If history has taught us anything, it's that markets ignore the impact of higher energy prices until it hits the real economy and profit margins — 1973 being the perfect example. Whether that warrants a melt-up I'm not sure, but it certainly makes one possible for a few months.
The real rates framework here is the most underappreciated part of this setup. Forty-eight basis points from negative is a specific, testable threshold. That is not a narrative. It is a mechanical trigger with historical precedent.
The point about liquidity sources also cuts through a lot of confusion. Tracking only central bank balance sheets misses government issuance, private credit expansion, and fiscal flows. That error has cost a lot of macro traders the last two years.
Where does digital asset allocation fit in your risk curve model as real rates cross negative?
The "48bps from negative real rates" framing is exactly where the Burns parallel gets uncomfortable. In Oct 1973 Burns was running real rates at -6.8% when the oil shock hit, and he convinced himself the 1973-74 supply impulse would pass through. It didn't — it compounded into the mid-70s when real rates briefly went positive. Today the Fed sits at 3.64% with March CPI annualized at 10.4% and WTI up 73.8% since January. The sequence-of-shocks point in the piece is right, but the FOMC internal/external contradiction (hawks citing supply shocks, doves citing the same shocks for cuts) is the tell that optionality is already gone. Melt-up and Burns-redux aren't mutually exclusive — they can run together for a quarter or two before one resolves.
If history has taught us anything, it's that markets ignore the impact of higher energy prices until it hits the real economy and profit margins — 1973 being the perfect example. Whether that warrants a melt-up I'm not sure, but it certainly makes one possible for a few months.
The real rates framework here is the most underappreciated part of this setup. Forty-eight basis points from negative is a specific, testable threshold. That is not a narrative. It is a mechanical trigger with historical precedent.
The point about liquidity sources also cuts through a lot of confusion. Tracking only central bank balance sheets misses government issuance, private credit expansion, and fiscal flows. That error has cost a lot of macro traders the last two years.
Where does digital asset allocation fit in your risk curve model as real rates cross negative?
The "48bps from negative real rates" framing is exactly where the Burns parallel gets uncomfortable. In Oct 1973 Burns was running real rates at -6.8% when the oil shock hit, and he convinced himself the 1973-74 supply impulse would pass through. It didn't — it compounded into the mid-70s when real rates briefly went positive. Today the Fed sits at 3.64% with March CPI annualized at 10.4% and WTI up 73.8% since January. The sequence-of-shocks point in the piece is right, but the FOMC internal/external contradiction (hawks citing supply shocks, doves citing the same shocks for cuts) is the tell that optionality is already gone. Melt-up and Burns-redux aren't mutually exclusive — they can run together for a quarter or two before one resolves.
How long do you think a melt up can last? These IPOs are going to take from other stocks in the market.
Michael Howell is saying that global liquidity has peaked for this cycle. It sounds like you disagree?