As the Fed begins their journey into a deflationary blizzard, they are beginning to break markets across the globe. As the World Reserve Currency, over 60% of all international trade is done in Dollars, and USDs are the largest Foreign Exchange (Forex) holdings by far for global central banks. Now all foreign currencies are crashing against the Dollar as the vicious feedback loops of Triffin’s Dilemma come home to roost. The Dollar Milkshake has begun.
The Fed, knowingly or unknowingly, has walked into this trap- and now they find themselves caught underneath the Sword of Damocles, with no way out…

Sword Of Damocles
--------------------------
“The famed “sword of Damocles” dates back to an ancient moral parable popularized by the Roman philosopher Cicero in his 45 B.C. book “Tusculan Disputations.” Cicero’s version of the tale centers on Dionysius II, a tyrannical king who once ruled over the Sicilian city of Syracuse during the fourth and fifth centuries B.C.
Though rich and powerful, Dionysius was supremely unhappy. His iron-fisted rule had made him many enemies, and he was tormented by fears of assassination—so much so that he slept in a bedchamber surrounded by a moat and only trusted his daughters to shave his beard with a razor.
As Cicero tells it, the king’s dissatisfaction came to a head one day after a court flatterer named Damocles showered him with compliments and remarked how blissful his life must be. “Since this life delights you,” an annoyed Dionysius replied, “do you wish to taste it yourself and make a trial of my good fortune?” When Damocles agreed, Dionysius seated him on a golden couch and ordered a host of servants wait on him. He was treated to succulent cuts of meat and lavished with scented perfumes and ointments.
Damocles couldn’t believe his luck, but just as he was starting to enjoy the life of a king, he noticed that Dionysius had also hung a razor-sharp sword from the ceiling. It was positioned over Damocles’ head, suspended only by a single strand of horsehair.
From then on, the courtier’s fear for his life made it impossible for him to savor the opulence of the feast or enjoy the servants. After casting several nervous glances at the blade dangling above him, he asked to be excused, saying he no longer wished to be so fortunate.”
—---------------
Damocles’ story is a cautionary tale of being careful of what you wish for- Those who strive for power often unknowingly create the very systems that lead to their own eventual downfall. The Sword is often used as a metaphor for a looming danger; a hidden trap that can obliterate those unaware of the great risk that hegemony brings.
Heavy lies the head which wears the crown.

There are several Swords of Damocles hanging over the world today, but the one least understood and least believed until now is Triffin’s Dilemma, which lays the bedrock for the Dollar Milkshake Theory. I’ve already written extensively about Triffin’s Dilemma around a year ago in Part 1.5 and Part 4.3 of my Dollar Endgame Series, but let’s recap again.
Here’s a great summary- read both sides of the dilemma:

Triffin's Dilemma Summarized

(Seriously, stop here and go back and read Part 1.5 and Part 4.3 Do it!)

Essentially, Triffin noted that there was a fundamental flaw in the system: by virtue of the fact that the United States is a World Reserve Currency holder, the global financial system has built in GLOBAL demand for Dollars. No other fiat currency has this.
How is this demand remedied? With supply of course! The United States thus is forced to run current account deficits - meaning it must send more dollars out into the world than it receives on a net basis. This has several implications, which again, I already outlined- but I will list in summary format below:

The United States has to be a net importer, ie it must run trade deficits, in order to supply the world with dollars. Remember, dollars and goods are opposite sides of the same equation, so a greater trade deficits means that more dollars are flowing out to the world.
(This will devastate US domestic manufacturing, causing political/social/economic issues at home.)
These dollars flow outwards into the global economy, and are picked up by institutions in a variety of ways.
First, foreign central banks will have to hold dollars as Foreign Exchange Reserves to defend their currency in case of attack on the Forex markets. This was demonstrated during the Asian Financial Crisis of 1997-98, when the Thai Baht, Malaysian Ringgit, and Philippine Peso (among other East Asian currencies) plunged against the Dollar. Their central banks attempted to defend the pegs but they failed.
Second, companies will need Dollars for trade- as the USD makes up over 60% of global trade volume, and has the deepest and most liquid forex market by far, even small firms that need to transact cross border trade will have to acquire USDs in order to operate. When South Africa and Chile trade, they don’t want to use Mexican Pesos or Korean Won- they want Dollars.
Foreign governments need dollars. There are several countries already who have adopted the Dollar as a replacement for their own currency- Ecuador and Zimbabwe being prime examples. There’s a full list here.
Third world governments that don’t fully adopt dollars as their own currencies will still use them to borrow. Argentina has 70% of it’s debt denominated in dollars and Indonesia has 30%, for example. Dollar-denominated debt will build up overseas.

The example I gave in Part 1.5 was that of Liberia, a small West African Nation looking to enter global trade. Needing to hold dollars as part of their exchange reserves, the Liberian Central Bank begins buying USDs on the open market. The process works in a similar fashion for large Liberian export companies.

Dollar Recycling

Essentially, they print their own currency to buy Dollars. Wanting to earn interest on this massive cash hoard when it isn’t being used, they buy Treasuries and other US debt securities to get a yield.
As their domestic economy grows, their need and dependence on the Dollar grows as well. Their Central Bank builds up larger and larger hoards of Treasuries and Dollars. The entire thesis is that during times of crisis, they can sell the Treasuries for USD, and use the USDs to buy back their own currency on the market- supporting its value and therefore defending the peg.
This buying pressure on USDs and Treasuries confers a massive benefit to the United States-

The Exorbitant Privilege

This buildup of excess dollars ends up circulating overseas in banks, trade brokers, central banks, governments and companies. These overseas dollars are called the Eurodollar system- a 2016 research paper estimated the size to be around $13.8 Trillion USD. This system is not under official Federal Reserve jurisdiction so it is difficult to get accurate numbers on its size.

https://preview.redd.it/92wcmhdb0uq91.png?width=691&format=png&auto=webp&s=20dbaf63f75ff6f2e255fff06e6f48c03170b11b

This means the Dollar is always artificially stronger than it should be- and during financial calamity, the dollar is a safe haven as there are guaranteed bidders.
All this dollar denominated debt paired with the global need for dollars in trade creates strong and persistent dollar demand. Demand that MUST be satisfied.
This creates systemic risk on a worldwide scale- an unforeseen Sword of Damocles that hangs above the global financial system. I’ve been trying to foreshadow this in my Dollar Endgame Series.
Triffin’s Dilemma is the basis for the Dollar Milkshake Theory posited by Brent Johnson.

The Dollar Milkshake

Milkshake of Liquidity
In 2021, Brent worked with RealVision to create a short summary of his thesis- the video can be found here. I should note that Brent has had this theory for years, dating back to 2018, when he first came on podcasts and interviews and laid out his theory (like this video, for example).
Here’s the summary below:
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“A giant milkshake of liquidity has been created by global central banks with the dollar as its key ingredient - but if the dollar moves higher this milkshake will be sucked into the US creating a vicious spiral that could quickly destabilize financial markets.
The US dollar is the bedrock of the world's financial system. It greases the wheels of global commerce and exchange- the availability of dollars, cost of dollars, and the level of the dollar itself each can have an outsized impact on economies and investment opportunities.
But more important than the absolute level or availability of dollars is the rate of change in the level of the dollar. If the level of the dollar moves too quickly and particularly if the level rises too fast then problems start popping up all over the place (foreign countries begin defaulting).
Today however many people are convinced that both the role of the Dollar is diminishing and the level of the dollar will only decline. People think that the US is printing so many dollars that the world will be awash with the greenback causing the value of the dollar to fall.
Now it's true that the US is printing a lot of dollars – but other countries are also printing their own currencies in similar amounts so in theory it should even out in terms of value.
But the hidden issue is the difference in demand. Remember the global financial system is built on the US dollar which means even if they don't want them everybody still needs them and if you need something you don't really have much choice. (See DXY Index):

DXY Index

Although many countries like China are trying to reduce their reliance on dollar transactions this will be a very slow transition. In the meantime the risks of a currency or sovereign debt crisis continue to rise.
But now countries like China and Japan need dollars to buy copper from Australia so the Chinese and the Japanese owe dollars and Australia is getting paid in dollars.
Europe and Asia currently doing very limited amount of non-dollar transactions for oil so they still need dollars to buy oil from saudi and again dollars get hoovered up on both sides
Asia and Europe need dollars to buy soybeans from Brazil. This pulls in yet more dollars - everybody needs dollars for trade invoices, central bank currency reserves and servicing massive cross-border dollar denominated debts of governments and corporations outside the USA.
And the dollar-denominated debt is key- if they don't service their debts or walk away from their dollar debts their funding costs rise putting great financial pressure on their domestic economies. Not only that, it can lead to a credit contraction and a rapid tightening of dollar supply.
The US is happy with the reliance on the greenback they own the settlement system which benefits the US banks who process all the dollars and act as gatekeepers to the Dollar system they police and control the access to the system which benefits the US military machine where defense spending is in excess of any other country so naturally the US benefits from the massive volumes of dollar usage.

https://preview.redd.it/yq1f1anq0uq91.png?width=1140&format=png&auto=webp&s=27447e2acec884848a5c70ab3651820e487fc0f3

Other countries have naturally been grumbling about being held hostage to the situation but the choices are limited. What it does mean is that dollars need to be constantly sucked out of the USA because other countries all over the world need them to do business and of course the more people there are who need and want those dollars the more is the pressure on the price of dollars to go up.
In fact, global demand is so high that the supply of dollars is just not enough to keep up, even with the US continually printing money. This is why we haven't seen consistently rising US inflation despite so many QE and stimulus programs since the global financial crisis in 2008.
But, the real risk comes when other economies start to slow down or when the US starts to grow relative to the other economies. If there is relatively less economic activity elsewhere in the world then there are fewer dollars in global circulation for others to use in their daily business and of course if there are fewer in circulation then the price goes up as people chase that dwindling source of dollars.
Which is terrible for countries that are slowing down because just when they are suffering economically they still need to pay for many goods in dollars and they still need to service their debts which of course are often in dollars too.

So the vortex begins or as we like to say the dollar milkshake- As the level of the dollar rises the rest of the world needs to print more and more of its own currency to then convert to dollars to pay for goods and to service its dollar debt this means the dollar just keeps on rising in response many countries will be forced to devalue their own currencies so of course the dollar rises again and this puts a huge strain on the global system.
(see the charts below:)
JPY/USD

GBP/USD

EUUSD

To make matters worse in this environment the US looks like an attractive safe haven so the US ends up sucking in the capital from the rest of the world-the dollar rises again. Pretty soon you have a full-scale sovereign bond and currency crisis.

https://preview.redd.it/72nlain01uq91.png?width=1141&format=png&auto=webp&s=cbaa411acc88acb3849949d84a36624d75d6cfc4

We're now into that final napalm run that sees the dollar and dollar assets accelerate even higher and this completely undermines global markets. Central banks try to prevent disorderly moves, but the global markets are bigger and the momentum unstoppable once it takes hold.
And that is the risk that very few people see coming but that everyone should have a hedge against - when the US sucks up the dollar milkshake, bad things are going to happen.
Worst of all there's no alternatives- what are you going to use-- Chinese Yuan? Japanese Yen? the Euro??
Now, like it or not we're stuck with a dollar underpinning the global financial system.”
—-------------
Why is it playing out now, in real time?? It all leads back to a tweet I made in a thread on September 16th.

Tweet Thread about the Yuan

The Fed, rushing to avoid a financial crisis in March 2020, printed trillions. This spurred inflation, which they then swore to fight. Thus they began hiking interest rates on March 16th, and began Quantitative Tightening this summer.
QE had stopped- No new dollars were flowing out into a system which has a constant demand for them. Worse yet, they were hiking completely blind-
Although the Fed is very far behind the curve, (meaning they are hiking far too late to really combat inflation)- other countries are even farther behind!
Japan has rates currently at 0.00- 0.25%, and the Eurozone is at 1.25%. These central banks have barely begun hiking, and some even swear to keep them at the zero-bound. By hiking domestic interest rates above foreign ones, the Fed is incentivizing what are called carry trades.
Since there is a spread between the Yen and the Dollar in terms of interest rates, it thus is profitable for traders to borrow in Yen (shorting it essentially) and buy Dollars, which can earn 2.25% interest. The spread would be around 2%.
DXY rises, and the Yen falls, in a vicious feedback loop.
Thus capital flows out of Japan, and into the US. The US sucks up the Dollar Milkshake, draining global liquidity. As I’ve stated before, this has seriously dangerous implications for the global financial system.
For those of you who don’t believe this could be foreseen, check out the ending paragraphs of Dollar Endgame Part 4.3 - “Economic Warfare and the End of Bretton Woods” published February 16, 2022:

Triffin's Dilemma is the Final Nail

What I’ve been attempting to do in my work is restate Triffins’ Dilemma, and by extension the Dollar Milkshake, in other terms- to come at the issue from different angles.
Currently the Fed is not printing money. Which is thus causing havoc in global trade (seen in the currency markets) because not enough dollars are flowing out to satisfy demand.
The Fed must therefore restart QE unless it wants to spur a collapse on a global scale. Remember, all these foreign countries NEED to buy, borrow and trade in a currency that THEY CANNOT PRINT!
We do not have enough time here to go in depth on the Yen, Yuan, Pound or the Euro- all these currencies have different macro factors and trade factors which affect their currencies to a large degree. But the largest factor by FAR is Triffin’s Dilemma + the Dollar Milkshake, and their desperate need for dollars. That is why basically every fiat currency is collapsing versus the Dollar.
The Fed, knowingly or not, is basically in charge of the global financial system. They may shout, “We raise rates in the US to fight inflation, global consequences be damned!!” - But that’s a hell of a lot more difficult to follow when large G7 countries are in the early stages of a full blown currency crisis.
The most serious implication is that the Fed is responsible for supplying dollars to everyone. When they raise rates, they trigger a margin call on the entire world. They need to bail them out by supplying them with fresh dollars to stabilize their currencies.
In other words, the Fed has to run the loosest and most accommodative monetary policy worldwide- they must keep rates as low as possible, and print as much as possible, in order to keep the global financial system running. If they don’t do that, sovereigns begin to blow up, like Japan did last week and like England did on Wednesday.
And if the world’s financial system implodes, they must bail out not only the United States, but virtually every global central bank. This is the Sword of Damocles. The money needed for this would be well in the dozens of trillions.
The Dollar Endgame Approaches…
—-------------------------------------------------------------

Q&A

(Many of you have been messaging me with questions, rebuttals or comments. I’ll do my best to answer some of the more poignant ones here.)

—-----
Q: I’ve been reading your work, you keep saying the dollar is going to fall in value, and be inflated away. Now you’re switching sides and joining the dollar bull faction. Seems like you don’t know what you’re talking about!
A: You’re mixing up my statements. When I discuss the dollar losing value, I am referring to it falling in ABSOLUTE value, against goods and services produced in the real economy. This is what is called inflation. I made this call in 2021, and so far, it has proven right as inflation has accelerated.
The dollar gaining strength ONLY applies to foreign currency exchange markets (Forex)- remember, DXY, JPYUSD, and other currency pairs are RELATIVE indicators of value. Therefore, both JPY and USD can be falling in real terms (inflation) but if one is falling faster, then that one will lose value relative to the other. Also, Forex markets are correlated with, but not an exact match, for inflation.
I attempted to foreshadow the entire dollar bull thesis in the conclusion of Part 1 of the Dollar Endgame, posted well over a year ago-

Unraveling of the Currency Markets

I did not give an estimate on when this would happen, or how long DXY would be whipsawed upwards, because I truly do not know.
I do know that eventually the Fed will likely open up swap lines, flooding the Eurodollar market with fresh greenbacks and easing the dollar short squeeze. Then selling pressure will resume on the dollar. They would only likely do this when things get truly calamitous- and we are on our way towards getting there.
The US bond market is currently in dire straits, which matches the prediction of spiking interest rates. The 2yr Treasury is at 4.1%, it was at 3.9% just a few days ago. Only a matter of time until the selloff gets worse.
—------
Q: Foreign Central banks can find a way out. They can just use their reserves to buy back their own currency.
Sure, they can try that. It’ll work for a while- but what happens once they run out of reserves, which basically always happens? I can’t think of a time in financial history that a country has been able to defend a currency peg against a sustained attack.

Global Forex Reserves

They’ll run out of bullets, like they always do, and basically the only option left will be to hike interest rates, to attract capital to flow back into their country. But how will they do that with global debt to GDP at 356%? If all these countries do that, they will cause a global depression on a scale never seen before.
Britain, for example, has a bit over $100B of reserves. That provides maybe a few months of cover in the Forex markets until they’re done.
Furthermore, you are ignoring another vicious feedback loop. When the foreign banks sell US Treasuries, this drives up yields in the US, which makes even more capital flow to the US! This weakens their currency even further.

FX Feedback Loop

To add insult to injury, this increases US Treasury borrowing costs, which means even if the Fed completely ignores the global economy imploding, the US will pay much more in interest. We will reach insolvency even faster than anyone believes.
The 2yr Treasury bond is above 4%- with $31T of debt, that means when we refinance we will pay $1.24 Trillion in interest alone. Who's going to buy that debt? The only entity with a balance sheet large enough to absorb that is the Fed. Restarting QE in 3...2…1…
—----
Q: I live in England. With the Pound collapsing, what can I do? What will happen from here? How will the governments respond?
England, and Europe in general, is in serious trouble. You guys are currently facing a severe energy crisis stemming from Russia cutting off Nord Stream 1 in early September and now with Nord Stream 2 offline due to a mysterious leak, energy supplies will be even more tight.
Not to mention, you have a pretty high debt to GDP at 95%. Britain is a net importer, and is still running government deficits of £15.8 billion (recorded in Q1 2022). Basically, you guys are the United States without your own large scale energy and defense sector, and without Empire status and a World Reserve Currency that you once had.
The Pound will almost certainly continue falling against the Dollar. The Bank of England panicked on Wednesday in reaction to a $100M margin call on British pension funds, and now has begun buying long dated (10yr) gilts, or government bonds.
They’re doing this as inflation is spiking there even worse than the US, and the nation faces a currency crisis as the Pound is nearing parity with the Dollar.

BOE announces bond-buying scheme (9/28/22)

I will not sugarcoat it, things will get rough. You need to hold cash, make sure your job, business, or investments are secure (ie you have cashflow) and hunker down. Eliminate any unnecessary purchases. If you can, buy USDs as they will likely continue to rise and will hold value better than your own currency.
If Parliament goes through with more tax cuts, that will only make the fiscal situation worse and result in more borrowing, and thus more money printing in the end.
—----
Q: What does this mean for Gamestop? For the domestic US economy?
Gamestop will continue to operate as I am sure they have been- investing in growth and expanding their Web3 platform.
Fiat is fundamentally broken. This much is clear- we need a new financial system not based on flawed 16th fractional banking principles or “trust me bro” financial intermediaries.
My hope is that they are at the forefront of a new financial system which does not require centralized authorities or custodians- one where you truly own your assets, and debasement is impossible.
I haven’t really written about GME extensively because it’s been covered so well by others, and I don’t feel I have that much to add.
As for the US economy, we are still in a deep recession, no matter what the politicians say- and it will get worse. But our economic troubles, at least in the short term (6 months) will not be as severe as the rest of the world due to the aforementioned Dollar Milkshake.
The debt crisis is still looming, midterms are approaching, and the government continues to deficit spend as if there’s no tomorrow.
As the global monetary system unravels, yields will spike, the deleveraging will get worse, and our dollar will get stronger. The fundamental factors continue to deteriorate.
I’ve covered the US enough so I'll leave it there.
—------
Q: Did you know about the Dollar Milkshake Theory before recently? What did you think of it?
Of course I knew about it, I’ve been following Brent Johnson since he appeared on RealVision and Macrovoices. He laid out the entire theory in 2018 in a long form interview here. I listened to it maybe a couple times, and at the time I thought he was right- I just didn’t know how right he was.
Brent and I have followed each other and been chatting a little on Twitter- his handle is SantiagoAuFund, I highly recommend you give him a follow.

Twitter Chat

I’ve never met him in person, but from what I can see, his predictions are more accurate than almost anyone else in finance. Again, all credit to him- he truly understands the global monetary system on a fundamental level.
I believed him when he said the dollar would rally- but the speed and strength of the rally has surprised me. I’ve heard him predict DXY could go to 150, mirroring the massive DXY squeeze post the 1970s stagflation. He could very easily be right- and the absolute chaos this would mean for global trade and finance are unfathomable.

History of DXY

—----------
Q: The Pound and Euro are falling just because of the energy crisis there. That's it!
Why is the Yen falling then? How about the Yuan? Those countries are not currently undergoing an energy crisis. Let’s review the year to date performance of most fiat currencies vs the dollar:
Japanese Yen: -20.31%
Chinese Yuan: -10.79%
South African Rand: -10.95%
English Pound: -18.18%
Euro: -14.01%
Swiss Franc: -6.89%
South Korean Won: -16.73%
Indian Rupee: -8.60%
Turkish Lira: -27.95%
There are only a handful of currencies positive against the dollar, the most notable being the Russian Ruble and the Brazilian Real- two countries which have massive commodity resources and are strong exporters. In an inflationary environment, hard assets do best, so this is no surprise.
—------
Q: What can the average person do to prepare? What are you doing?
Obligatory this is NOT financial advice
This is an extremely difficult question, as there are so many factors. You need to ask yourself, what is your financial situation like? How much disposable income do you have? What things could you cut back on? I can’t give you specific ideas without knowing your situation.
Personally, I am building up savings and cutting down on expenses. I’m getting ready for a severe recession/depression in the US and trying to find ways to increase my income, maybe a side hustle or switching jobs.
I am holding my GME and not selling- I still have some shares in Fidelity that I need to DRS (I know, sorry, I was procrastinating).
For the next few months, I believe there will be accelerating deflation as interest rates spike and the debt cycle begins to unwind. But like I’ve stated before, this will lead us towards a second Great Depression very rapidly, and to avoid the deflationary blizzard the Fed will restart QE on a scale never seen before.
QE Infinity. This will be the impetus for even worse inflation- 25%+ by this time next year.
It’s hard to prepare for this, and easy to feel hopeless. It’s important to know that we have been through monetary crises before, and society did not devolve into a zombie apocalypse. You are not alone, and we will get through this together.
It’s also important to note that we are holding the most lopsided investment opportunity of a generation. Any money you put in there can be grown by orders of magnitude.
We are at the end of the Central Bankers game- and although it will be painful, we will rid the world of them, I believe, and build a new financial system based on blockchains which will disintermediate the institutions. They have everything to lose.
—------
Q: I want to learn more, where can I do? What can I do to keep up to date with everything?
You can start by reading books, listening to podcasts, and checking the news to stay abreast of developments. I have a book list linked at the end of the Dollar Endgame posts.
I’ll be covering the central bank clown show on Twitter, you can follow me there if you like. I’ll also include links to some of my favorite macro people below:

I’m still finishing up the finale for Dollar Endgame- I should have it out soon. I’m also writing an addendum to the series which is purely Q&A to answer questions and concerns. Sorry for the wait.
—-------------------
Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person.

(Hey everyone, this is the SECOND half of the Finale, you can find the first half here)

The Dollar Endgame

True monetary collapses are hard to grasp for many in the West who have not experienced extreme inflation. The ever increasing money printing seems strange, alien even. Why must money supply grow exponentially? Why did the Reichsbank continue printing even as hyperinflation took hold in Germany?
What is not understood well are the hidden feedback loops that dwell under the surface of the economy.
The Dragon of Inflation, once awoken, is near impossible to tame.
It all begins with a country walking itself into a situation of severe fiscal mismanagement- this could be the Roman Empire of the early 300s, or the German Empire in 1916, or America in the 1980s- 2020s.
The State, fighting a war, promoting a welfare state, or combating an economic downturn, loads itself with debt burdens too heavy for it to bear.
This might even create temporary illusions of wealth and prosperity. The immediate results are not felt. But the trap is laid.
Over the next few years and even decades, the debt continues to grow. The government programs and spending set up during an emergency are almost impossible to shut down. Politicians are distracted with the issues of the day, and concerns about a borrowing binge take the backseat.
The debt loads begin to reach a critical mass, almost always just as a political upheaval unfolds. Murphy’s Law comes into effect.
Next comes a crisis.
This could be Visigoth tribesmen attacking the border posts in the North, making incursions into Roman lands. Or it could be the Assassination of Archduke Franz Ferdinand in Sarajevo, kicking off a chain of events causing the onset of World War 1.
Or it could be a global pandemic, shutting down 30% of GDP overnight.
Politicians respond as they always had- mass government mobilization, both in the real and financial sense, to address the issue. Promising that their solutions will remedy the problem, a push begins for massive government spending to “solve” economic woes.
They go to fundraise debt to finance the Treasury. But this time is different.
Very few, if any, investors bid. Now they are faced with a difficult question- how to make up for the deficit between the Treasury’s income and its massive projected expenditure. Who’s going to buy the bonds?
With few or no legitimate buyers for their debt, they turn to their only other option- the printing press. Whatever the manner, new money is created and enters the supply.
This time is different. Due to the flood of new liquidity entering the system, widespread inflation occurs. Confounded, the politicians blame everyone and everything BUT the printing as the cause.
Bonds begin to sell off, which causes interest rates to rise. With rates suppressed so low for so long, trillions of dollars of leverage has built up in the system.
No one wants to hold fixed income instruments yielding 1% when inflation is soaring above 8%. It's a guaranteed losing trade. As more and more investors run for the exits in the bond markets, liquidity dries up and volatility spikes.
The MOVE index, a measure of bond market volatility, begins climbing to levels not seen since the 2008 Financial Crisis.

MOVE Index
Sovereign bond market liquidity begins to evaporate. Weak links in the system, overleveraged several times on government debt, such as the UK’s pension funds, begin to implode.
The banks and Treasury itself will not survive true deflation- in the US, Yellen is already getting so antsy that she just asked major banks if Treasury should buy back their bonds to “ensure liquidity”!
As yields rise, government borrowing costs spike and their ability to roll their debt becomes extremely impaired. Overleveraged speculators in housing, equity and bond markets begin to liquidate positions and a full blown deleveraging event emerges.
True deflation in a macro environment as indebted as ours would mean rates soaring well above 15-20%, and a collapse in money market funds, equities, bonds, and worst of all, a certain Treasury default as federal tax receipts decline and deficits rise.
A run on the banks would ensue. Without the Fed printing, the major banks, (which have a 0% capital reserve requirement since 3/15/20), would quickly be drained. Insolvency is not the issue here- liquidity is; and without cash reserves a freezing of the interbank credit and repo markets would quickly ensue.
For those who don’t think this is possible, Tim Geitner, NY Fed President during the 2008 Crisis, stated that in the aftermath of Lehman Brothers’ bankruptcy, we were “We were a few days away from the ATMs not working” (start video at 46:07).
As inflation rips higher, the $24T Treasury market, and the $15.5T Corporate bond markets selloff hard. Soon they enter freefall as forced liquidations wipe leverage out of the system. Similar to 2008, credit markets begin to freeze up. Thousands of “zombie corporations”, firms held together only with razor thin margins and huge amounts of near zero yielding debt, begin to default. One study by a Deutsche analyst puts the figure at 25% of companies in the S&P 500.
The Central Banks respond to the crisis as they always have- coming to the rescue with the money printer, like the Bank of England did when they restarted QE, or how the Bank of Japan began “emergency bond buying operations”.
But this time is massive. They have to print more than ever before as the ENTIRE DEBT BASED FINANCIAL SYSTEM UNWINDS.
QE Infinity begins. Trillions of Treasuries, MBS, Corporate bonds, and Bond ETFs are bought up. The only manner in which to prevent the bubble from imploding is by overwhelming the system with freshly printed cash. Everything is no-limit bid.
The tsunami of new money floods into the system and a face ripping rally begins in every major asset class. This is the beginning of the melt-up phase.
The Federal Reserve, within a few months, goes from owning 30% of the Treasury market, to 70% or more. The Bank of Japan is already at 70% ownership of certain JGB issuances, and some bonds haven’t traded for a record number of days in an active market!
The Central Banks EAT the bond market. The “Lender of Last Resort” becomes “The Lender of Only Resort”.
Another step towards hyperinflation. The Dragon crawls out of his lair.

QE Process
Now the majority or even entirety of the new bond issuances from the Treasury are bought with printed money. Money supply must increase in tandem with federal deficits, fueling further inflation as more new money floods into the system.
The Fed’s liquidity hose is now directly plugged into the veins of the real economy. The heroin of free money now flows in ever increasing amounts towards Main Street.
The same face-ripping rise seen in equities in 2020 and 2021 is now mirrored in the markets for goods and services.
Prices for Food, gas, housing, computers, cars, healthcare, travel, and more explode higher. This sets off several feedback loops- the first of which is the wage-price spiral. As the prices of everything rise, real disposable income falls.
Massive strikes and turnover ensues. Workers refuse to labor for wages that are not keeping up with their expenses. After much consternation, firms are forced to raise wages or see large scale work stoppages.

Wage-Price Spiral
These higher wages now mean the firm has higher costs, and thus must charge higher prices for goods. This repeats ad infinitum.
The next feedback loop is monetary velocity- the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.
The faster the dollar turns over, the more items it can bid for- and thus the more prices rise. Money velocity increasing is a key feature of a currency beginning to inflate away. In nations experiencing hyperinflation like Venezuela, where money velocity was purported to be over 7,000 annually- or more than 20 times a DAY.
As prices rise steadily, people begin to increase their inflation expectations, which leads to them going out and preemptively buying before the goods become even more expensive. This leads to hoarding and shortages as select items get bought out quickly, and whatever is left is marked up even more. ANOTHER feedback loop.
Inflation now soars to 25%. Treasury deficits increase further as the government is forced to spend more to hire and retain workers, and government subsidies are demanded by every corner of the populace as a way to alleviate the price pressures.
The government budget increases. Any hope of worker’s pensions or banks buying the new debt is dashed as the interest rates remain well below the rate of inflation, and real wages continue to fall. They thus must borrow more as the entire system unwinds.
The Hyperinflationary Feedback loop kicks in, with exponentially increasing borrowing from the Treasury matched by new money supply as the Printer whirrs away.
The Dragon begins his fiery assault.

Hyperinflationary Feedback Loop
As the dollar devalues, other central banks continue printing furiously. This phenomenon of being trapped in a debt spiral is not unique to the United States- virtually every major economy is drowning under excessive credit loads, as the average G7 debt load is 135% of GDP.
As the central banks print at different speeds, massive dislocations begin to occur in currency markets. Nations who print faster and with greater debt monetization fall faster than others, but all fiats fall together in unison in real terms.
Global trade becomes extremely difficult. Trade invoices, which usually can take several weeks or even months to settle as the item is shipped across the world, go haywire as currencies move 20% or more against each other in short timeframes. Hedging becomes extremely difficult, as vol premiums rise and illiquidity is widespread.
Amidst the chaos, a group of nations comes together to decide to use a new monetary media- this could be the Special Drawing Right (SDR), a neutral global reserve currency created by the IMF.
It could be a new commodity based money, similar to the old US Dollar pegged to Gold.
Or it could be a peer-to-peer decentralized cryptocurrency with a hard supply limit and secure payment channels.
Whatever the case- it doesn't really matter. The dollar will begin to lose dominance as the World Reserve Currency as the new one arises.
As the old system begins to die, ironically the dollar soars higher on foreign exchange- as there is a $20T global short position on the USD, in the form of leveraged loans, sovereign debt, corporate bonds, and interbank repo agreements.
All this dollar debt creates dollar DEMAND, and if the US is not printing fast enough or importing enough to push dollars out to satisfy demand, banks and institutions will rush to the Forex market to dump their local currency in exchange for dollars.
This drives DXY up even higher, and then forces more firms to dump local currency to cover dollar debt as the debt becomes more expensive, in a vicious feedback loop. This is called the Dollar Milkshake Theory, posited by Brent Johnson of Santiago Capital.
The global Eurodollar Market IS leverage- and as all leverage works, it must be fed with new dollars or risk bankrupting those who owe the debt. The fundamental issue is that this time, it is not banks, hedge funds, or even insurance giants- this is entire countries like Argentina, Vietnam, and Indonesia.

The Dollar Milkshake
If the Fed does not print to satisfy the demand needed for this Eurodollar market, the Dollar Milkshake will suck almost all global liquidity and capital into the United States, which is a net importer and has largely lost it’s manufacturing base- meanwhile dozens of developing countries and manufacturing firms will go bankrupt and be liquidated, causing a collapse in global supply chains not seen since the Second World War.
This would force inflation to rip above 50% as supply of goods collapses.
Worse yet, what will the Fed do? ALL their choices now make the situation worse.

The Fed's Triple Dilemma
Many pundits will retort- “Even if we have to print the entire unfunded liability of the US, $160T, that’s 8 times current M2 Money Supply. So we’d see 700% inflation over two years and then it would be over!”
This is a grave misunderstanding of the problem; as the Fed expands money supply and finances Treasury spending, inflation rips higher, forcing the AMOUNT THE TREASURY BORROWS, AND THUS THE AMOUNT THE FED PRINTS in the next fiscal quarter to INCREASE. Thus a 100% increase in money supply can cause a 150% increase in inflation, and on again, and again, ad infinitum.
M2 Money Supply increased 41% since March 5th, 2020 and we saw an 18% realized increase in inflation (not CPI, which is manipulated) and a 58% increase in SPY (at the top). This was with the majority of printed money really going into the financial markets, and only stimulus checks and transfer payments flowing into the real economy.
Now Federal Deficits are increasing, and in the next easing cycle, the Fed will be buying the majority of Treasury bonds.
The next $10T they print, therefore, could cause additional inflation requiring another $15T of printing. This could cause another $25T in money printing; this cycle continues forever, like Weimar Germany discovered.
The $200T or so they need to print can easily multiply into the quadrillions by the time we get there.
The Inflation Dragon consumes all in his path.
Federal Net Outlays are currently around 30% of GDP. Of course, the government has tax receipts that it could use to pay for services, but as prices roar higher, the real value of government tax revenue falls. At the end of the Weimar hyperinflation, tax receipts represented less than 1% of all government spending.
This means that without Treasury spending, literally a third of all economic output would cease.
The holders of dollar debt begin dumping them en masse for assets with real world utility and value- even simple things such as food and gas.
People will be forced to ask themselves- what matters more; the amount of Apple shares they hold or their ability to buy food next month? The option will be clear- and as they sell, massive flows of money will move out of the financial economy and into the real.
This begins the final cascade of money into the marketplace which causes the prices of everything to soar higher. The demand for money grows even larger as prices spike, which causes more Treasury spending, which must be financed by new borrowing, which is printed by the Fed. The final doom loop begins, and money supply explodes exponentially.

German Hyperinflation
Monetary velocity rips higher and eventually pushes inflation into the thousands of percent. Goods begin being re-priced by the day, and then by the hour, as the value of the currency becomes meaningless.
A new money, most likely a cryptocurrency such as Bitcoin, gains widespread adoption- becoming the preferred method and eventually the default payment mechanism. The State continues attempting to force the citizens to use their currency- but by now all trust in the money has broken down. The only thing that works is force, but even the police, military and legal system by now have completely lost confidence.
The Simulacrum breaks down as the masses begin to realize that the entire financial system, and the very currency that underpins it is a lie- an illusion, propped up via complex derivatives, unsustainable debt loads, and easy money financed by the Central Banks.
Similar to Weimar Germany, confidence in the currency finally collapses as the public awakens to a long forgotten truth-
There is no supply cap on fiat currency.
Conclusion:

QE Infinity

When asked in 1982 what was the one word that could be used to define the Dollar, Fed Chairman Paul Volcker responded with one word-
“Confidence.”
All fiat money systems, unmoored from the tethers of hard money, are now adrift in a sea of illusion, of make-believe. The only fundamental props to support it are the trust and network effects of the participants.
These are powerful forces, no doubt- and have made it so no fiat currency dies without severe pain inflicted on the masses, most of which are uneducated about the true nature of economics and money.
But the Ships of State have wandered into a maelstrom from which there is no return. Currently, total worldwide debt stands at a gargantuan $300 Trillion, equivalent to 356% of global GDP.
This means that even at low interest rates, interest expense will be higher than GDP- we can never grow our way out of this trap, as many economists hope.
Fiat systems demand ever increasing debt, and ever increasing money printing, until the illusion breaks and the flood of liquidity is finally released into the real economy. Financial and Real economies merge in one final crescendo that dooms the currency to die, as all fiats must.
Day by day, hour by hour, the interest accrues.
The Debt grows larger.
And the Dollar Endgame Approaches.

~~~~~~~~~~~~~~~~
Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading my Post I cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Post are just that – an opinion or information. Please consult a financial professional if you seek advice.
*If you would like to learn more, check out my recommended reading list here. This is a dummy google account, so feel free to share with friends- none of my personal information is attached. You can also check out a Google docs version of my Endgame Series here.
~~~~~~~~~~~~~~
I cleared this message with the mods;
IF YOU WOULD LIKE to support me, you can do so my checking out the e-book version of the Dollar Endgame on my twitter profile: https://twitter.com/peruvian_bull/status/1597279560839868417
The paperback version is a work in progress. It's coming.
THERE IS NO PRESSURE TO DO SO. THIS IS NOT A MONEY GRAB- the entire series is FREE! The reddit posts start HERE: https://www.reddit.com/Superstonk/comments/o4vzau/hyperinflation_is_coming_the_dollar_endgame_part/
and there is a Google Doc version of the ENTIRE SERIES here: https://docs.google.com/document/d/1552Gu7F2cJV5Bgw93ZGgCONXeenPdjKBbhbUs6shg6s/edit?usp=sharing
Thank you ALL, and POWER TO THE PLAYERS. GME FOREVER
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

I am getting increasingly worried about the amount of warning signals that are flashing red for hyperinflation- I believe the process has already begun, as I will lay out in this paper. The first stages of hyperinflation begin slowly, and as this is an exponential process, most people will not grasp the true extent of it until it is too late. I know I’m going to gloss over a lot of stuff going over this, sorry about this but I need to fit it all into four posts without giving everyone a 400 page treatise on macro-economics to read. Counter-DDs and opinions welcome. This is going to be a lot longer than a normal DD, but I promise the pay-off is worth it, knowing the history is key to understanding where we are today.
SERIES (Parts 1-4) TL/DR: We are at the end of a MASSIVE debt supercycle. This 80-100 year pattern always ends in one of two scenarios- default/restructuring (deflation a la Great Depression) or inflation (hyperinflation in severe cases (a la Weimar Republic). The United States has been abusing it’s privilege as the World Reserve Currency holder to enforce its political and economic hegemony onto the Third World, specifically by creating massive artificial demand for treasuries/US Dollars, allowing the US to borrow extraordinary amounts of money at extremely low rates for decades, creating a Sword of Damocles that hangs over the global financial system.
The massive debt loads have been transferred worldwide, and sovereigns are starting to call our bluff. Governments papered over the 2008 financial crisis with debt, but never fixed the underlying issues, ensuring that the crisis would return, but with greater ferocity next time. Systemic risk (from derivatives) within the US financial system has built up to the point that collapse is all but inevitable, and the Federal Reserve has demonstrated it will do whatever it takes to defend legacy finance (banks, brokedealers, etc) and government solvency, even at the expense of everything else (The US Dollar).
I’ll break this down into four parts. ALL of this is interconnected, so please read these in order:

Updated Complete Table of Contents:

“Enter the Dragon”

The Inflation Dragon

PART 5.0 “The Monster & the Simulacrum”

“In the 1985 work “Simulacra and Simulation” French philosopher Jean Baudrillard recalls the Borges fable about the cartographers of a great Empire who drew a map of its territories so detailed it was as vast as the Empire itself.
According to Baudrillard as the actual Empire collapses the inhabitants begin to live their lives within the abstraction believing the map to be real (his work inspired the classic film "The Matrix" and the book is prominently displayed in one scene).
The map is accepted as truth and people ignorantly live within a mechanism of their own design and the reality of the Empire is forgotten. This fable is a fitting allegory for our modern financial markets.
Our fiscal well being is now prisoner to financial and monetary engineering of our own design. Central banking strategy does not hide this fact with the goal of creating the optional illusion of economic prosperity through artificially higher asset prices to stimulate the real economy.
While it may be natural to conclude that the real economy is slave to the shadow banking system this is not a correct interpretation of the Baudrillard philosophy-
The higher concept is that our economy IS the shadow banking system… the Empire is gone and we are living ignorantly within the abstraction. The Fed must support the shadow banking oligarchy because without it, the abstraction would fail.” (Artemis Capital)

The Inflation Serpent

To most citizens living in the West, the concept of a collapsing fiat currency seems alien, unfathomable even. They regard it as an unfortunate event reserved only for those wretched souls unlucky enough to reside in third world countries or under brutal dictatorships.
Monetary mismanagement was seen to be a symptom only of the most corrupt countries like Venezuela- those where the elites gained control of the Treasury and printing press and used this lever to steal unimaginable wealth while impoverishing their constituents.
However, the annals of history spin a different tale- in fact, an eventual collapse of fiat currency is the norm, not the exception.
In a study of 775 fiat currencies created over the last 500 years, researchers found that approximately 599 have failed, leaving only 176 remaining in circulation. Approximately 20% of the 775 fiat currencies examined failed due to hyperinflation, 21% were destroyed in war, and 24% percent were reformed through centralized monetary policy. The remainder were either phased out, converted into another currency, or are still around today.
The average lifespan for a pure fiat currency is only 27 years- significantly shorter than a human life.
Double-digit inflation, once deemed an “impossible” event for the United States, is now within a stone’s throw. Powell, desperate to maintain credibility, has embarked on the most aggressive hiking schedule the Fed has ever undertaken. The cracks are starting to widen in the system.
One has to look no further than a simple graph of the M2 Money Supply, a measure that most economists agree best estimates the total money supply of the United States, to see a worrying trend:

M2 Money Supply
The trend is exponential. Through recessions, wars, presidential elections, cultural shifts, and even the Internet age- M2 keeps increasing non-linearly, with a positive second derivative- money supply growth is accelerating.
This hyperbolic growth is indicative of a key underlying feature of the fiat money system: virtually all money is credit. Under a fractional reserve banking system, most money that circulates is loaned into existence, and doesn't exist as real cash- in fact, around 97% of all “money” counted within the banking system is debt, in one form or another. (See Dollar Endgame Part 3)
Debt virtually always has a yield- that yield is called interest, and that interest demands payment. Thus, any fiat money banking system MUST grow money supply at a compounding interest rate, forever, in order to remain stable.
Debt defaulting is thus quite literally the destruction of money- which is why the deflation is widespread, and also why M2 Money Supply shrank by 30% during the Great Depression.

Interest in Fractional Reserve Fiat Systems
This process repeats ad infinitum, perpetually compounding loan creation and thus money supply, in order to prevent systemic defaults. The system is BUILT for constant inflation.
In the last 50 years, only about 12 quarters have seen reductions in commercial bank credit. That’s less than 5% of the time. The other 95% has seen increases, per data from the St. Louis Fed.

Commercial Bank Credit
Even without accounting for debt crises, wars, and government defaults, money supply must therefore grow exponentially forever- solely in order to keep the wheels on the bus.
The question is where that money supply goes- and herein lies the key to hyperinflation.

In the aftermath of 2008, the Fed and Treasury worked together to purchase billions of dollars of troubled assets, mortgage backed securities, and Treasury bonds- all in a bid to halt the vicious deleveraging cycle that had frozen credit markets and already sunk two large investment banks.
These programs were the most widespread and ambitious ever- and resulted in trillions of dollars of new money flowing into the financial system. Libertarian candidates and gold bugs such as Peter Schiff, who had rightly forecasted the Great Financial Crisis, now began to call for hyperinflation.
The trillions of printed money, he claimed, would create massive inflation that the government would not be able to tame. U.S. debt would be downgraded and sold, and with the Fed coming to the rescue with trillions more of QE, extreme money supply increases would ensue. An exponential growth curve in inflation was right around the corner.
Gold prices rallied hard, moving from $855 at the start of 2008 to a record high of $1,970 by the end of 2011. The end of the world was upon us, many decried. Occupy Wall Street came out in force.
However, to his great surprise, nothing happened. Inflation remained incredibly tame, and gold retreated from its euphoric highs. Armageddon was averted, or so it seemed.
The issue that was not understood well at the time was that there existed two economies- the financial and the real. The Fed had pumped trillions into the financial economy, and with a global macroeconomic downturn plus foreign central banks buying Treasuries via dollar recycling, all this new money wasn’t entering the real economy.

Financial vs Real Economy
Instead, it was trapped, circulating in the hands of money market funds, equities traders, bond investors and hedge funds. The S&P 500, which had hit a record low in March of 2009, began a steady rally that would prove to be the strongest and most pronounced bull market in history.
The Fed in the end did achieve extreme inflation- but only in assets.
Without the Treasury incurring significant fiscal deficits this money did not flow out into the markets for goods and services but instead almost exclusively into equity and bond markets.

QE Stimulus of financial assets
The great inflationary catastrophe touted by the libertarians and the gold bugs alike never came to pass- their doomsday predictions appeared frenetic, neurotic.
Instead of re-evaluating their arguments under this new framework, the neo-Keynesians, who held the key positions of power with Treasury, the Federal Reserve, and most American Universities (including my own) dismissed their ideas as economic drivel.
The Fed had succeeded in averting disaster- or so they claimed. Bernanke, in all his infinite wisdom, had unleashed the “Wealth Effect”- a crucial behavioral economic theory suggesting that people spend more as the value of their assets rise.
An even more extreme school of thought emerged- the Modern Monetary Theorists%20is,Federal%20Reserve%20Bank%20of%20Richmond.)- who claimed that Central Banks had essentially discovered a ‘perpetual motion machine’- a tool for unlimited economic growth as a result of zero bound interest rates and infinite QE.
The government could borrow money indefinitely, and traditional metrics like Debt/GDP no longer mattered. Since each respective government could print money in their own currency- they could never default.
The bill would never be paid.
Or so they thought.

The American Reckoning

This theory helped justify massive US government borrowing and spending- from Afghanistan, to the War on Drugs, to Entitlement Programs, the Treasury indulged in fiscal largesse never before seen in our nation’s history.

America's Finances
The debt continued to accumulate and compound. With rates pegged at the zero bound, the Treasury could justify rolling the debt continually as the interest costs were minimal.
Politicians now pushed for more and more deficit spending- if it's free to bailout the banks, or start a war- why not build more bridges? What about social programs? New Army bases? Tax cuts for corporations? Subsidies for businesses?
There was no longer any “accepted” economic argument against this- and thus government spending grew and grew, and the deficits continued to expand year after year.
The Treasury would roll the debt by issuing new bonds to pay off maturing ones- a strategy reminiscent of Ponzi schemes.
This debt binge is accelerating- as spending increases, (and tax revenues are constant) the deficit grows, and this deficit is paid by more borrowing. This incurs more interest, and thus more spending to pay that interest, in a deadly feedback loop- what is called a debt spiral.

Gross Govt Interest Payments
The shadow threat here that is rarely discussed is Unfunded Liabilities- these are payments the Federal government has promised to make, but has not yet set aside the money for. This includes Social Security, Medicaid, Medicare, Veteran’s benefits, and other funding that is non-discretionary, or in other words, basically non-optional.
Cato Institute estimates that these obligations sum up to $163 Trillion. Other estimates from the Mercatus Center put the figure at between $87T as the lower bound and $222T on the high end.
YES. That is TRILLION with a T.
A Dragon lurks in these shadows.

Unfunded Liabilities
What makes it worse is that these figures are from 2012- the problem is significantly worse now. The fact of the matter is, no one knows the exact figure- just that it is so large it defies comprehension.
These payments are what is called non-discretionary, or mandatory spending- each Federal agency is obligated to spend the money. They don’t have a choice.
Approximately 70% of all Federal Spending is mandatory.
And the amount of mandatory spending is increasing each year as the Boomers, the second largest generation in US history, retire. Approximately 10,000 of them retire each day- increasing the deficits by hundreds of billions a year.
Furthermore, the only way to cut these programs (via a bill introduced in the House and passed in the Senate) is basically political suicide. AARP and other senior groups are some of the most powerful and wealthy lobbying groups in the US.
If politicians don’t have the stomach to legalize marijuana- an issue that Pew research finds an overwhelming majority of Americans supporting- then why would they nuke their own careers via cutting funding to seniors right as inflation spikes?
Thus, although these obligations are not technically debt, they act as debt instruments in all other respects. The bill must be paid.
In the Fiscal Report for 2022 released by the White House, they estimated that in 2021 and 2022 the Federal deficits would be $3.669T and $1.837T respectively. This amounts to 16.7% and 7.8% of GDP (pg 42).

US Federal Budget
Astonishingly, they project substantially decreasing deficits for the next decade. Meanwhile the U.S. is slowly grinding towards a severe recession (and then likely depression) as the Fed begins their tightening experiment into 132% Federal Debt to GDP.
Deficits have basically never gone down in a recession, only up- unemployment insurance, food stamp programs, government initiatives; all drive the Treasury to pump out more money into the economy in order to stimulate demand and dampen any deflation.
To add insult to injury, tax receipts collapse during recession- so the income side of the equation is negatively impacted as well. The budget will blow out.
The U.S. 1 yr Treasury Bond is already trading at 4.7%- if we have to refinance our current debt loads at that rate (which we WILL since they have to roll the debt over), the Treasury will be paying $1.46 Trillion in INTEREST ALONE YEARLY on the debt.
That is equivalent to 40% of all Federal Tax receipts in 2021!

In my post Dollar Endgame 4.2, I have tried to make the case that the United States is headed towards an “event horizon”- a point of no return, where the financial gravity of the supermassive debt is so crushing that nothing they do, short of Infinite QE, will allow us to escape.
The terrifying truth is that we are not headed towards this event horizon.
We’re already past it.

True Interest Expense ABOVE Tax Receipts
As brilliant macro analyst Luke Gromen pointed out in several interviews late last year, if you combine Gross Interest Expense and Entitlements, on a base case, we are already at 110% of tax receipts.
True Interest Expense is now more than total Federal Income. The Federal Government is already bankrupt- the market just doesn't know it yet.

Luke Gromen Interview Transcript (Oct 2021, Macrovoices)

The black hole of debt, financed by the Federal Reserve, has now trapped the largest spending institution in the world- the United States Treasury.
The unholy capture of the Money Printer and the Spender is catastrophic - the final key ingredient for monetary collapse.
This is How Money Dies.

The Underwater State
-------

(I had to split this post into two part due to reddit's limits, see the second half of the post HERE)

~~~~~~~~~~~~~~~~
Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading my Post I cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Post are just that – an opinion or information. Please consult a financial professional if you seek advice.
*If you would like to learn more, check out my recommended reading list here. This is a dummy google account, so feel free to share with friends- none of my personal information is attached. You can also check out a Google docs version of my Endgame Series here.
~~~~~
I cleared this message with the mods;
IF YOU WOULD LIKE to support me, you can do so my checking out the e-book version of the Dollar Endgame on my twitter profile: https://twitter.com/peruvian_bull/status/1597279560839868417
The paperback version is a work in progress. It's coming.

THERE IS NO PRESSURE TO DO SO. THIS IS NOT A MONEY GRAB- the entire series is FREE! The reddit posts start HERE: https://www.reddit.com/Superstonk/comments/o4vzau/hyperinflation_is_coming_the_dollar_endgame_part/
and there is a Google Doc version of the ENTIRE SERIES here: https://docs.google.com/document/d/1552Gu7F2cJV5Bgw93ZGgCONXeenPdjKBbhbUs6shg6s/edit?usp=sharing
Thank you ALL, and POWER TO THE PLAYERS. GME FOREVER
~~~~~

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

I've heard people say that we live in a two speed economy, do you think it's true? What are the implications of this?
As my username suggests, I did a post grad and I'm relatively comfortable but won't feel safe until I earn 6 figures but I see plenty of payrolls in my work and I can't believe how little some people earn. How do these people live?

I know it's been a long time since you've seen me post a DD and update to what's going on in the world of steel.
The rumors of my demise are false and I have not gone into hiding or as many have speculated, "witness protection", but rather I have been inundated with life.
Before I get into what will likely be walls and walls of text, fancy graphs and information that will likely feel like you are being reeducated like this:

https://preview.redd.it/ckwy49pop9u71.png?width=900&format=png&auto=webp&s=18c393fdfb85831703f2f4251d7dcc00d7870a03
I want to touch on myself and this sub.
I have been lurking in the shadows for quite a while and honestly I've started this DD about 10 different times over the past few weeks and just couldn't find the time to deliver something I would be proud of.
Let's start with this sub - I absolutely love it and the people that have come here to follow the thesis.
With that being said, I stated months ago that I did not want this sub to be about one person - me.
My goal from the beginning was always to educate everyone about the commodity I love so much - steel, but it was more important to create a community of sharing and fellowship.
There are so many other brilliant people that have posted here, many with much more to offer and have done so out of the kindness of their hearts and to help others become more educated and intelligent investors.
Sure, we can have debates and argue "Bull" & "Bear" cases for everything, IT'S ALWAYS BEEN ENCOURAGED.
Echo Chambers benefit no one other than people with big egos.
I have also, ALWAYS said, if you have ideas that will make money, share them!
I love steel, but I love money more.
This sub is only as strong as the fabric of the people that decide to interact and share ideas here.
If you want to complain, please do so in a civil and well thought out manner - always be kind - trust me, you'll feel better for it.
Now, before we take the journey together down the rabbit hole, I wanted to briefly touch on my absence from posting.
As I said, I've been here the entire time watching and there are quite a few people here that I engage with and talk to daily.
When I was posting consistently, there seemed to be a lot of apprehension into "if this play is so good, why do you have to keep reminding us??"
I got a lot of complaints about the constant "pumping".
It was never "pumping" - it was me doing what I do throughout my life and that is committing 100%, actually, overcommitting to be honest.
My updates were meant to give everyone visibility into what I still believe to be the MOST SIGNIFICANT TRANSFORMATIONAL SHIFT in the history of the steel business, with the last being the invention of the EAF.
Then, I backed off posting, not because I believed the thesis was dead or prices came down on our beloved steel tickers.
As soon as I stopped, then the other side of the crowd was unhappy.
"Thesis Dead"
"No Lambo"
"These bags are heavy"
Here's one from the other day from u/needafiller
"Hey man, I haven't checked my portfolio of MT Jan calls in 2 months. But judging from your MIA status and the status of the sub, I'm guessing my calls will expire worthless. Thanks for teaching me a valuable and expansive lesson"
I'm guessing he meant "expensive". . . .regardless, I have realized a couple things:

I am never going to make you all happy.
I am not responsible for your choices.

Believe it or not, those two things were very hard for me, as of course, we all want to be liked and I want all of you to prosper.
The amount of messages I get asking my opinion on portfolios and trades is sheer lunacy and became overwhelming.
Many weren't even very friendly, much like it was my obligation to answer without even a greeting or a pleasantry.
Ok, I know I've ranted quite a bit and I'm sure some of you are about to have a full-blown seizure from all of the eye-rolling and pontificating, but let me say one last thing about me and I'll move on.
I am a person, I have a demanding career, I have a family, I have a life outside of here that I ended up neglecting trying to pour myself into this sub for almost the past year.
There are only so many hours in a day and time is the most valuable thing we all have, next to our health.
We all need to have priorities and this sub is going to have to move down my list a bit.
I am honored that many of you think so highly of what I share, it is greatly appreciated.
I will share when I can, but I have to say - there are many here that are doing a great job and carrying the baton - thanks!
Now, let's get on with the show.
There is just so much to unpack that I feel like I need to start over, but I'm not going to do that.
The information I shared is there and it is still relevant today and part of the ever-evolving thesis.
For those that keep asking questions - please read all my past DD's to get up to speed.
So many topics - where do we start?????
China, China, China has really been the hot topic of not only the steel world, but also the global economy. The GDP slowdown, Evergrande, power outages, property market, construction, coal, steel output cut to multi-year lows, etc. It's a lot to digest and well the market has been choking on it for the past 30+ days.
Everyone knows that China has always been the world's market setter for steel prices, as they are the largest manufacturer as a country, collectively in the world.
The way it used to work was China would export their low cost steel and create a domino effect across the globe - lowering many countries steel prices by putting pressure on their domestic manufacturers and many times forcing them to export to other countries their excess capacities.
We are no longer seeing the deluge of low cost Chinese steel flowing out of the country.
Instead, there is less and less available month over month, as now production has not only been cut, but so have the hours in which Chinese manufacturers can operate.
https://www.taipeitimes.com/News/biz/archives/2021/10/16/2003766173
The Kaohsiung-based company urged Taiwanese steel-using companies to take advantage of the lower steel prices to prepare for Environmental Social Governance (ESG) challenges it sees coming down the line for related industries.
“We hope that our downstream buyers can take full advantage of this period of price stability in steel to accelerate their ESG transition efforts and be prepared for the worldwide trend in decarbonization,” China Steel said in a statement.
The company also said it plans to reduce carbon emissions from 2018 levels by 7 percent by 2025, and to be completely carbon neutral by 2050.
“We will be following the lead of Tata Steel Europe and Germany’s Thyssenkrupp Steel in adding a carbon surcharge,” the company said.
China Steel said that several factors are indicating a rebound in Asian steel prices in the fourth quarter, including a rise in demand due to a global economic recovery as well as a surge in raw material costs.
“The strict ‘dual-control’ electricity use policy mandated that many steelmakers in China can only run during off-peak hours from November 15 to March 15, 2022,” the company said.
“We predict that crude steel production will decrease by at least 30 percent,” it added.
In addition to predicting tighter supplies due to electricity shortages, the company said that the price of coking coal has broken US$400 per tonne, while iron ore, which hit bottom last month, has risen by nearly 40 percent.
“Given the tightness in supply of various steel smelting materials and the Baltic Dry Index has reached a 13-year high, we expect Asian steel prices to rebound,” China Steel said.
The Baltic Dry Index is a bellwether index for global dry bulk shipping, which has surged alongside demand for coal imports amid a global energy crunch.
Global and domestic demand for steel is expected to be strong, said the state-run company, which has a committee decide the price of steel for domestic delivery, monthly for some products and quarterly for others.
The World Steel Association predicted that “the demand for global steel will grow by 4.5 percent year-on-year to 1.86 billion tonnes, and that a further 2.2 percent growth year-on-year is expected in 2022,” China Steel said, adding that it expects a bullish steel market until next year.
China’s production in September fell by close to 20 percent year on year (YoY) and around 11 percent month on month (MoM). This, however, is positive for steel companies as it points to structural changes that are likely to be seen in the global steel environment, which has been the key focus for many months.
We are in an environment of high input costs with coal, fuel, transportation, labor - the inflation that was called transitory is very much here and I believe it is here to stay for quite a long time.
https://www.kitco.com/news/2021-10-12/These-commodities-are-most-affected-by-high-energy-prices-Capital-Economics.html
The commodities that are likely to be most affected by the looming energy crisis are the industrial metals, agriculture, and the precious metals sector, Capital Economics commodities economist Edward Gardner said in a report.
"Historically, energy prices have been most correlated with industrial metal prices, followed by agricultural prices, and precious metals prices. This is also evident from the annual correlations of different commodity prices with energy prices," the report said.
The higher the energy prices rise, the more it will cost to produce these commodities. "The precise association between energy prices and other commodity prices, however, depends on both the energy intensity of production and the similarity of underlying demand drivers," the report clarified.
Industrial metals seem to be the most correlated with energy prices. "It is clear that industrial metal prices track energy prices the most closely over time, which is mainly because the drivers of demand are similar. That said, industrial metals, like many commodities, require large energy inputs to produce, which is another reason why their prices tend to move together," Gardner said.
The metals sector accounts for 10% of global energy usage. More specifically, steel production takes up 6.5% of global energy usage.
https://oilprice.com/Energy/Energy-General/Europes-Energy-Crisis-Is-Hurting-Metal-Producers-In-A-Big-Way.html
Power prices have been rising all year. The situation, however, has become particularly acute since the summer. Natural gas prices have spiked and coal prices on the spot market have risen strongly.
The shortage of natural gas in Europe has driven the cost increases. Furthermore, it has encouraged power producers to shift to coal, just as global coal prices have surged on the back of output shortfalls in China and India. Those shortfalls have resulted in increased imports by the world’s two largest thermal coal consumers. (Also the world's largest steel producers)
Steel mills are already imposing power cost increases of up to Euros 50 per ton on long products to cover mostly power-related costs but, to a lesser extent, transport costs within Europe, too. The region is suffering from an acute lack of drivers and transport capacity.
https://preview.redd.it/s2cejld0xau71.jpg?width=473&format=pjpg&auto=webp&s=442c5289871f24cc19ea091c7419634d91c4d4fe
Both production cutbacks and energy-specific surcharges are likely to become an increasing feature of the European metal market this year. They will probably also be a factor into next year, as high electricity, coal and natural gas costs are going to be sustained through the winter season, with little hope that inventory levels will be replenished — and, therefore, easing of prices — before next summer.
I expect prices for steel products to stay high on the back on increased inputs as well as supply chain restocking world-wide for the next 12-18 months.
The global recovery is still uneven and cutbacks will further exacerbate supply shortages, causing demand to push prices higher.
Also, steel manufacturers are passing on the increased costs of steelmaking by not only increasing prices, but also in the form of surcharges.
My personal opinion is that we see steel prices continue to rise on the back of inflationary pressures, as well as increased prices of many other commodities.
That brings me to the US and the steel market here, which remains red hot in terms of demand with supply still not catching up.
Depending on the product, lead times are anywhere from 6 to 22 weeks.
Remember, the US is an "insulated market" in many regards due to the deep moat right now that is the Section 232 tariffs as well as the nosebleed costs of ocean freight from other countries to the US.
I'll first touch on shipping costs.
The problem is the lack of vessels, especially the smaller ships that handle bulk freight.
The Supermax vessels are all transporting 20' and 40' containers - which is also a nightmare in itself.
Prior to COVID, the cost to move a ton of steel from Europe and Asia was roughly $20 per metric ton.
Today, it is $160 per metric ton.
That is an 800% increase.
Then you have congestion problems all over the US, which is extending lead times, increasing costs of trucking and rail.
As of this morning:
Rail Terminal Updates:
BNSF & UP/LAX/LGB BNSF:

There is a severe congestion, limited gate capacity, restrictions, rail car shortages and limited reservations. This is causing increased delays on import rail units.
At the end of September, BNSF (Burlington Northern Santa Fe) announced an embargo to Los Angeles for all cargo to LAX/Hobart, affecting operations from Chicago.
BNSF closure for LAX-bound cargo extended through October 15th.
In LAX, containers have to wait an average of almost 16 days before being picked up.

Chicago Rail Ramp:

The rail facilities in Chicago are experiencing severe congestion because of dwelling containers and chassis shortages. G3 and G4 locations are only allowing ten open spots daily, causing a large backlog for containers to be picked up for imports.
There are gate restrictions and lane suspensions implemented, causing delays in pick-ups and deliveries. The rails continue to monitor in-gates with allocation or reservations.

Philadelphia:

Severe shortages of available chassis, extended delays in pick-ups, deliveries, and drayage.

Savannah:

Continued congestion and delays at the local ramps, shortage of chassis and equipment.

Jacksonville and Miami:

Congestion issues at both rails. The rail congestion in Chicago is affecting services out of Miami. Long delays in picking up/dropping off.

Seattle:

Congestion due to increased dwell time for Import rail cargo. Cargo going to Chicago delayed by up to 10 days. Limited trucker capacity.
The warehouse is up to capacity, long waiting line for export/import.

Memphis:

Rail Ramp congestion due to increased volumes and delayed pick-ups.

Houston/Dallas:

There is a severe chassis shortage and congestion. Truckers are booked for 2-3 weeks in advance.

Port Terminals:
Due to increased volume, most terminals are experiencing congestion issues, including Philadelphia, Savannah, Miami, Houston, Seattle, Los Angeles/Long Beach.
1. U.S. East Coast:
Philadelphia:

Vessel waiting time is 24-36 hours due to high import volume.

Savannah:

Vessel waiting time is 7 days due to off proforma vessels and high import volume. Carriers are advancing cut-offs with little to no notice, which highly affects operations.

Port Everglades and Miami:

Vessel waiting time is 3-6 days causing a CFS Backlog. Equipment shortages are resulting in pick-up delays.

2. U.S. West Coast:
Around 70 container ships are still waiting off the coast of California to unload at the ports of Los Angeles and Long Beach.
Los Angeles:

Vessel waiting time is 8-15 days due to yard congestion, high import dwell, and labor shortage.

Long Beach:

Up to a 15-day vessel waiting time due to high import dwell and labor shortages.

Seattle:

25-30-day vessel waiting time due to high import volume and labor shortages.

Oakland:

1-2-day vessel waiting time due to high import volume and labor shortages.

3. U.S. Gulf Coast:
Houston:

Waiting time is 2-4 days due to high import volume and labor shortage.

Equipment Availability:

There is a continuous chassis shortage in LAX/Long Beach, New York, Philadelphia, Saint Louis, Columbus, Cleveland, Chicago, Memphis, Atlanta, Nashville, and Louisville.
Equipment availability remains an issue at locations such as Atlanta, Chicago, Cincinnati, Columbus, Detroit, Kansas City, Minneapolis, Memphis, Nashville, Omaha, St. Louis, and Seattle.

Do you think we may have a little bit of a problem here??
It's why I told everyone to do their Christmas shopping back in June.
It's only showing signs of worsening as global supply chains keep trying to catch up and restock, but demand continues to outpace supply.
Now the tariffs.
https://www.reuters.com/business/us-hopeful-reaching-deal-with-eu-steel-tariffs-by-end-october-source-2021-10-14/
"We're hopeful we can reach agreement by the end of the month," the source, who spoke on condition of anonymity, told Reuters.
A steel industry source said Tai and the EU were edging closer to a likely agreement that would replace the Section 232 tariffs with a tariff-rate quota (TRQ) arrangement that would allow duty-free entry of a specified volume of EU steel, with tariffs applied to higher volumes.
This person said that talks are "going well," but was reluctant to say that a deal would be reached by Oct. 31.
Dombrovskis has expressed openness to a quota arrangement similar to those that Canada and Mexico have with the United States, but said a deal is needed by early November.
Other EU officials have told Reuters that much depends on the volume of steel allowed duty free into U.S. ports.
The industry source said EU negotiators were seeking to base the quota on U.S. import volumes prior to the imposition of the 232 tariffs in 2018, while U.S. negotiators want to base the quotas on lower volumes after the tariffs were imposed.
I've said for a while now that I believe the elimination of these tariffs would be good for the US, as it would bring extra supply into a market that is in dire need of surplus material.
It would give price stability to US manufacturing that would be able to plan better and buy material at a discount from current spot prices in the US.
We all knew $2,000/ton steel would not last forever, even if it normalizes around $1,200 to $1,400 per ton, it would still be 250%+ above historic norms.
$CLF, $NUE, $STLD, $X, etc. would all still throw off obscene amounts of FCF at these levels.
In addition, there would be a quota system in place, which means the supply into the US is FINITE.
There would not be a flood of cheap import steel, but rather supplemental supply that would benefit US manufacturers and also, most notably, still my baby - $MT.
EU HRC is approx. $950/MT, add the 25% tariff of $237.50 = $1187.50/MT
Freight is $160/MT
Total landed to a US port is $1,347.50/MT, then you have unloading and reloading to a truck or rail costs and then the trucking or rail freight costs, which could land you into the Midwest at as much as $1,450/MT.
That price would be great today, but shipments from Europe would not arrive in the US until February at the earliest.
February US Midwest futures sit at $1,380 today.
https://www.investing.com/commodities/us-steel-coil-contracts
So, doesn't make much sense.
However, take away $237.50/MT and it makes a lot of sense.
We will see how this plays out, but I do not see it as a detriment to US manufacturers.
It could be a big win for EU steel manufacturers however, especially if ocean freight decreases, but that is not looking likely until at least Q3 of next year in my opinion.
Many executives I talk to believe 2022 will be a carbon copy of 2021 in terms of lack of supply heading into next year and prices moving back up throughout the year due to demand and inflationary pressures.
Let's jump back to inflation for a bit because I think it's a real important concept and we have been told for months now that it was transitory.
I never really agreed with that assessment, how inflation is measured and the commodities that are all lumped together.
https://www.washingtonpost.com/business/2021/10/15/us-economy-inflation-uncomfortable/
Regardless, news last week that U.S. inflation is running at a 13-year high of 5.4 percent confirmed what many Americans already know as they juggle their budgets: Food, energy and shelter costs are all rising rapidly, adding to the strain Americans were already dealing with from the higher costs of hard-to-find goods such as cars, dishwashers and washing machines.
Workers are demanding pay increases because they can see their wages aren’t buying as much with so many everyday necessities costing more, including rent. That leads companies to hike prices more, then workers turn around and demand another pay raise. Economists call this phenomenon a “wage-price spiral.” It often leads to sustained high inflation that forces the Fed to step in to stop it.
Rising food, gas and rent costs hit the budgets of low- and middle-income Americans hard. While wages have been rising at the fastest pace in decades, the gains have been eaten up entirely by rising costs, Labor Department data shows. This prompts workers to ask for more pay.
“The wage-price spiral has already begun,” said economist Sung Won Sohn of Loyola Marymount University and SS Economics. “In the financial markets and the economy, the biggest long-term problem we have is inflation. You can’t turn the inflation rate on and off.”
Higher wages, in my opinion, are not transitory.
Higher steel prices, also in my opinion, are not transitory either.
This is where we get back to the most fundamental change in steel making - which is the "Green" initiative and becoming carbon neutral.
This is going to require A LOT of scrap and from the beginning of this thesis I said steel prices in the future would be fought over the cost of scrap and more importantly - the supply of scrap.
I'll get back to scrap shortly, but I believe inflation will be another catalyst to keep steel prices elevated for the foreseeable future.
We hear about inflation here in the US, but a lot of people don't realize that China is actually exporting inflation at this point.
Remember earlier when I talked about China being able to deflate steel prices across the world?
They have been able to export deflation for decades by having stagnant wages and manipulating their currency through low interest rates.
https://seekingalpha.com/article/4457920-are-we-entering-a-commodity-supercycle
Today, inflation "revenge" has caught up with China. Like everybody else in the world, China is dealing with all kinds of commodity shortages including copper, coal, steel, and iron ore, chickens, lumber, etc. China has its own supply problems and rising prices. While China hopes this is temporary, its economy has developed enough in recent decades, and workforce wages have risen enough, that the days when they can supply goods at "lower prices" to keep inflation at bay are over.
As material prices soar, China's factory-gate inflation has hit 13-year high levels. China is now set to be exporting inflation to the world. Given that China is facing high internal demand from its own population and that the earning power of its citizens is increasing, it is becoming virtually impossible to pressure its workforce to accept the "old cheap" wages that it used to pay its labor. Devaluing their currencies is no longer a viable option they can use either as an indirect way to lower their labor purchasing power. It all comes down to "scarcity of natural resources". No wonder why prices of all kinds of commodities are rising.
Then we have the DXY, which has actually strengthened over the past 3 months from a low of 89.6 to 93.9, it is still flat on the 1 year chart.

https://preview.redd.it/8kk1d76qmau71.png?width=1786&format=png&auto=webp&s=b43119879071efcf8af30603c8b6143e0c0485fd
https://www.investopedia.com/articles/forex/09/factors-drive-american-dollar.asp

Weakening U.S. Dollar

A combination of the budget deficit and the current account deficit is seen as a long-term structural driver of a weaker U.S. dollar. The speed and size of government stimulus packages in response to the global pandemic have been unprecedented. As a result of the federal government pumping trillions into the economy, the twin deficits reached all-time lows earlier this year.

https://preview.redd.it/np8phln4rau71.png?width=1252&format=png&auto=webp&s=54c2c22deced5b6d6fa0ebbbd1f5a37da26735e8
The U.S. budget deficit rose to $2.71 trillion through August, on track to be the second-largest shortfall in history due to trillions of dollars in COVID relief.
Given the likelihood of a two-year gap between the beginning of the Fed’s tapering of bond purchases and the first interest rate increase, the dollar may struggle to rise past its current levels through the end of 2022
The value of the dollar is very important for commodity prices because the U.S. dollar is the benchmark pricing mechanism for most commodities. Commodity prices have an inverse relationship with the dollar value, so a declining dollar means rising prices.
As the world starts to reopen and the recovery becomes more global and even, I believe we will see the USD weaken against other currencies, especially if we see a passage of the $3.5T, $2.5T or whatever package that President Biden is trying to get through Congress as it will mean more money printing and higher corporate taxes.
Speaking of Infrastructure - that will be yet another catalyst for steel prices in the United States.
There are plenty of positives in the demand outlook, including the bipartisan infrastructure bill with about $550 billion in additional spending planned. In Nucor's July 22, Q2 earnings call, CEO Leon Topalian said the infrastructure bill should boost steel demand "by as much as 5 million tons per year for every $100 billion of new investment."
This afternoon $STLD reported earnings.
Steel Dynamics earnings were seen exploding to $4.95 from 51 cents a year ago, according to Zacks Investment Research. Revenue was seen more than doubling to $4.99 billion.
Steel Dynamics earnings came in $4.96 a share, just beating views. However, another consensus forecast had EPS at $4.57, which STLD comfortably beat. Revenue leapt 118.5% to $5.09 billion.
"We continue to see strong steel demand coupled with moderating, but still historically low customer inventories throughout the supply chain," CEO Mark Millett said in a statement. "We believe this momentum will continue and that our fourth quarter consolidated earnings could represent another record performance."
Other strengths include lean stocks throughout the supply chain, with automakers needing to rebuild "staggeringly low" inventories, he said.
The lift in oil prices also could boost demand in the oil sector that's been a drag throughout the pandemic.
Steel prices have always been strongly correlated with oil prices and I believe we will see this continue.
That brings me to scrap.
The big news last week was $CLF entered into a definitive agreement to acquire Ferrous Processing and Trading Company.
https://www.clevelandcliffs.com/news/news-releases/detail/533/cleveland-cliffs-enters-the-scrap-business-and-announces
This completes the vertical integration for $CLF and LG knows that the future will be largely dependent on EAF manufacturing and the utilization of scrap as the input of choice.
Transaction rationale:

Allows Cliffs to optimize productivity at its existing EAFs and BOFs as the Company has no current plans to add additional steelmaking capacity
Expands portfolio of high-quality ferrous raw materials to include iron ore pellets, direct-reduced iron, and now prime scrap
Immediately secures substantial access to prime scrap, where demand is expected to grow dramatically with limited to no growth in corresponding supply
Creates a platform for Cliffs to leverage long-standing flat-rolled automotive and other customer relationships into recycling partnerships to grow prime scrap presence
Furthers commitment to environmentally-friendly, low-carbon intensity steelmaking with cleaner materials mix

Global View of Scrap: Uptrend of international scrap market continues unabated

- Over the past week, the international scrap market has continued its uptrend unabated. In Turkey’s import scrap market, the price has increased by 7.57 percent or $34/mt week on week for prime HMS I/II 80:20 scrap. The month-on-month price rise is now 12.9 percent. Higher freight costs boosted by strong demand are still pushing up prices in Turkey, while market players have started to say that the psychological threshold of $500/mt will be reached and exceeded in the coming week. Some mills are already concluding deep sea scrap deals for December shipments to secure needed tonnages.
- On the US side, October scrap prices were settled less than a week ago and, now, many in the market have turned their sights to the next buy cycle, which will start in just over two weeks. There are numerous planned maintenance outages that had been scheduled to take place in the last four months of the year. Market players agree that a downward movement is unlikely in the local US scrap market, though, as far as how much upside the market could experience, sentiment is largely mixed. Whereas some believe that shredded scrap, which settled at roughly $450-455/gt in the Ohio Valley and Northeast, could tick up to $470-475/gt next month (with similar upticks seen for other scrap grades in this region), others believe that that the only mills that will pay higher prices next month are those that decreased prices down during this month’s buy cycle.
- South Korean mills have continued to raise their import scrap prices in deals concluded from Russia and Japan. SteelOrbis has learned that Dongkuk Steel has bought 27,000 mt of Russian A3 grade scrap at $534/mt CFR, $51/mt higher than the previous deal in late September. Suppliers from the US are going to target not less than $545/mt CFR for HMS I in South Korea in the next round of sales, while the previous sale price was rumored at $522.5/mt CFR. Demand for the lower grade ex-Japan scrap from South Korea has been not very high, so the tradable level for ex-Japan H2 scrap in South Korea has remained almost stable at JPY 52,000-53,000/mt ($458-467/mt) FOB, while a number of new deals for shredded, HS and shindachi have been reported in the market at increased prices.
- Vietnamese steelmakers have faced higher offers for scrap from the US and Japan and, though bids have also started to increase gradually, trading has been inactive this week. Japanese H2 grade scrap offers to Vietnam are currently in the range of $535-550/mt CFR, while Vietnamese buyers’ target prices for this grade is at $525/mt CFR for now. Also, ex-US HMS I/II 80:20 scrap offers to Vietnam at $550/mt CFR, while tradable prices have also increased to $535-540/mt CFR, up by $15-20/mt on average from last week.
- The import scrap price increase in Pakistan during the current week has been gaining momentum, following the global trend. By the end of the week, offers for shredded 211 scrap of European origin reached $550-555/mt CFR, up $30/mt over the past week, with Pakistani customers being quite active in bookings, but at prices not higher than the low end of the range. Meanwhile, domestic producers of rebar have adjusted their prices upwards by PKR 3,000/mt (around $17-18/mt), aiming to pass on higher input costs.
- Import scrap offers in Bangladesh have risen significantly during the current week. Though Bangladeshi customers have not resumed bookings yet, preferring to evaluate the current developments, some of them are expected to book material in the coming week. While offers for bulk HMS I/II 80:20 scrap have increased by $35/mt during the week, to $570/mt CFR, containerized HMS I/II 80:20 scrap has been offered at $535/mt CFR, up $20/mt over the past week. Shredded scrap of European origin has added $5-10/mt over the past week to $560-565/mt CFR. The shortage of containers has remained the most challenging issue in doing business.
- Ex-Japan scrap prices have continued to strengthen, with the results of the Kanto monthly export tender only confirming the bullish mood among market participants concerning future developments. On balance, the tender in October was closed at over $60/mt higher compared to the previous month. While the price in the Kanto tender corresponds to JPY 54,213/mt ($480/mt) FOB, the SteelOrbis reference price this week was settled at JPY 52,000-54,000/mt ($455-473/mt) FOB, adding JPY 500/mt to the high end of the range over the past week due to the higher bids from Vietnamese customers.
https://www.prnewswire.com/news-releases/global-steel-scrap-market-to-reach-748-2-million-metric-tons-by-2026--301331321.html
Amid the COVID-19 crisis, the global market for Steel Scrap estimated at 574.5 Million Metric Tons in the year 2020, is projected to reach a revised size of 748.2 Million Metric Tons by 2026, growing at a CAGR of 4.5% over the analysis period. Obsolete, one of the segments analyzed in the report, is projected to grow at a 5.3% CAGR to reach 438.5 Million Metric Tons by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the Prompt segment is readjusted to a revised 3.4% CAGR for the next 7-year period. This segment currently accounts for a 26.3% share of the global Steel Scrap market. Obsolete scrap, or old scrap, represents the largest segment. Obsolete scrap consists of any redundant steel product with no usage life and is generally collected when the products made from steel reach their end of life. Prompt scrap is obtained when steel products are being manufactured. This type of scrap consists of punchings, turnings, borings and cuttings.
The Steel Scrap market in the U.S. is estimated at 52.3 Million Metric Tons in the year 2021. The country currently accounts for a 8.78% share in the global market. China, the world's second largest economy, is forecast to reach an estimated market size of 301.7 Million Metric Tons in the year 2026 trailing a CAGR of 5.7% through the analysis period. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 2.7% and 3.2% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 2.6% CAGR while Rest of European market (as defined in the study) will reach 319.3 Million Metric Tons by the end of the analysis period.
Scrap will continue to grow in demand for many years to come and the move by LG to acquire a company that controls 15% of the US scrap market was a very brilliant one.
In summation, the catalysts as I see them:

China - further output cuts, less steel in global market.
China - increase in steel prices on the back of rebound in domestic demand and global supply chain needs.
Increased cost of coke and coal.
Carbon surcharges.
Inflation
Weakening of USD.
Infrastructure
Increasing long term demand for scrap.

I know many of you guys want new PT's.
I'm not giving any new updates on those, as I'm still very comfortable with the PT's I last put out.
Of course, the timing is the million dollar question.
I still think $CLF and $MT are the two stocks that have the most meat left on the bones, but I could also see 40-50% upside on $STLD, $NUE and $X from their current prices.
I believe that Q4 will be even healthier than Q3 and believe you will hear it in the guidance for all other manufacturers like you heard it in the guidance from $STLD today.
I still believe we are in the early stages of the 5th Commodity SuperCycle of all time:

https://preview.redd.it/w1eg75lt8bu71.png?width=1368&format=png&auto=webp&s=2e5e0bf275f33c87c39050a34f2f448a862270eb
I believe we are going to get to that red dot WAYYYYYYYYYYY before 2045.
Thanks for following me and valuing my opinion.
I promise you all not to be a stranger and I'll be around a bit more over earnings than I have been.
Hang in there!
-Vito

TL;DR: Tom Brady and his wife Gisele had a significant equity interest in FTX. After FTX began to crumble, they made a series of suspicious moves that may very well have been an effort to withdraw their funds and hide them in tax shelters in Costa Rica, including staging a public divorce which legally separated the two, in an effort to protect those assets and prevent their seizure in coming criminal proceedings.
WHY THIS MATTERS: If the Bradys have withdrawn and hidden funds, it's likely that other high-profile FTX clients (including AMC shorts, who were evidently using tokenized shares to short AMC) are doing the same thing, and tracking the Bradys can give insight into the SHFs next move, and how they're going to try to evade MOASS and justice.
DISCLAIMER: This is not financial advice, I am not a financial advisor. I am a retarded Ape who exists in a weird Venn diagram at the intersection of NFL football, financial markets, and celebrity gossip. This is almost entirely wild speculation.
CAST OF CHARACTERS
Tom Brady: Superstar NFL Quarterback, played most of his 22-year career for the New England Patriots before moving to the Tampa Bay Buccaneers in 2020. Often credited as the greated NFL QB of all time, because people apparently forgot about Peyton Manning.
Gisele Bundchen: Brazilian-born supermodel and brand spokeswomen, one of the highest-paid models in the world. Married Tom Brady in 2009.
Sam Bankman-Fried: also known as SBF, founder of cryptocurrency exchange FTX and trading firm Alameda Research. His wealth peaked at $26 billion, although that has fallen substantially since FTX filed for insolvency. He has also been cited as the "second largest Democrat donor" behind only billionaire George Soros.
Gary Gensler: chair of the Securities and Exchange Commission, appointed by President Biden in 2021. Formerly CFO of the Hillary Clinton 2016 presidential campaign, and professor at MIT, where he worked closely with fellow professors Joseph Bankman and Barbara Fried, parents of Sam Bankman-Fried.
Changpeng Zhao: The Chinese-Canadian founder and CEO of Binance, the worlds largest cryptocurrency exchange.
Costa Rica: A small central American country, known as the "Switzerland of Central America" for its favorable tax climate and privacy controls of offshore banking. A popular tax haven for wealthy individuals and corporations seeking to protect assets.
TIMELINE:
JANUARY 2021: It's announced that Tom Brady and his wife, Gisele Bundchen were taking an "undisclosed equity stake in crypto exchange platform FTX Trading Ltd." Along with being partners and investors, the deal included Brady becoming an "FTX ambassador" and Gisele taking the role of "environmental and social initiatives adviser." Along with their equity stake, they received "an undisclosed amount of cryptocurrency." They even appeared in commercials promoting the platform.
FEBRUARY 2022: Brady announces his retirement after a disappointing playoffs season where the Tampa Bay Buccaneers failed to reach the Super Bowl. In Brady's words, "When I suck, I'll retire."
Also, this month, the Bradys take a trip to Costa Rica, where they own a home.
MARCH 2022: About a month later, Brady announces that he's going to "unretire", and return to quarterback in Tampa Bay, claiming that it's a "family decision"
Also this month, SEC Chair and former Hillary Clinton campaign finance chair Gary Gensler held a meeting with FTX CEO Sam Bankman-Fried (the first of several) to "discuss custody of digital asset securities by special purpose broker-dealers, including the unique risks associated with custody of digital asset securities and the conditional no-action relief discussed in the statement." Sub-reddit favorite Charles Gasparino would later explain in a tweet that this was merely a person attending as^sic "45 minute lecture by Gensler."
JUNE 2022: The Bradys spend a summer vacation in Italy.
JULY 2022: It is announced that FTX has closed a deal to acquire US cyptocurrency lender BlockFi for up to $240 million. This same deal provided a "$400 million revolving credit facility" to BlockFi.
AUGUST 2022: Cracks appear in FTX's façade, hinting at deeper trouble when the FDIC issues cease and desist letters to FTX (among other companies) claiming that the FDIC has "reason to believe that FTX US, and it's related entities...have made false and misleading statements" claiming that FTX was insurance by FDIC in violation of Section 18(a)(4) of the Federal Deposit Insurance Act.
This same month, Tom Brady takes a sudden 11-day leave of absence from the Tampa Bay Buccaneers, missing much of training camp and the first pre-season game, to "attend a personal matter." The Bradys spent the leave of absence at an exclusive resort in the Bahamas (where FTX is headquartered) for "family time with his wife."
Immediately after returning from the Bahamas, it is reported that the Bradys had a "series of heated arguments" about Brady's decision to un-retire and Gisele travels to Costa Rica.. In this same time frame, a haggard Brady holds a press conference where he offers vague answers to questions and explains that "there's a lot of shit going on."
SEPTEMBER 2022: Bloomburg reports on the "close relationship" between Alameda Research and FTX, citing that the relationship would be illegal were the firms subject to the regulatory oversight of firms operating in traditional equities markets.
Gisele is back in the U.S. by September 5. It is reported that she and Brady are living seperately.
Brady holds a press conference before the September 18 game against the New Orleans Saints in which he looks even worse than his previous press conference. He looks gaunt and exhausted, and shows none of his usual charm and enthusiasm.
OCTOBER 2022: Gisele and Brady both hire divorce lawyers. Despite Gisele being described as "Brady's Biggest Cheerleader" and his "biggest fan", press is now reporting that their marriage was troubled for some time, and that she had "threatend to divorce Tom several times before." It's similarly reported that their split is "nasty" and that they are "ready to fight." articles emphasize that "it will take some time to divide their immense wealth and property all over the world."
A week later, the divorce is filed and finalized "immediately", with assets split. It's reported that "their divorce had been 'amicably' finalized." Articles comment on the unusual speed with which the divorce was finalized, citing an "ironclad prenup [which] allowed the swift division of their assets." It's revealed that Gisele has purchased her own $11.5 million Miami home. According to Zillow information, the mansion was listed for sale in May, but then removed from listing in August (the same time period when Brady took his sudden leave of absence for their Bahamas trip). Then it was relisted in September and almost immediately purchased by Gisele within days of the divorce being finalized.
NOVEMBER 2022: For weeks, SBF is engaged in a "desperate race to raise money" amid a Twitter feud with his former friend Changpeng Zhao, the CEO of Binance.
Coindesk reports that "a significant portion of Alameda Research's assets" were held in the exchange token issued by FTX.
On November 7, Zhao announces that Binance will be selling all of it's holdings of FTX crypto which had been received in 2021, when FTX bought back Binance's equity stake in FTX. However, on November 8, Zhao announces that Binance was seeking to purchase FTX outright due to a "liquidity crisis" at FTX.
On November 9, the Wall Street Journal reports that Binance will not be buying FTX after all due to the poor state of FTX's finances. The same day, FTX announces that they will not be processing customer withdrawals.
As FTX's insolvency becomes apparent and bankruptcy, not to mention criminal charges, appear imminent, it is reported that Tom Brady, as a partner and investor (but not Gisele) is at risk of losing his entire investment.

An introduction

I'll start with a little introduction about myself. I am 22 years old, and I am currently living in Romania. My trading journey started at 19. So, here is me, 19 years old, deciding what path I want to take in life. At 18 years old, I decided I wanted to change the world. To make it a better place. After going through all the possible paths I decided upon business. Why business? Because in order to change the world, you need power. Money gives you power. What's the fastest way to make money? Starting a business.
So, I went to the best business school I could find in my country and there I started my university days. Three months in, I realised that I needed to learn and secure additional sources of income. That's what wealthy people do, right? And what's the most common source of income across wealthy people? The stock market of America.
So, there, I gathered 100 Euros, opened a brokerage account with a firm that had a plan of teaching people the stock market while managing their funds. Do note, 100 euros was a lot of freaking money for my age and country. I had a fund manager that used to call me every few days to talk, get a few lessons and get a stock recommandation.
Long story short, trades were good. What was not good is by the time the fund manager got on the phone with me the stock would turn around. What liqudated the account was an oil trade gone bad. I remember the last trade recommandation he did was Moderna, one month after the pandemic started. The focus of this account was nevertheless forex exchange.
Ouch. My first liqudated account. Fast forward, second semester of first year of business school. I get 300 more Euros. I decided again, that the most okay way to do this is to follow trading signals. After all, I can focus on my business studies and people that know what they are doing can make me money, right? Damn wrong.
I started following trading signals for Forex from a guy that I have been following for about 4 months. I liked what I saw. There I am with my 300 euros accounts aaaand I lost 100 euros of it again. A little bit of exagerated position sizes combined with bad trading signals lost me about 33% of my account.
Great, let actually do some research and see who is the best signal trading group that is free. Well, my research all leaded to one group. Started following them, the signals were profitable at first. But again, this is how this market screws with small & dumb money. It leads you in only to take it all away. Anyways, the signals were beggining to be more and more hit and miss. I got down to 70 euros, then started trading only their index signals, grew my account to 170 euros, then I started taking a swing trade in gold. Averaged down 8 times and got the account liqudated.
Ouch again. You know what, maybe this isn't for me. I am not in my second semester of the second year of business school. I went on an exchange program for one semester to Kozminski University in Poland. (top 50 business school in the world). Learnt a great deal there.
Great, I also have 2000 euros of scholarship money. I didn't use it because the cost of living was even lower than in my home country. So, my brother discovered some crypto guru on TikTok. He starts trading and he lets me know about it. I told him I am happy for him but I don't want to lose money again. What was the system? A DCA algo bot on coins you select. One and a half month passes and that algo bot is doubling his money every few days.
Now, just reading this, you can imagine what I got. He got a battle tested algo bot. Got a community that is making a great deal of money off of it. I got FOMO. After all, he tested it, it freaking works, and it prints money. I join him with my 2000 Euros. Stuff is great. I am sitting on 10k Euros after around two weeks. Well, what's the problem with averaging down that we all know? It works until it doesn't. Elon Musk made a tweet and Bitcoin fell a lot (iirc it was about him dumping his BTC stock). All the community got liqudated, myself and my brother included.
Things were looking grim. We lost a great deal of money we couldn't afford to lose. Things were sad and we looked for hope. The hope was him getting a bank loan. After strongly advising him not to get a bank loan, I theory crafted a system in which an event like this couldn't liqudate us. Well what my system wasn't taking into account is that my brother was playing with money he could not afford to lose and thus he wasn't making the decisions my system designed. BTC takes a dump again. Loses around 3k out of a 10k loan.
I decided I was out. This is not going to work. Our relation gets cold after that and he continues to trade crypto. He starts learning technical analysis. He is still doing this currently, so I guess it is working for him, whatever he is doing over there.
Anyway, my decision was to not touch trading ever again. I get into 3rd year of business school. I get a scholarship exchange to Norway for one semester and one semester to France, at EM Normandie Business School (a top 80 in the world business school). By the time I start my France exchange, I get into long-term investing. Read about all the great gains in 2021. Blast of a year, great.
Should be mentioned, I fought to get those scholarships at those prestigious business schools because if I ever wanted to compete with the richest people in the world, I would have to get access to the best knowledge there is about business. I would also have to learn at an obnoxious speed because those people have lived 2 to 3 of my lifetimes and had the chance to gather obscure amounts of knowledge in that timeframe. If I want to compete with them, I would have to get that knowledge in just a few years.
Back to trading. So, I start an investopedia trading simulator (for the lack of money I had). It's 3rd of January 2022. Apocalypse starts in the stock market. Oh wow. Thank god for the lack of money I had. Two months pass and things don't look that bad. I start learning about the stock market and invest in some safe ETF's (at least they should've been). QQQX, SPHD, VWCE (all world index).
Well great, they were doing fine. In my time in France, I had for a roommate, for what I was about to discover, the child of one of the most influential family in Taiwan. Turns out they were also great freaking investors & option traders. I learnt what I could understand from him. (so not much)
So, I reconfigured my portofolio plan. Now I know what I want to invest in. Amazing! I got my hands on 3000 Euros, that were for a different purpose that I will highlight further down. I wanted to get my toes wet and it was around 15 July. I invested 1000 euros in those stocks: MSFT, NVDA, AMD, NET, PLTR, PYPL, SNOW, SQ. Well god damn good picks. The summer rally made my portofolio be up 30%.
But, let rewind for a bit. As it is probably understood, I wanted to be an entrepreneur. Great business plan and everything. In line for 100.000 euros of funding. (This is June) In the meantime, I also discovered this place because one of the users linked it in the stocks subreddit. I read all the wiki, watched all the videos, and I really liked it.
Well, now for my downfall. It's the end of the last semester. The first punch was the funding. The funding was European Funds which were managed by an Agricultural School of Busines. Submmited my business plan, passed each step in the first place. Well, now they want the financial plan. I do it. Turns out, they did not want included the COGS. That automatically put my costs too high for the funding, even though, well, I don't have to explain COGS to you.
So, some really old guys that had no knowledge about business called me and told me in order for the competition to be fair they can't allow me to remove the COGS from the financial plan (which is not the standard format that you are all familiar with), and because I can't remove COGS I have to be disqualified.
That was an uppercut punch to my jaw. I lost the most secure and hassle-free funding for my business (electrical skateboards) that I could have ever gotten not because I was not good enough, but because of bureaucracy. The second punch came from the doubters that everyone has around them when thinking of starting a business. It's something natural that I did not mind until I took my biggest hit that I could not control. I started to doubt myself even though my record says I am solid.
Well, if I can't get funding, either I go for more hurtful sources of funding like Venture Capitalists and such, which is a difficult battle since no one is a fan of physical products anymore. Everyone likes digital businesses, for good reason. Better investment by far.
I started to look for a career, Tech Sales fitted my criteria for a chance to make fast big money. Great, so I will start a career in that direction. Well here comes the knock out punch. France refused to release my transcript of records because it's their policy to release it at the end of summer, no questions asked. Well, even though I was going to fail the year and not finish university because of it, even though they had the grade in the system (and they just refused to release an official document for it) they refused to do anything about it, even if my university asked them on a more serious tone.
So, I did not finish business school and I have to wait until next summer to sustain my thesis. Because I did not finish business school, I can't get a job abroad. A job in Romania is just out of the question because 300 Euros a month is just not something I am willing to work with.
I had 3000 Euros that my dad gave me to purchase the Market Research I needed for my business plan. As I mentioned above, I invested the first 1000 Euros in July. I have another 2000 Euros comming in the following months from different sources. That would add up to 5000 Euros. Enough to start this trading journey.
In the meantime, after recovering my spirit I decided I wanted to be a Twitch livestreamer because of my gaming talent. So, I was going to go full time into gaming and try to become a livestreamer. That lasted for about a month. I have realised my first goal of reaching the top of the ladder for the game I was going to livestream, but I realised I love gaming but I don't want to be an entertainer.
So, I arrived at trading. I came back to the community I discovered before summer. Which puts us in September. The last glimpse of hope I have for meeting my target wealth in time. (Which is 5 years from now).

My learning journey

I now dedicate 17 hours a day to this. My routine starts at 3PM, I wake up, read Oneoption chat from the day before read new RDT posts, and get ready for the market, which starts at 4:30PM. I trade until 11PM and after that I learn from 11PM to 7 AM. Rinse and repeat. I decided to document this, since I thought some of you mind find it interesting, inspiring, or anything in between.
16.09.2022 – Day 1
Started reading Market Wizards (60 page) (Mindset)
Started learning Canddle Sticks formations – Hammer & Inverted Hammer (Chart Analysis)
17.09.2022 – Day 2
Reading Market Wizards (98 Page) (Mindset)
Learning what Bidding & Asking is ; Supply & Demand ; Volume (Trading/Chart Analysis)
Going Long & Short (Stocks)
18.09.2022 – Day 3
Reading Market Wizards (154 Page) (Mindset)
Read about Options (Options)
19.09.2022 – Day 4
Reading Market Wizards (190 Page) (Mindset)
Setted up the trading platform a bit (Tools)
20.09.2022 – Day 5
Researched Charting tools (Tools)
Started a course on options (Options)
21.09.2022 – Day 6
Setted up my chart indicator (Tools)
Paper traded to test them (Practice)
Learned about buying and selling calls (Options)
22.09.2022 – Day 7
Explored more chart indicators & all the indicators posted in the sub (Tools)
Learned about buying and selling puts (Options)
Watched the market
Read the wiki some more, watched youtube some more, explored all the posts ever posted in general flair
23.09.2022 – Day 8
Learned about intrinsic and extrinsic value (Options)
Paper traded a bit (Practice)
Listened to Hari live stream and took some notes
24.09.2022 – Day 9
Paper traded a bit (Practice)
Researched indicators (Setup)
Learning about options (Options)
25.09.2022 – Day 10
Researched indicators (Setup)
Studied Options (Options)
26.09.2022 – Day 11
Studied Options (Options)
Paper traded stocks (Practice)
27.09.2022 – Day 12
Watched the market
Watched Hari livestream and took notes
Learning Options (Options)
28.09.2022 – Day 13
Learning Options (Options)
Watched the market
29.09.2022 – Day 14
Watched the market and actively participated – did some profitable trades (Practice)
30.09.2022 – Day 15
Listened to Hari Livestream – took some notes
Watched and kind of played the market
1.10.2022 – Day 16
Finished learning Options begginer course (Options)
2.10.2022 – Day 17
Learning Option Spreads – CDS / PDS / BB (Option Spreads)
3.10.2022 – Day 18
Paper traded (Practice)
Learning Option Spreads – Bracketed Butterflies (Option Spreads)
4.10.2022 – Day 19
Paper traded (Practice)
Learned about my volume indicators: OBV and RV (Indicators)
5.10.2022 – Day 20
Paper traded (Practice)
Learned about sector strength indicators and what they mean (Indicators)
6.10.2022 – Day 21
Paper traded (Practice)
Listened to Hari & Pete livestream and took notes
7.10.2022 – Day 22
Paper traded (Practice)
8.10.2022 – Day 23
Learned about VWAP, SMA, EMA, BB (Indicators)
9.10.2022 – Day 24
Learned about Volume Candles, Daily Ranges, ATR (Indicators)
10.10.2022 – Day 25
Paper traded (Practice)
Learned about Divergences, True Strength Index, ATR (Indicators)
12.10.2022 – Day 26
Paper traded (Practice)
Learned about Algo lines (Charting)
13.10.2022 – Day 27
Paper traded (Practice)
Learned about Heikin-Ashi candles (Charting)
14.10.2022 – Day 28
Paper traded (Practice)
Learned about TICK and VIX (Indexes)
15.10.2022 – Day 29
Paper traded (Practice)
Learned about UVXY (Indexes)
16.10.2022 – Day 30
Learned about Flag formation (Chart Patterns)
Learned about Doji, Hammer, Doji Sandwich (Canddlestick Patterns)

Student notes

One thing I found a challenge is that all the information is scattered. Sure, there is the wiki. But there is also Oneoption, Hari videos, posts that are not in the wiki, comments in older posts and older live chats, and information not present here. So, in order to facilitate my learning, I started grouping all the information I could find about each topic into my notes.
Those notes are only about the topics I have studied until now. They do not include any information from Hari or Pete videos, as I didn't get to document them yet. (With the exception of the Algo lines section).
They were designed with me in mind, thus no resources. You should all ignore the Options section and just go to Option Spreads onwards. I am sure the information contained in them will be useful to some of you.
I would also appreciate it if you got anything to add to the topics posted so far in it, if there is any knowledge you would want to share about a section. Here is the link

Paper trading progress

Week 1: 27 trades / 51% winrate / 0.60 P.F.
Week 2: 41 trades / 68% winrate / 3.6 P.F.
Week 3: 48 trades / 81% winrate / 0.84 P.F.
Kind of obvious what I need to work on. Position size, exits, etc. so I am not going to write novels about this section too. I am just happy my winrate is increasing.

Going foward

I plan to add up to my long term portofolio, which I currently invested about 25% of my 5.000 Euro in. This is because I want to gain from the relief rally I expect and the gains to be had by the time I finish learning. I also aknowledge the risk associated with this idea. It is needless, and I think I am only doing it to prove to myself that I can do fundamental analysis too and that I know how to analyse a business. If the risk turns against me, I will have to get a job for a few months to gather up the money needed to start trading, which will take an awfully long time.
I plan to finish writing and learning the theory that I have presented in the document, so I can finally move forward to analyse my trades in detail by journaling and doing walkaway analysis on them. I know the urgency of this part, yet I have to postpone it because I feel like I need to understand the whole theory before doing a solid analysis of the trades. I will need to work on my entries,exits, and most importantly, position size. This will be a continuing flaw in my trades for at least a month or two more.

One Major Discovery

There is one last thing. In my research of indicators I have come across a pattern you will find made by the indicators listed in my notes. Namely, my OBV indicator and True Strength indicator. I am using scripts that highlight divergences for me, so I can avoid being deceived by my own eyes. Well, I played with those two indicators and, although too early to be worth sharing with you guys, the results from the sample of trades I have soo far looked at are incredible.
First off, to my knowledge, Hari only uses TSI to look for crosses. And as you guys know, divergences are predictive indicators with the flaw of signaling false alarms.
Well, here is the thing. I have found out that on the daily chart, based on previous highlights of the indicator, it is right 9/10 times.
Heck, here is a chart of SPY with the indicator. The dots you see in the indicator are coded as follows: orange/red = bearish divergence
blue/green = bullish divergence
Well, I realise it is hard if not impossible to allign the indicator signal with the candle on the chart, so here is a picture with the most recent divergence.
There are a lot of things standing in my way before I can make a solid argument for them. Namely, I can't scan for the stocks that have divergences on. I have to go each day between them by hand and see if a divergence appears. Also, there is a lot more about a strategy than just signals that may be right at an obscene rate. For example, do you enter in the postmarket in the trade (something I cannot) or the start of the next trading day? Can you quantify the magnitude of the move? And so on.
One of the things that would be the most dissapointing, although the indicator gives the signal before the next candle on the 5M, I have not tested if it waits for a new candle before signaling the divergence, on the daily chart. I would highly assume it does as shown in historic data of it, but I have to verify it to confirm it, once a divergence appears.
Lastly, on the 5M I found OBV divergences to still be effective, but not effectie enough to take them for more than confirmation bias. However, again, combining TSI and OBV divergences I have found the signal to be 9/10 effective. (alleged number, just consider that I am having a hard time finding moves that are against the signals of those 2 indicators combined.
Here is the signal on SPY
Here is the signal on a stock, namely SQ
Again, as far as I know, it can't predict how long will the move last. But what I know is that next candle will respect the pattern.
I am open to discussion about what I found, and I apologise for writing about it if it's not appropiate. I realise there is not enough research I have done before even thinking of suggesting it to you guys. At the same time, I appreciate the fact that the sooner it is revelead to you, the more money might be generated or saved by you. So, because the results of the week were soo immaculate, I decided to write about it.

Best Investment Apps of 2020 - Investopedia

Strange Things Volume II: Triffin's Dilemma and The Dollar Milkshake

(Seriously, stop here and go back and read Part 1.5 and Part 4.3 Do it!)

The Dollar Milkshake

Q&A

(Many of you have been messaging me with questions, rebuttals or comments. I’ll do my best to answer some of the more poignant ones here.)

NA (Vietnam) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that two sides speed up formation of twinning relations among localities, potential for cooperation in climate change, education, history and culture.'

Remember When Wilbur Ross was appointed Sec. of Commerce and the “stock market = economy” and a push for negative interest rates was happening and Operation Warp Speed came out? Silver and Gold coins have two sides - don’t they?

Hyperinflation is Coming- The Dollar Endgame: PART 5.1- "Enter the Dragon" (SECOND HALF OF FINALE)

(Hey everyone, this is the SECOND half of the Finale, you can find the first half here)

The Dollar Endgame

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

NA (VN) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that the two sides speed up formation of twinning relations among localities, potential for cooperation in education, history and culture.'

NA (Vietnam) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that two sides speed up formation of twinning relations among localities, potential for cooperation in climate change, education, history and culture.'

@Reuters: In Airbus country, two-speed economy gives wings to the French left ahead of election https://t.co/fJ6ZzEyXfE https://t.co/8cdNgd4AOH

France: confidence indicators point to a two-speed economy (ING)

NA (Vietnam) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that two sides speed up formation of twinning relations among localities, potential for cooperation in climate change, education, history and culture.'

NA (Vietnam) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that two sides speed up formation of twinning relations among localities, potential for cooperation in education, history and culture.'

NA (Vietnam) leader meets Greek President in Hanoi, 'will work together on tourism, maritime economy, shipbuilding, seaport.. proposed that two sides speed up formation of twinning relations among localities, potential for cooperation in climate change, education, history and culture.'

Two-speed euro zone economy as services shine, factories struggle

Two-speed economy leaves people like Edward Schimmel behind, but that's not WA's only economic dilemma

@Reuters: Two-speed euro zone economy as services shine, factories struggle https://t.co/raKeiDSlcj https://t.co/MVRstk4hcK

Two-speed recovery in January as Omicron variant continues to weigh on customer-facing parts of the economy in the UK (IHS Markit)

Hyperinflation is Coming- The Dollar Endgame: PART 5.0- "Enter the Dragon" (FIRST HALF OF FINALE)

Updated Complete Table of Contents:

“Enter the Dragon”

PART 5.0 “The Monster & the Simulacrum”

The Inflation Serpent

The American Reckoning

(I had to split this post into two part due to reddit's limits, see the second half of the post HERE)

You can follow my Twitter at Peruvian Bull. This is my only account, and I will not ask for financial or personal information. All others are scammers/impersonators.

Do we live in a two speed economy?

The Thesis - Is Dead? Long live The Thesis. Global Steel Updates, Inputs, Macros, China, The Market and my ramblings.

Weakening U.S. Dollar

Global View of Scrap: Uptrend of international scrap market continues unabated

Tin-foil hat theory: Tom Brady and Gisele engineered their divorce to get funds out of FTX and shift them to shelters in Costa Rica.

My trading journey & a student notes

An introduction

My learning journey

Student notes

Paper trading progress

Going foward

One Major Discovery

Binary Options RSI Fractal Indicators Iq Option