The Breakdown

Corey Hoffstein is the founder and Chief Investment Officer of Newfound Research LLC, a quantitative research and investment fund. He is also the host of the “Flirting with Models” podcast.  His most recent research is “Liquidity Cascades: The Coordinated Risk of Uncoordinated Market Participants.”  In it, he examines three popular narratives about what is driving radical swings in markets, including: The increased role of the Fed The rise of passive and index investing The growth of volatility-correlated strategies  He finds that, individually, none could explain the radical market shifts we’ve seen. However, when combined, they create a market incentive loop that is causing markets to move and react to exogenous shocks more quickly and aggressively than ever before.  Find our guest online: Twitter: @choffstein  Website: Newfound Research

Today on the Brief: Where the digital euro fits in Lagarde’s economic integration plans New stablecoin guidance from the OCC Mnuchin and Powell head to the Hill Our main discussion features Marty Bent.  Marty is the author of one of the best known daily bitcoin newsletters, as well as the host of “Tales From The Crypt” podcast. He also is one of the leaders of Great American Mining, a new project using bitcoin mining to make big energy more efficient and profitable.  In this discussion, we talk about how bitcoin and big energy are unlikely allies, how that alliance can bring more bitcoin mining back to America, and how it is working to reduce America’s energy dependence.  Find our guest online: Twitter: @MartyBent Twitter: @GAMdotAI Website: https://gam.ai

Today on the Brief Stocks down, dollar up on COVID-19 resurgence fears People’s Bank of China says digital yuan needed to fight USD dominance 140,000 have claimed UNI tokens Judge stops Trump WeChat ban Nikola founder resigns Our main discussion: The FinCEN Files  The FinCEN Files are a leaked cache of suspicious activity reports filed by banks with the U.S .Financial Crimes Enforcement Network. The more than 2,000 files, representing $2 trillion in transactions, were leaked to BuzzFeed News more than a year ago. BuzzFeed, in turn, shared them with the International Consortium of Investigative Journalists, who then helped distribute them to 108 publications in 88 countries.  This episode provides an overview of the leaks and explains why they show that, despite lots of PR bluster, banks are happy to file their reports and then keep on banking likely money launderers. 

On this week’s “Long Reads Sunday,” NLW reads macro analyst Lyn Alden’s latest: “A Century of Fiscal and Monetary Policy: Inflation vs Deflation” The article looks at: When monetary policy is effective versus when fiscal policy needs to take over  How short-term debt cycles add up to long-term debt cycles that have very different remedies Why long-term debt cycles inevitably end in default or devaluation  Why the conclusion of the last long-term debt cycle in the U.S. – the 1930s and 1940s – suggests that devaluation is the most likely outcome

On this edition of The Breakdown weekly recap, NLW looks at: DEXetition – Uniswap’s battle with SushiSwap heats up as the former dropped the UNI governance token in what some likened to a crypto stimulus check  The Fed has no clothes – After another FOMC meeting of “nothing new,” the mirage of Federal Reserve omnipotence is fading TikTok and WeChat banned from U.S. app stores – Is it just a negotiating technique? Whatever the case, people are not happy Kraken becomes a bank – What it means now that Kraken has been approved for a Wyoming Special Purpose Depository Institution charter

MicroStrategy made waves when it announced in early August it was moving $500,000,000 in treasury reserves out of cash. At least $250 million were to be moved into bitcoin.  Earlier this week, the company announced its final bitcoin purchases totaled $425 million.  In this conversation with NLW, MicroStrategy CEO Michael Saylor explains: Why he’s always treated the company with a long time horizon Why the asset inflation rate is the real inflation rate How he became convinced that bitcoin is the best treasury asset in the world  Why Michael believes some other companies will follow suit, but better do so quick Why the intensity of maximalists is actually part of the reason he grew conviction around the asset  Why he would buy every bitcoin if he could

Raoul Pal is CEO and co-founder of Real Vision, a platform fundamentally disrupting macroeconomics and financial media.  In this wide-ranging conversation, he and NLW discuss:  Hot takes on the most recent Jerome Powell/Federal Reserve press conference Why central banks can’t do anything more until they merge with treasury departments  Why stablecoins are disrupting how we think about global reserve assets  Why traditional financial media missed an entire generation of investors Why all macro debates are boring

Today on the Brief: Kraken is the first crypto exchange to become a U.S. bank FTC preparing antitrust lawsuit against Facebook Gold-standard fan Judy Shelton doesn’t have the votes to be confirmed as Federal Reserve governor  Our main discussion: The battle for the soul of finance.  In this episode, NLW looks at the power competition between governments on the one hand and the decentralized network-driven finance alternatives that would reshape that power. Interestingly, in this competition corporations may play a role that benefits both sides at different times and in different ways.

Today on the Brief: MicroStrategy increases its bitcoin reserves by $175 million  The Oracle-TikTok deal starts to smell fishy The SEC is investigating claims of fraud involving Nikola Corp. Our main discussion: The rise of zombie firms.  A zombie firm is a company that can’t afford to service its debt from operating income. These companies are made possible by artificially low interest rates, and they drain resources from the economy.  On today’s episode, NLW explains: Why there are more zombie companies than ever The negative impact they have on the economy How they could drive a new financial crisis

Today on the Brief: Crypto exchange volume sees highest month-over-month increase since February 2018 Uniswap overtakes SushiSwap in total value locked What Coinbase vs. Apple means for the future of decentralized applications Our main discussion: NLW looks at the business of geopolitical competition, including: TikTok, Oracle and the new politics of deal making in the “new Cold War” “Mulan” controversy around Uyghurs and Hong Kong police support  The real motivation for China’s digital currency