoin fixes this. Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. - Source Video   That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, and REVIEW on iTunes, and SHARE! Written by Ansel Lindner Economist, bitcoin specialist, and author of the Bitcoin Dictionary and the free weekly Bitcoin Fundamentals Report. Find more from Ansel at the bitcoinandmarkets.com

In this episode of the Fed Watch podcast, CK and I discuss our thoughts on the “IMF debate” that took place on April 21, 2022 between Fed Chair Jerome Powell, ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva, Indonesia Finance Minister Sri Mulyani Indrawati, and Barbados Prime Minister Mia Mottley. Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. Takeaways First, I must preface my write up by saying this was not a debate at all. These financial bureaucrats were simply using this forum to get their message across to the people of the world. They all basically agreed on the major points, that being, inflation is high and we can blame Russia for much of the problem due to supply shocks. The major theme from Lagarde and Powell was, to get CPI back into their acceptable range of 2%, they must rein in demand in their respective economies, since the driving force of the rise is due to a supply shock. The medium is the message as it goes. Although this event is meant to portray a united front for the global financial system, we pick out several very important places where Powell and Lagarde disagree once you dig a little deeper.  ECB and Fed on Inflation Christine Lagarde breaks down the components of the high CPI level in Europe by saying 50% of it is due to energy prices, another significant portion is due to food prices, and only a small fraction of CPI, 2.9% to be exact, is what is called “core CPI”. I know that most people in the bitcoin space don’t accept the importance of core CPI and think it is a scam to hide actual inflation. But in this case, Lagarde has a point. Most of Europe’s price increases are due to a self-imposed supply shock.  Chair Powell talks about CPI in the US differently. He acknowledges the supply shock aspect, but his main view of the supply side of things is that the US economy is red hot and very tight. He mentions the labor market multiple times, claiming supply cannot keep up with rising demand, as opposed to Europe where supply is being cut relative to demand. CK and I react to these two viewpoints of the central bank chiefs. The Sunset of Globalization Another very important exchange from the IMF roundtable we emphasize is when the moderator asks about the decline in globalization. Powell says that it is quite possible that we see a reversal in globalization, while Lagarde “pleads Europe’s case” for a mere revisiting of the terms of trade. I think this exposes a fundamental difference between these two economies, and in the podcast we take time to detail this out more in depth. Suffice it to say in this write up, the US is more self-sufficient and ultimately less concerned about the fate of globalization than Europe. Europe is beholden to the global economy for customers and for energy inputs.  Bitcoin’s Answer to Lagarde and Powell Being a bitcoin show, CK and I take a lot of time discussing just how bitcoin fixes these problems of the financial system that Powell and Lagarde speak about. Instead of relying on central planners (who admit to following the market anyway), a bitcoin system will take much of the complexity out of the process. We will not have the false impression that the expert class knows best and people will be unencumbered by a narrative of inadequacy and inefficiency. That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, and REVIEW on iTunes, and SHARE! Written by Ansel Lindner Economist, bitcoin specialist, and author of the Bitcoin Dictionary and the free weekly Bitcoin Fundamentals Report. Find more from Ansel at the bitcoinandmarkets.com

In this episode of the Fed Watch podcast, I give a big update on central bank related news from around the world. It’s been several weeks since we’ve done a down and dirty update on material from the monetary world, so there is a lot to cover. Listen to the episode for my complete coverage. Below, I summarize Federal Reserve related headlines and their upcoming FOMC meeting, CPI and inflation expectations, Europe and the ECB’s dilemma, and lastly, China’s horrible economic issues. Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. Federal Reserve Calendar Financial headlines have been awash with Federal Reserve Presidents and Governors trying to outdo each other in their calls for rate hikes. The most recent is from President Bullard of the St Louis Fed, calling for a 75 bps hike and up to 3.75% on the Fed Funds rate by the end of the year! Powell is speaking in front of the Volcker Alliance meeting via pre-recorded remarks and appear live to the IMF on Thursday April 21 (I got the events mixed up in the podcast). I expect discussion of the global CPI situation in relation to different countries’ monetary policy. We should get some insight into Powell’s view of the current global economy in these remarks, more than the typical “the economy is expanding at a moderate pace” vanilla comments we usually get at the FOMC pressers. The much anticipated next FOMC meeting is scheduled for May 3-4. The market is saying that a 50 bps hike is likely, so anything less than that would be a dovish surprise. Up to this point, the Fed has only raised rates once by 25 bps, yet the onslaught of calls for rapid and large rate hikes has made it seem as though they have already done more. The Fed’s main policy tool is forward guidance. They want the market to believe that the Fed is going to hike so much they break something. In that way, the Fed economists believe they will tampen inflation expectations leading to lower actual inflation. Therefore, all these outrageous calls for extremely high Fed Funds rate by the end of the year are meant to mold your expectations, not actual prescriptions for monetary policy. CPI, Inflation Expectations and Yield Curve The next segment of the podcast is all about inflation expectations. Below are the charts I go over with some simplified commentary. Source: FRED Above, we see the CPI year-over-year. The most recent number is 8.55%, however, in April we are entering the YoY space of the acceleration of CPI last year. April 2021’s CPI jumped from 2.6% that March to 4.1%. That means we will need to see similar acceleration in prices between this March and April, which I do not think we will get. And the rest of the inflation expectation metrics below do not agree CPI will continue to worsen (for the US). Source: FRED The University of Michigan Consumer CPI expectations has effectively been capped below 5%, and as we approach recession that should move downward quickly, placating Fed economists I’d like to add. Source: FRED The 5-year Breakeven is slightly elevated from historical norms at 3.3%, but it is a long way from confirming the 8% of the CPI. Source: FRED Same with the 10-year Breakeven. It is even less elevated from historical norms, coming in at 2.9%. Far from the 8% CPI. Source: FRED One of the highest regarded inflation expectations measures is the 5-year 5-year Forward. It is still below its historical norm, coming in at 2.48%. All of these measures agree with each other in being far below the 8% CPI, added to the flat yield curve with some inversions shown below, and the shakiness of the economy, it leads me to expect an orderly return of CPI to its historical norm in the 1-3% range. Transitory has become a meme at this point, but we can see that it has o