“All roads lead to inflation...I’m long gold, long Bitcoin”
- Long gold has been the trade of the last year: +50% since October 7th 2023; Long BTC +65% or so this year.
Paul Tudor Jones articulated my 4D trade in essence – debt debasement & dollar devaluation.
“We are going to be broke,” he said of the current fiscal irresponsibility. Both candidates will raise the debt – no one is talking about lowering spending.
We asked a while back in Overleveraged whether debts matter
“The question is, after this election, will we have a Minsky moment here in the United States and U.S. debt markets?” he asked in an interview with CNBC.
“Will we have a Minsky moment where all of a sudden there’s a point of recognition that what they’re talking about is fiscally impossible, financially impossible?”
Of course, he was talking about the US, but it applies everywhere, from France to China, the UK to Italy.
USD strength, therefore, is relative, and right now, it’s relative to a crapfest everywhere else – American exceptionalism (no landing trade) + Trump trade...10yr TIPS yield +40bps in the last month is a bit of a face-ripper but has not done anything to dissuade the gold bulls – which means either it’s inflation all the way or just a mega geopolitical hedge (post Oct 7?)...we have talked a lot about this here - global public debt hits $100tn this year...it will be monetised at some point – i.e. the Minsky moment of which PTJ talks, which will see gold rally way beyond what it has done so far... but there are clearly lots of factors at play...ultimately, I see 4D at work, but it’s worth pointing out that USD’s relative safety and strength need to be appreciated ... 4D does not mean a weaker dollar if everywhere else is in an even bigger mess.
No stopping the gold bugs
EURUSD through 1.08 and looking to test the August 1st low – DXY also making a fresh high
USDJPY – USD strength has pushed against an open door here and broken above the 200-day SMA above 152 this morning
This morning, European stocks are mixed to flat after yesterday's lacklustre session on Wall Street. Deutsche Bank shares fell despite profits rising 31%, while Lloyd's share rose slightly as it delivered a slight beat to expectations.
Starbucks pulled guidance for 2025 after sales plunged for the third consecutive quarter. Global comparable sales –7% vs the –3.5% expected, with non-GAAP earnings per share –24% to $0.80 vs $1.05 expected...US SSS –6%, China –14%. No one wants this so-called coffee anymore – make your own at home.
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The Alaska summit between Trump and Putin concluded, but the lack of details disclosed has raised concerns in Europe. What are the potential implications of this summit?
Markets this week saw movements driven by inflation data, interest rate expectations, and geopolitical tensions. The Dollar Index initially fell then rose, while gold recorded a decline. Equity markets experienced strong gains, and Bitcoin prices reached new record highs. The week was also marked by significant political and economic events.
From Tuesday, 19 August 2025, key data releases include Canada’s July inflation at 12:30 GMT, expected to rise from 1.9% to 2.0% on base effects and firmer energy prices, and U.S. building permits, seen easing from 1.393 M to 1.390 M amid high borrowing costs.
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