building 🍞 | interests: monetary policy, energy markets, game economies & bikes | writing and youtube: kyla.substack.com

Kentucky/?/kyla.eth
Joined July 2014
It’s hard to win the economic game - the Fed has their toolkit to shape the monopoly board, but the efficacy of those tools are a completely different discussion it will be an interesting few months to see if raising rates actually does help - or if it is “different this time"
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Things stay the same, but they don’t. We live in a loop, but we don’t. When describing what Wordle actually means to us as a Society, @add_hawk (the author of the excellent book Games: Agency as Art) wrote:
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Final Thoughts Stocks do okay in higher rate environments. It isn’t like rates go up and the whole stock market gets trucked - things are okay, but because we live in the extreme edges of the distribution (yelling into the void, “the world is MELTING because of rate hikes”).
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But the Fed can't just not do anything??? People are worried about inflation (66% think its’s the biggest risk to the economy over the next 12 months!! (and it’s a political hot potato)). So the Fed has to do *something*.
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#4 Markets Stocks are not happy. Higher yields put pressure on valuations (very far out cash flows not as cool in a higher rate environment) Fed hiking means less liquidity for stocks, putting pressure on risk assets (including crypto). Fewer YOLO dollars.
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#4.5 Private Mkt Valuations Crypto is flush w a lot of VC & wall street dollars $$ moves according to the risk assessment of their holders - so crypto ends up trading like big tech But crypto is also yield (and innovation) - which could be key in a (maybe) slowing economy
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#5 The Economy A very big worry is that the Fed is hiking into a slowing economy. That Makes Things Difficult. We have seen some weakness (IMF, hello) but if the Fed hikes into a weaker economy, that makes them hiking us into a Recession more probable
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#2 Inflation (contd) Supply chains + labor/wage issue + pressure for companies + weaker earnings bc of labor/wage problems + higher input costs Companies are experiencing increasing pressure from inflation, labor shortages, etc = higher costs for everyone
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#3 Federal Reserve Market is pricing in that the Fed is going to raise rates. We don't know how many times or how often or how quickly - yet Bond market believes Fed will hike. Stock market (and crypto) are catching up.
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The market is going through it With the Fed meeting tomorrow, increased geopolitical risk, inflationary worries, and economic slowdowns all shaping the current environment - here is everything that is going on right now (mostly)
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#1 Geopolitics Russia is getting closer to invading Ukraine. China is flying around Taiwan. Central Asia is experiencing blackouts. This leads to 1) uncertainty & 2) worries over energy supply Russia = 1/3 of Europe's gas & Kazakhstan alone is ~18% of Bitcoin's hashrate
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What is going on? 🤨 On geopolitical risks, the inflation narrative, the Federal Reserve, the markets (stocks, bonds, and crypto) and the economy and how it's all ~connected~ kyla.substack.com/p/on-marke…
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another look at all the forces! (simplified of course!)
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The Markets 🥲
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mathematically speaking
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Activision launching Call of Duty: Vanguard was a subtle hint to the future😌
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