Milkshakes, Markets, and Madness - October 13 Lecture Notes

Introduction

• Show Overview: Discusses financial markets, associated madness, and the dollar milkshake theory.
• Dollar Milkshake Theory: Framework for understanding the monetary system, particularly helpful in navigating market dynamics.

Current Market Overview

• Election madness is ongoing but markets have remained strong.
• August and September had dramatic moments, but October has been calm.
• Market Highlights:
  • Early week market decline, rallied later.
  • CPI: Higher than expected, typically would cause rate/dollar hikes and asset sell-off.
  • Jobless Claims: Higher than expected, indicating a weakening economy.
  • PPI: Higher, but not enough to alter rate cut expectations.
  • Gold and Silver: Closed flat but had intra-week volatility.
  • Oil: Volatility with swings but closed flat.
  • VIX: Flat, but potential for increase due to various geopolitical and domestic factors.
  • Equities: Up ~1% for the week.

Upcoming Milkshake Masterclass

• Delay: Originally planned for this fall, now scheduled for early next year.
• Purpose: To provide a comprehensive understanding of the milkshake theory.
• Importance: Framework helps in understanding market operations and navigating them.

Key Market Concepts

• Importance of the Dollar: Crucial in navigating market trends.
• Diversification: Mitigates risks and avoids massive drawdowns.
  • Example: Permanent Portfolio (25% Cash, Stocks, Real Estate, Commodities).
• Liquidity: Most significant factor influencing asset prices.

Masterclass Topics Preview

• What is Money?: Misunderstood concept, varies by time and place.
  • Debate: Commodity money vs. fiat currency.
• Monetary History: Challenges the barter origin story.
  • Debt as a central monetary system element.
• Monetary System Design: Exponential systems necessitating growth, susceptible to crashes.
• Eurodollar System: Key to understanding global monetary mechanics.
• Geography & Geopolitics: U.S. geographic advantages and global positioning.
• Monetary Weaponization: U.S. uses dollar strategically in global politics.
• Transition to New Systems: Involves economic volatility and potential military conflicts.

Conclusion

• Next Steps: For those interested in the masterclass, sign up at macroalchemist.com.
• Market Outlook:
  • Potential for similar market conditions as seen in July.
  • Look out for trading opportunities in the semiconductor sector.
• Final Thoughts: Stay safe, prepare for upcoming market turbulence.