The Contrarian Takeover of the Stock Market

Ansel Adams: It's wild to look at the stock market like this. S&P 500 peaking back up, but I don't know. It feels like the energy is recession even if the stock market is not showing that. My thesis here is that we are at the end of a large credit bubble. And what that will manifest in the market is low growth and low inflation.

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Hosts: Ansel Lindner and Christian Keroles

Watch this Episode: YouTube || Rumble

Fed Watch is a macro podcast with a clear contrarian thesis of a deflationary breakdown of the financial system leading to bitcoin adoption. We question narratives and schools of thought, and try to form new understanding. In each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

Find all charts and links at bitcoinandmarkets.com/fed146

In this episode, CK and I make a global round trip of macro headlines, anchored as always in bitcoin. We begin by going through the bitcoin chart and analyze whether the Hong Kong June 1st news is important or not. Next, the big news item to discuss this week is the US debt ceiling deal. We tease apart a few aspects of the deal, and, perhaps more importantly, we discuss the possible liquidity fallout from the deal.

The US government avoided default (as if that was a real risk in the first place), but the devil is in the details as they say. The Treasury now has the task of refilling their bank account which they keep at the Federal Reserve called the Treasury General Account. They will increase their balance by $500 billion by the end of the month, and to do so, people are worried they will be sucking money out of the economy. Some claim the tightening effect will be like the Fed raising rates 25 bps.

On the podcast, CK and I discuss if this is a real concern or not. I tend to think that there are some bullish and bearish aspects, we cannot know what the net result will be. In that case, we have to fall back on our thesis of where the global economy is as a whole.

Next, we zip over to China and look at the disappointing May PMI data. Manufacturing data slumps even further. Lastly, we connect the hard times in China to the effects on Germany, which this week announced it has entered recession. Q1 2023 came in at -0.3% GDP after Q4 2022 was -0.5%.

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