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Financial Instability, Liquidity Drying Up, Alarm Bells Ringing: TBL Weekly #14
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Financial Instability, Liquidity Drying Up, Alarm Bells Ringing: TBL Weekly #14

Our free weekly markets analysis, recapping the action in bitcoin and macro.

Nik Bhatia
and
Joe Consorti
Oct 1, 2022
19
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Financial Instability, Liquidity Drying Up, Alarm Bells Ringing: TBL Weekly #14
thebitcoinlayer.substack.com

Welcome to TBL Weekly #14—here are the week’s highlights!

Markets Analysis

Our monitor for the week ending Saturday, October 1st, 2022:

Markets continue exhibiting signs of stress as the Fed doubles down on quelling inflation. We believe the Fed is not necessarily blissfully unaware of the havoc it could cause, but rather accepting of particular fates. We also believe that unforeseen scenarios will rise that will force them to, well, pause and reassess what it has done.

Japan is (now but pretty much always) on yen intervention watch, England staved off a wave of pension fund margin calls by emergency-purchasing long-dated gilts, and the strong dollar is a real danger for the world. Rates are tearing through 15-year highs in the US. If there is not a course correction soon, and even if there is, troubled waters lay ahead.

Rising financial instability is threatening the global economy. What is going to break at the mercy of the dollar and associated tighter financial conditions next: another sovereign, or perhaps a major financial such as Credit Suisse? A systemic unwind of an investment bank with sprawling roots like Credit Suisse could spur a domino effect of delinquencies around the globe with associated creditors. Right now, Credit Suisse default protection is more expensive than prior to the Great Financial Crisis:

Expect cracks to appear more frequently as the Fed’s “higher for longer” hiking mission persists. The Bank of England intervention was a hint of what lies ahead, and a tap on the shoulder from a major financial firm, either directly or via ECB President Christine Lagarde by proxy, would be the end of tightening in our opinion. The Fed wants to focus on inflation by itself, but dangers creep from hard-to-see corners of the financial system.

Continue reading our markets update about rising instability in yesterday evening’s free markets analysis. Markets are moving fast—this post has everything you need to get up to speed:

September 30th Global Macro Update

The last chart for today is our confluence price, a combination of three bitcoin valuation models to indicate fair value. Bitcoin trades slightly cheap, using our TBL Fair Value Ratio:

If you’re enjoying today’s analysis, consider supporting us by becoming a paid subscriber. As a paid subscriber, you get full access to all research as it drops.

To round out the day, here are your quick links to all of the TBL content for the week:

Tuesday

Nik & Joe recap September’s market action two days after the Fed’s decision on September 21st. Interest rates skyrocketing, equities hanging on by a thread, and our outlook heading into a tense Q4:

Wednesday

Nik breaks down the emergency intervention on behalf of UK pension funds by the Bank of England. It was another example of “too big to fail,” as BlackRock looks to be the primary beneficiary of this week’s action.

We suspect these themes of fragility and intervention to continue playing out over the coming months. Get caught up so you’re oriented for the next major market event:

The Bitcoin Layer
Bank of England bails out BlackRock
Dear readers, Let me see your bingo cards. I know one of you predicted that British pension managers would get margin called after a budget announcement from the new leadership. We now have our first major intervention of the cycle (sorry Bank of Japan, your intervention is considered permanent), and global markets are giving us some very important signals as a result…
Read more
4 months ago · 21 likes · 1 comment · Nik Bhatia

Thursday

Nik discusses the BoE bailout of BlackRock in video form. Don’t miss our most viewed markets video ever:

Friday

Nik & Joe take you through the global macro landscape in an all-encompassing update. Fragility is the theme across all markets. As soaring yields threaten the world’s financial plumbing, a slowdown could turn into a severe economic contraction:

The Bitcoin Layer
TBL's Comprehensive Macro Analysis Framework
Dear readers, Today we bring you behind the scenes of our global macro framework. The full suite of tools we use to analyze markets. Conceived by Nik as an intricate, global, macroeconomic watch; hundreds of gears and cogs all moving in tandem. This is a comprehensive global macro update as of today, September 30th, 2022. Let’s dive in…
Read more
4 months ago · 7 likes · Nik Bhatia and Joe Consorti

Have a great weekend everybody!


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