#Fragmentation Spring: The 60/40 Portfolio Died And Creative Destruction Got Arbitraged In “Speaker Pelosi’s Bottom” ….
“We have to refine our monetary policy framework.” (Gita Gopinath)
Summary:
· The Central Bank of Central Banks accepts the IMF’s monetary policy framework paradigm shift thesis.
· The Central Bank of Central Banks confirms that victory in the global battle for “Trust” is the key deciding factor required for Polycrisis victory.
· The Cleveland Fed accepts the IMF’s monetary policy framework paradigm shift thesis.
· The Cleveland Fed informs that the Halo Effect, of Immediacy Bias, in current price inflation behavior, is a bigger driver of future inflation performance than surveyed, and market-implied, long-term inflation expectations.
· The Cleveland Fed, thereby, informs that the recent “Platts’ Brent Tweak” has failed to control future inflation performance.
· The Cleveland Fed implies that the recent OPEC+ production cut has done the Fed’s next tightening, already.
· The Cleveland Fed ignores the fact that weak Asian demand reinforces the Backwardation convergence of higher Crude spot prices, and higher short-term inflation expectations, on lower long-term prices and lower long-term inflation expectations.
· Market consensus broadly accepts the IMF’s monetary policy framework paradigm shift thesis.
· By default, market consensus must, therefore, accept “Speaker Pelosi’s Bottom” investment factor.
· The 60/40 Portfolio died in “Speaker Pelosi’s Bottom”.
· BlackRock’s Alpha Slam Dunk Model Portfolio has replaced the 60/40 Portfolio.
· BlackRock’s Alpha Slam Dunk Model Portfolio is “good enough for Government work”.
· The Alpha Slam Dunk Model Portfolio is consistent with the “IMF Spring” Fragmentation paradigm shift.
· Evidently, BlackRock also “Slam Dunked” in “Speaker Pelosi’s Bottom”.
· BlackRock’s AUMs will replace the Fed’s balance sheet as the main fiscal and monetary policy driver of US economic policy.
· Failure is an orphan, and so is Emmanuel Macron.
· Success has many Semiconductor Chips on its shoulders.
· “Fragmentation Spring” has shifted from the IMF Spring Meetings, through Russia, via Ukraine, to Europe.
· A Eurozone financial crisis, which leads to banking sector consolidation, is a highly likely asymmetric outcome that does not require the passage of the EU’s proposal to end bank bailouts at the national level.
· Christine Lagarde accepts the IMF’s monetary policy framework paradigm shift thesis as a catalyst for multipolar, potentially conflicted, global central banking fragmentation.
· Lagarde’s attempt to placate the Hawks, while promoting Macron’s “Strategic Autonomy”, is inconsistent with Eurozone financial stability and unity.
· At this point, in the AI War of Trust, the ChatBot is mightier than the sword but still weaker than a crystal ball.
· Chancellor Hunt intends to replace the repelled capital, from the Ungovernable Kingdom (UK), by confiscating the hypothecated private pension capital which he has fattened with vote-buying incentives.
· The Sage of Omaha’s fundamental “Friend-Shoring” position, in Japanese equities, gains technical momentum from CTAs.
Extracts
· The conditions for victory, in the Polycrisis, are higher relative trust in the crisis risk management system.
(Source: the Author)
· Platts’ recent Brent Tweak puts long-term inflation expectations into Backwardation.
· Platts’ recent Brent Tweak puts America in control of global long-term inflation expectations and contractually embeds the Exorbitant Privilege into the global economy.
· Platts’ recent Brent Tweak makes OPEC and Russia spot price takers.
(Source: the Author)
· The IMF concludes that the structural “Fragmentation” paradigm shift has shifted developed central bank monetary policy frameworks.
· The IMF implies that the absurd combination of “Quantitative Tightening” and “Qualitative Easing” is the optimal way to trade off inflation and financial stability risks at this point in the Polycrisis.
· “Speaker Pelosi’s Bottom” is officially a long-only global macro investment factor.
(Source: the Author)
· The sub-contracting of foreign and monetary policymaking, to the Masters of the Asset Class Universe, is becoming a Trillion Dollar Marshall Plan Mandate.
(Source: the Author)