Episode 005: Forward guidance’s end

A very lively discussion this week that goes on a bit longer than usual as Mark & I get into a disagreement over the implications of Chinese gold-backed stablecoins. But before the fireworks, Mark & I review what President Trump achieved at ASEAN and APEC, how his earlier successes set him up for it, and what it means for Global bifurcation; then we fire both barrels at the failure that has been central bank forward guidance and our prediction (hope?) that this travesty is about to meet it well deserved, but likely messy, end as fundamentals expose the fundamental errors in central banks’ forecasts and policies.

00:00 President Trump takes La Cosa Nostra Americana to ASEAN and APEC.

02:45 Trump-Xi meeting seen in context of broader strategy and earlier building blocks.

03:28 Cementing ASEAN as part of US sphere was critical final plank ahead of APEC.

07:29 Who backed down & who won what from the Trump-Xi meeting?

09:04 Fentanyl concessions as a win against “hybrid warfare.”

11:13 China’s “own goal” with critical minerals response to narrow US NVIDIA export controls.

14:38 Was the real loser revealed to be Europe and its much deeper weaknesses?

15:59 The depth of China’s fundamental supply-chain leverage and the years it will take to overcome.

16:42 Did Xi and Trump come to a durable understanding?

18:35 Validation of Trumpian “tariff wall” approach over targeted industrial policy.

20:16 Realignment of Western alliances from “US dependencies” to regional alliances with US cooperation.

22:05 Success of La Cosa Nostra American and national interests over foreign policy as a popularity contest.

23:26 Market narratives’ basis in informational asymmetries regarding China and the US.

26:32 Devaluation’s role in adjustment for inflexible state-run economies like China.

27:57 Difference between modern Chinese overinvestment and Japan’s in the 1980s.

30:24 Information asymmetries in central banking and the flaws of forward guidance.

33:24 What did we learn from last week’s Fed, BoJ and ECB meetings last week?

38:17 Forward guidance’s undermining of central banks’ credibility.

43:02 Abusing a new tool.

45:13 When will there be a market reckoning of central banks’ credibility failures?

48:34 Markets aren’t the omniscient fortune tellers they (and central banks) believe.

51:02 TIPS breakevens are not inflation expectations; bond traders don’t set prices they (badly) forecast them.

52:06 The 1970s analogue: myths and facts.

53:45 The “dual mandate” is robbing Peter to pay Paul; you’re going to lose those jobs eventually if you ignore inflation.

54:55 The “debasement trade” amid overvalued, risky gold prices.

56:44 The “stopped watches” of the debasement trade and US decline.

57:34 The role of zero rates in fueling commodity speculation.

58:26 Conflating narratives: asset seizure fears are not the same as fiat debasement.

61:57 China’s embrace of a gold-based system.

63:23 Will China replace its CNH strategy with gold-backed stablecoins to counter the US GENIUS act?

64:06 But why would anyone want a Chinese-law issued gold stablecoin?

64:48 Most bullish signal ever for equities/gold ratio?

66:53 What’s the best inflation hedge?

67:19 Confusion over payments system versus money.

68:31 No, I’m going to disagree with you, Mark!

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