Notes From Underground: It’s Hard to Believe

A Note From Notes

On December 7, 2009, NOTES FROM UNDERGROUND published its first post and we’ve shared a few thousand thoughts since then (all archived at WordPress and for those on CQG they available thanks to the great efforts of Stan Yabroff). In sifting through this treasure trove I am proud to say this has been an arduous but rewarding endeavor. The amount of work is great especially because so many of these musings have been time sensitive.

Then in the last five years, I’ve been fortunate enough to work with the Financial Repression Authority to elevate the discussion surrounding these thoughts with some of the greatest minds in the business — Felix Zulauf, Marc Faber, Jim Bianco, Peter Boockvar, Lacy Hunt, David Rosenberg, Louis Gave and so many others.

So as I scroll through the voluminous posts, podcasts and CNBC appearances, I’m in awe of how we’ve attempted to open up the world of financial markets to deep analytical exegesis of important investment ideas on a time scale from one hour to years depending upon the amount of leverage involved in the trade. As Louis Gave once said, “I am not paid to forecast for my clients but to adapt,” that sums up the endeavor of this blog. Over the past 12 years I have hoped to get my readers to adopt to the illogical exigencies of the geo-political world. The rationalists do not read NOTES FROM UNDERGROUND because they know where prices OUGHT to be.

But, where do we go from here? This is where you come in, dear readers. I’d be interested in understanding how you best consume this information. Maybe it’s a 15-minute daily chat with FRA’s Richard Bonugli and other guests. Either way, we’re going to try and monetize this wealth of information, and offer up my wisdom to large traders, sovereign wealth funds and family wealth offices and the like. It’s been so enriching interacting with many minds around the world. I am beyond grateful to experience, teach and, most importantly, learn from the likes of Dave Richards, Mike Temple, Big Man, Professor Waspi and many more.

In that vein, I am posting a podcast that was recorded about two weeks ago, a roundtable of sorts featuring Jim Bianco and Peter Boockvar. This may be one of the best ways to advance NOTES FROM UNDERGROUND.

Many Thanks,


***One last theme to think about. The strength of the DOLLAR this year — especially in the last three months — is a brewing disaster for the global financial system. The Institute of International Finance has been hypersensitive to the rabid rise in global debt, which is approaching $300 trillion. The DOLLAR’S reserve currency status is responsible for much of the debt as at least 55% is denominated in the greenback via different forms of derivatives. But a rise in the DOLLAR causes hardships for those not engaged in DOLLAR commerce except for the pricing of their debt. It is this huge mismatch that poses a potential calamity for the entire global financial system.

The DOLLAR‘s reserve role with the debt overhang means that FED Chair Jerome Powell has to be extremely careful in embarking on a tapering and rate increases while other central banks like the ECB are still aggressively pumping liquidity into the system. ECB President Christine Lagarde must STOP her dovish rhetoric and cooperate with the other G-7 finance ministers and central bank chiefs to end QE as one.

On Wednesday, rhetoric from ECB members and other European finance ministers has been more “hawkish,” and has caused the EURO to reverse recent losses and yields on euro-area sovereign debt rising higher (and taking U.S. bonds with them). If the G-7 nations would coordinate their policy decisions and the DOLLAR were to weaken, then the U.S. YIELD CURVE would probably reverse its recent FLATTENING action. Pay attention to currency levels. A critical currency outlier continues to be the Chinese yuan as it continues to rally in direct contravention to conventional wisdom: weak Chinese economy, weak currency. It is making a 40-month high Wednesday. Does this mean a further commodity rally as the CHINESE ECONOMY shifts to more domestic consumption?

There was a Financial Times piece last week by Ruchir Sharma titled, “China is Faltering, but the World is not Feeling the Effects.” Sharma, a Morgan Stanley global strategist noted “exports have fallen as a share of China’s GDP from above 35 percent before 2010 to less than 20 percent today.”I s this the sea change in the global economy that Professor Michael Pettis has been discussing for many years? If so, what will the impact be on the world economy and especially will the disinflationary force of China’s one billion workers be felt through higher prices as the Chinese export less and consume more?

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19 Responses to “Notes From Underground: It’s Hard to Believe”

  1. salonstudios Says:

    Hello Yra and fellow followers of NFTU.Here is a tweet from La Garde.She knows “humps”? .She says with great confidence that inflation will go down in 2022.What she does not say is ,that is IF she really knows and not saying now ,is if inflation does go down, it is likely it will be a bust.

  2. salonstudios Says:

    La Garde Tweet

  3. The Bigman Says:

    Yra Thank you for another great year here, I have certainly profited far more from the board and its gurus than anything anyone thought I may have contributed.
    File the following quote from this week’s BLS release under “this can’t be good”:

    “Non-farm business sector labor productivity decreased 5.2 percent in the third quarter of 2021, the U.S. Bureau of Labor Statistics reported today, as output increased 1.8 percent and hours worked
    increased 7.4 percent. This is the largest decline in quarterly productivity since the second quarter of 1960, when the measure decreased 6.1 percent.”

  4. kevinwaspi Says:

    Yra Thank you for all that you do, and for your generous shout-out.
    Your work through NOTES along with the reader’s contributions have been a refreshing and rewarding safe harbor in a world filled with nonsense and fake ‘analysis’.

  5. Leslie Philipp Says:

    Thank you very much Yra.

    I always enjoy and profit from the clear sighted adaptations you and your cohort so generously share. It’s informative and quite frankly, refreshing.

    Now, where do I find that podcast you mentioned?


    Leslie Philipp

    • Yra Says:

      Leslie–click on the picture above /and orgo the financial repression authority web site and thank you for your kind words.

  6. hopgrower Says:

    Thankyou very much Yra. I learn so much.

    Salonstudios, I find it interesting that at a time when Powell “retires” the word “transitory”, La Garde is discussing a “hump” which refers to transitory. Yra has been saying, those in high places should find the same play book. However, I personally believe that it is more easily viewed as a chess match between all the countries, they don’t only want to solve the current dilemma, they want to win also.

  7. Marte Wayne Anderson Says:

    Yra, thanks for all the knowledge you share with us. I was a friend of Lenny Feldman who always spoke very highly of you. All the best, Marte A

  8. Pierre Says:

    Thank you Yra for all the insights you provide. This blog has taught me so much. Thanks to everyone who contributes!
    Wishing everyone a happy, healthy and prosperous New Year.

  9. Notes From Underground: It’s Onerous to Imagine - Precious Metals Daily Says:

    […] Source link […]

  10. Zeberdee Says:

    Thanks Yra. I don’t trade at all (prefer PM’s) but have been coming here for years now. Jim Sinclair many years ago spoke very highly of you…. and I have been coming here ever since. Thankyou.

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