ebipere

You are a blessing for data. This was my guess with the Dual Circulation Strategy - that China was and is now focusing on the external circuit. It supports my global "Yuan-Carry Trade" hypothesis. The difference to the "Yen-Carry Trade" is that it is invite-only and you can only borrow Yuan to buy Chinese physical goods and services rather than G7 financial assets. US-CN10Y onwards an upwards towards 300bppa

Imports basically stopped growing in 2014 and are now declining in dollar terms -- Exports shot up in 2021 and are still rising. The biggest vehicles, ships and planes deficit was $35b in 2014; the surplus is now $ 225b. Tis a remarkable swing 2/2

Another visualization of the second China shock -- Until 2020, China's trade in transportation equipment was pretty balanced. Not anymore 1/2

@B_Eichengreen FIMA-repo ? I agree more securities but are we to understand that the CB-UAE has insignificant USTreasuries.

@Brad_Setser When the Physical is the Financial @ebipere/note/p-198606881" target="_blank" rel="nofollow noopener">substack.com/@ebipere/note/…

China -- via its massive stockpile -- is the new central bank of oil, replacing Saudi Arabia ... Helped save the US and Europe from a much bigger oil shock

Absolutely agree - Strategic Reserve Management - Reserve Lending; - Supply Chain Diversification - pipeline, ship, onshore; - Value Chain Redundancy - Carbon2Fuel, Carbon2Chemicals, Carbon2Feedstock Carbon[Coal/ Crude/Gas]; - Demand and Distribution Management - price rises & export bans; I think the metaphor works well. “Strategic Commodity Reserves as Monetary Base” “Commodity Calendar Spreads as Open Market Operations”

@GodfreeTrh @KenRoth This is interesting. I always thought China has different approach to capacity. The country seems allergic to shortages - even to the point of oversupply.

@KenRoth Chill. It also has 200,000,000 people waiting to move to cities. Your warmed-over 'ghost city' propaganda is stupid and shameful.

In considering China's economic "miracle," remember the country's housing crisis. It has 90 million vacant apartments, enough to house the entire population of the United States. That has destroyed many people’s life savings. trib.al/GBPo2Nm

@ShangguanJiewen @iangtobin @shaunrein @ShangguanJiewen we are coming over to join you! I always wonder about moving to China for part of the year. The infrastructure is outstanding.

@iangtobin @shaunrein I would rather not say and self-dox.

You don't know the real China if you only visit or live in Shanghai and Beijing! True in some regards. But not for reasons you expect Subways, airports & roads are often better in tier 2 & 3 cities because they are newer Housing is much more affordable Tier 2 > Tier 1

@ShangguanJiewen @shaunrein Purchased?

@shaunrein I got an apartment in a tier 4 city. Nice roads. Two mega-malls. Beaches. Good hospitals. High-speed rail. Two story, three bedroom, two bath, two living room, with two balconies was 180,000 RMB, or abou 26,000 dollars. Small cities are the best. Plus less traffic.

@shaunrein You are a one man tourism ministry! 🥳

A Monetary Base for Commodities? The Hormuz closure produced a $77 spread on a single barrel of crude in a single week in March. Same commodity. Same week. $72 in Alberta. $175+ at eastern delivery points. That is an unacceptable sovereignty gap: the distance between what a financial claim promises and what a physical system can deliver when the substrate fails. Every major economy has an institution designed to close this gap in financial markets. It is called a central bank. No equivalent institution exists for physical commodity markets. A Strategic Reserves Authority functioning as the Commodity Lender of Last Resort is not a larger stockpile agency. It is a categorically different institution: holding physical reserves and infrastructure rights as assets, maintaining defined delivery obligations as liabilities, and intervening in physical markets the way central banks intervene in money markets. The financial architecture of sovereign resilience has a backstop. The physical architecture does not. Countries are going to have to start making decisions beyond “ Critical Minerals” open.substack.com/pub/ebipere/p/…

@JavierBlas @zerohedge So the PRC is behaving counter cyclically with respect to price. Maybe the will do the same with soyabeans.

The difference between Chinese oil imports (plunging, heading into May to a 10-year low) and Indian oil imports (surging to the highest May ever) can not be more stricking. Effectively, Beijing (and Tokyo using the SPR) have saved the day for the whole region.

Why is avoiding a recession rational? A recession may be undesirable but are we saying that it is not part of an economic cycle? Why do we overcompensate modulation on the downside? Address the symptoms but trying to prevent it happening is problematic. Does no one believe in capitalism anymore?

My unpopular opinion is that Biden’s econ team achieved their stated goal of world class Covid recovery, avoided recession (once thought inevitable), prioritized employment, navigated global inflation, and delivered benefits to the working class. it’s just that voters hated it.

@Brad_Setser They affect going on holiday abroad! 😂 Either you stay at home and foreigners ruin your day, or you go abroad and ruin theirs. I know who is getting my vote.

What about fx adjustment tho? ft.com/content/b600db…

@sweet_est_pea @citrinowicz Ok - any chance of an idiots guide to fatwas? I was not aware there was a classification system. I do recall the Salman Rushdie. I would have thought Nuclear bomb was up there.

@ebipere @citrinowicz There was never a formal fatwa. And yes

I would strongly suggest going back and looking at the actual U.S. intelligence assessments, which repeatedly concluded that Iran was not on the verge of acquiring a nuclear weapon. More importantly, even Israel itself did not publicly claim that Khamenei had made the decision to build a bomb. That is not my argument, it was the assessment of the American intelligence community. And that is before even getting into the significance of the fatwa and a range of other factors that simply do not align with the claim that Iran was actively rushing toward weaponization. Since we are already exchanging recommendations and lectures, I would also suggest focusing less on facilities destroyed twenty years ago as the primary basis for determining whether Iran is “close” to a bomb. Here is an uncomfortable reality: if Iran actually decided to pursue weaponization, many of the facilities currently being monitored by you would likely become irrelevant to the process. And if I may add one more point, there are limits to the strategic conclusions one can draw solely from satellite imagery. A little humility would go a long way.

The Missed Road A 300 basis point move in long-duration rates is not a rounding error on a 30-year asset. It restructures which energy architecture wins. CAPEX-heavy energy systems behave like bond issuances. Fixed rate. Long duration. As yields rise around them, fuel-cost sensitivity drops to zero, depreciation compounds in their favour, and thermal competitors repricing daily at market become structurally more expensive with every passing quarter. Spain ran this playbook. Not by design, but by timing. Its renewables buildout locked in fixed financing before the rate inflection. It is now the cheapest industrial electricity market in Europe. Germany and Italy, OPEX-dominant, are not. China ran the same playbook at continental scale between 2015 and 2022, The G7 did not. Chinese are still running it and their long-term yields are declining. G7 yields are rising. The competitiveness gap that Spain demonstrated in six years is now being set for a 30-year run between the world's largest industrial economies. The Clean versus Carbon debate is the wrong frame. The right frame is CAPEX versus OPEX in a world where the yield gap between the two competing systems may just have became structural and rates are currently moving in opposite directions. open.substack.com/pub/ebipere/p/…

K - shaped recovery

There will be no Iran deal until the US 10 year breaks 5% to new post-GFC highs. Need both 30 & 10 yields to close to a new highs. Trump will continue to fold to Netanyahu, until he has to fold to the market. He actually can’t think for himself. GCC better start selling their treasuries and buying gold. That is the only way Trump will move. A new high in US-CN 10YR and it’s Trump against global capital.

@Nicolas_Colin @neha @CurrenPower @mariekeflament Money is pure politics. Distilled, refined and infused for subsequent transmutation.

.@neha Narula trained as a software engineer and now heads the Digital Currency Initiative at MIT. The latest @CurrenPower episode with her and @mariekeflament covers a lot of ground. Four things I wanted to highlight. 1️⃣ Programmability vs control. Programmable money executes automatically. What Neha calls "restricted money" can only be spent on certain things — think SNAP benefits / food stamps for instance. The fear that killed CBDC research in the US was the idea that government money could become conditional money. That fear is now in the politics of every country still considering a retail CBDC. (And it applies to stablecoins too. Tether freezing $500M of USDT at the US government's request shows where the control actually sits.) 2️⃣ CBDCs and stablecoins are less different than the debate suggests. A stablecoin backed by a central bank balance sheet is effectively a wholesale CBDC wrapped by the private sector. What matters is the design: what is it backed by, who can redeem, what happens in bankruptcy. The label is secondary. 3️⃣ Quantum. Bitcoin's cryptography will eventually be vulnerable. The technical path to post-quantum resistance exists. The hard problem is coordination — no CEO to mandate a migration, Satoshi's coins may be permanently inaccessible, and parts of the community do not accept the premise. Neha's view: build the signature scheme, enable migration, defer the rest until a quantum computer is actually close. 4️⃣ Geopolitics. Iran's reported willingness to accept payments in stablecoins and Bitcoin signals that these instruments now matter at the level of nation states working around sanctions. That is a story about the limits of dollar infrastructure and who controls the pipes. 🎙 Full episode and transcript here: currencyofpower.co/p/money-is-a-s…

@danrobinson @_SirWilliam_ I am sure some is going to bring up Jevons paradox as proof that there woll be more mathematicians and that we will need more GPUs

I don’t think pure mathematicians are that likely to lose their jobs It’s not like society needs a target number of proofs per year, and hires enough mathematicians to hit it It’s more like we target how many mathematicians we want, and proofs are what they do with their time