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Life After The Death Of Fiat

Four days in inflation-ravaged Lebanon with "The Bitcoin Standard" author Dr. Saifedean Ammous.



Four days in inflation-ravaged Lebanon with "The Bitcoin Standard" author Dr. Saifedean Ammous.

This article originally appeared in Bitcoin Magazine's "Moon Issue." To get a copy, visit our store.

“What should the time preference of my magazine article be?”

It’s a question I first pose to author Saifedean Ammous as we walk a darkened city sidewalk, the only light reaching us from nearby restaurants where smiling diners idle.

Observing what could be any busy suburban food court, my initial impression of Lebanon is that it seems undisturbed, even normal, a far cry from the headlines heralding a once-in-a-century economic crisis defined by annual inflation that’s now the highest in the world at 140%.

But if busy Beirut doesn’t appear eager to play poster child for the ills of the fiat financial system, Saifedean is quick to note the streetlights out above us, a casualty of government budget cuts.

“The market,” Saifedean says, “is simply finding a way.”

It’s the start of a series of discussions to take place over days as we explore the city, consider his newly published work, “The Fiat Standard,” and probe the mysteries at the heart of Bitcoin that remain as the calendar year turns to 2022 and beyond.

Of frequent debate is what I assert is a generational divide forming between Bitcoin’s old-guard technologists and an ascendant meat-eating, family-first, Bitcoin-asa-lifestyle movement for whom Saifedean’s work has become a kind of dogma.

After all, it wasn’t long ago that Bitcoin discussion was defined by early coders who saw it solely as a software, an improving protocol for moving digital money. Today, it’s the ironclad economics of Bitcoin that dominate discourse, in no small part due to Saifedean (pronounced Safe-e-deen) and his 2018 publication, “The Bitcoin Standard.”

It’s not an exaggeration to say more people now buy bitcoin after reading the book than they do on discovering Satoshi Nakamoto’s 2008 white paper or by reviewing its code online.

So great has been the fanfare around the work, CEOs of public companies now proudly boast they’ve spent billions adopting a “bitcoin standard,” the most recent being an Australian baseball team that tweeted images of coaches teaching the book both on and off the field.

The author’s eager readers will no doubt find much to like in “The Fiat Standard,” a self-published sequel that’s arguably even more expansive in its assertion that central bank money printing is a great societal evil stretching far beyond monetary policy.

Included among its chapters are sure to be fan favorites like “Fiat Life,” “Fiat Food” and “Fiat Science” that frame state agencies like the U.S. Food and Drug Administration and issues like climate change as symptoms of government interference in freedoms, industry and family life.

Still, for his part, Saifedean pushes back on assertions he’s forging an association between Bitcoin and alternative lifestyles, or that his position and influence make him responsible for changes in sentiment among the movement.

He’s picking the bones from a coal-grilled fish, its eyes charred and blackened into its sockets, when he finally answers my more antagonistic questions directly.

“These ideas are popular because they match where Bitcoin fits in this time and place,” he says. “This is what Bitcoin is here to rescue us from, inflation and all the trappings of inflation.”

Our journey in Lebanon will offer context to the assertion.


Saifedean’s road to Bitcoin is a long one, defined by denial, acceptance and fateful encounters. It’s a meandering tale, relayed as we weave the many parked cars and traffic bollards that squeeze us often and tightly against Beirut’s straining retaining walls.

The son of a doctor, Saifedean explains he grew up in “one of those families” where you had to join the vocation or else you’re branded a failure. Still, he would be eager to break from tradition.

Saifedean, now 41, refers to these early years as the “high time preference” period of his life, the phrase (denoting a bias toward short-term decision-making) now colloquial as a critique against fiat finance thanks to its use in “The Bitcoin Standard.”

Medicine seemed like too much work, so he chose to study mechanical engineering at the American University of Beirut (AUB). We’ll spend much of our time circling this gated portion of the city, its tranquil, cedar tree gardens and soccer pitches walled off from the urban sprawl.

Once on the outskirts of the city, AUB is today besieged by quick-service restaurants and shops, its hospital serving as the center for what Saifedean calls the “COVID ritual,” and he wastes no opportunity to assert the virus is being abused to exert new forms of draconian control.

If he appears at first intent on showing me around his beloved alma mater, that interest ends when we’re beset by guards intent on making him wear a “muzzle.” “It’s a shame,” he says, scratching graying hair with an irritated hand. “It’s a beautiful campus.”

It’s another recurring theme — that for Saifedean, Lebanon is something of a cherished second home. “It was the hedonistic capital of the world,” he recalls. “If you wanted to party, enjoy yourself, have great food, great wine, there was nothing like it up until 2019.”

That’s when the current crisis began, turning “the Switzerland of the Middle East” into a country known for power outages and a diaspora that’s increasingly seeking refugee status abroad.

It’s hard to piece together an exact timeline for when the issue — namely, the decoupling of the black market exchange rate (then 27,000 Lebanese pounds to the U.S. dollar) from the central bank rate (still officially 1,500 pounds to the U.S. dollar) — began, or why what followed would so strongly counter the narrative Lebanon was a “resilient” nation, always able to borrow and refinance its debt despite domestic challenges.

The situation has since been exacerbated by COVID-19 and the 2020 Port of Beirut explosion, which have combined to shutter one in five local businesses.

Born to a family that had its land confiscated by Israel in Palestine, Saifedean sees the State and its penchant for central planning as the ultimate culprit for the crisis in Lebanon, and as we walk, he proves eloquent in identifying the many effects of government intervention.

“There’s a holdout tenant stuck there who is paying something like $7 a year for rent,” he explains, pointing at a browning building he believes is the victim of misguided rent controls. “They are waiting to get paid off. All over the city these apartments are falling apart.”

There’s a certain sadness to the narration, as it’s among these buildings where Saifedean discovered his interest in economics as an undergraduate at AUB.

Back then, his attitude was different. “I thought the world needed planning. I had that kind of statist immaturity that we need to have someone in authority to tell us what to do because the world is a scary place,” he says. “I chose to go the path of fiat.”

It’s a path that would next take him to the London School of Economics (LSE), where he’d have his first encounter with the outsider Austrian economists his work has revitalized, and finally to the Lebanese American University (LAU) in Beirut, where he’d write “The Bitcoin Standard.”

There, he says, Bitcoin saved his life.


THE HEADLINE OF THE ANNAHAR NEWSPAPER, THE LEADING LEBANESE NEWSPAPER READS: “(US) Dollar Rate at the Outskirts of 30 thousand Lira!” referring to the black-market rate of the USD/LBP. The Lebanese currency has lost 95% of its value to inflation since September 2019. The Lebanese central bank still fixes the official exchange rate to 1,515 while the parallel market (the official name of the black market) exchanges at around 28,000.
A GRAFFITI THAT READS: “Lift the bank secrecy of your accounts” on the Lebanese central bank parking wall, referring to the bank accounts of the corrupt Lebanese politicians that are accused of transferring billions of dollars to their accounts. Since October 2019, the Lebanese central bank had gradually locked access to all bank deposits for withdrawal and transfer abroad.

We’ve settled into the corner of a brightly painted café when our talk turns to Saifedean’s rising profile and how it might impair his relationships in the city. He freely admits he’s lost contacts from his former life because of his stances on COVID-19 and Bitcoin. At times, though, Saifedean seems reluctant to make the situation worse.

Despite the encouragement of our photographer Ibrahim, he isn’t initially eager to pose in front of the Banque du Liban, the central bank whose graffiti-strewn and barricaded building bears the marks of frustrations aimed at the economic downturn.


It’s rubbing salt in wounds.


You’re discussing economics.
You don’t think Salim [Sfeir, head of the Association of Banks in Lebanon] owns bitcoin?

If the offhand remark makes it seem at first as if there’s a popular awareness of Bitcoin and how it might be a solution for the crisis in Lebanon, we’ll find this isn’t exactly the case.

Saifedean puts the blame on local financial institutions that have for years pressured Bitcoin with restrictive policies. A central bank directive, he says, has been successful in turning away interest despite the fact that it’s not clear if buying and selling bitcoin is banned.

No arrests have been made, but there’s been an implied force Saifedean experienced firsthand when he would try and fail to install a Bitcoin ATM at a local shopping center in 2017. That isn’t to say others haven’t been successful.

“I know people whose banks would close their account unless you signed a paper saying you would not deal with cryptocurrencies,” he says. “They were fighting it every step of the way.”

That isn’t to say others haven’t been successful since, especially in the wake of the collapse of trust in the local banking sector.

We find a Bitcoin ATM at a nearby currency exchange, and it’s clear the operators see utility in bitcoin. They don’t want to be identified (for fear of reprisal), but they’re open about how bitcoin is allowing local Lebanese to store value safely amid trying times.

“We have thousands of dollars in our houses,” the operator explains. “They are stealing the money every time they print new notes.” You get the sense he’s wearing his wealth, his tan leather jacket looks new and it’s adorned liberally with gold chains.

The owner estimates the ATM gets about 15 customers a day, but it’s a far cry from what you might expect in a city of millions where the currency is depreciating daily.

Yet, outside the shop, life amid hyperinflation carries a certain facade of stability. Window after window on trendy Hamra Street features the latest suits and streetwear from Nike, Gucci, Rolex and the like. Under the surface, though, locals say the strain is growing.

Ibrahim is eager to explain how hyperinflation has impacted his life. He rents two houses, the result of a recent marriage. Both are similar in size and location, but he pays 1 million lira per month (or about $35) for the first, and 500 euros (about $600) for the second.

These costs are set by the contract and so don’t accomodate changes in the value of the local currency. “You can argue for both parties [of the contract],” Ibrahim says, the Canon equipment of his trade jostling in a saddlebag. “I cannot pay 500 euros. But the owner, it’s not his fault the currency devalued.”

Already, he has seen two classes of workers emerge — those who get paid by foreign firms in U.S. dollars and those who receive salaries in Lebanese pounds. For emphasis, he points to a nearby traffic guard pacing away his afternoon.

“His salary is less than $50. He used to get $800 and now he gets $50. You can imagine how this impacts his choices of food, his pleasure time,” he says.

There are losers in hyperinflation, to be sure, but there are also winners. As Saifedean explains, the situation isn’t all that bad for the wealthy. “They just got a 95% discount on their [mortgage],” he says amid dinner at a busy upscale grill.

It’s a subtle revelation that will set in over the coming days, that inflation isn’t a humanitarian crisis but a bone cancer — malignant maybe but almost undetectable on the surface.

“The people who can afford to eat here,” Ibrahim adds, “still eat here.”


As Saifedean’s journey shows, it isn’t always easy to recognize economic reality — even he would spend years skeptical of the idea bitcoin was replacing gold and becoming global money.

Indeed, Saifedean’s early academic work remained steeped in the idea some authority, if only properly informed and encouraged, was capable of enacting economic and political change.

As a master’s student, Saifedean would first make a name in columns penned for Columbia’s school newspaper, The Columbia Spectator, which addressed the Palestinian struggle and the various hypocrises revealed by the Western institutions that attempted to intervene and assist it.

As highlighted by the New York Observer in 2007, Saifedean was already adept at taking an assertive stance on political issues, sparking an argument at a campus party celebrating the birth of Israel and “taking over” talk at a Hillel debate on whether Zionism is racist. 

“You might as well base citizenship on the horoscope. No Scorpios are allowed, and my family are Scorpios,” Saifedean argued, the hyperbole shocking the pro- Israel lobby in attendance.

His 2011 PhD thesis, “Alternative Energy Science and Policy: Biofuels as a Case Study,” would mark the point at which he would begin channeling his antagonism toward its present targets.

Today, it reads as a prelude to “The Fiat Standard,” arguing government subsidies for biofuels actually harmed the environment. His new book revives the idea, asserting that oil and other hydrocarbon fuels should be recognized for their history of improving human life.

An attempt to unite his undergraduate engineering work with his new interest in economics, the paper found its author at first attempting to model how biofuel mandates could achieve climate goals, a direction that would sharply shift in the wake of the 2008 Great Financial Crisis.

As the global markets teetered on the edge of collapse, Saifedean began to see himself in the academics who justified bailouts for billionaires with similar spreadsheet models. That’s when, he says, he began to embrace the “Austrian perspective.”

“I figured out that people have known that the world is far too complicated, that I wasn’t alone.”

Empowered, he would keep on writing his PhD thesis, naively thinking he’d be embraced as a controversial, independent thinker. Instead, this turn toward libertarianism was met with resistance by the Columbia brass, and he remains bitter about the rebuke.

“I ignored how their entire intellectual way of approaching the world relies on their own statist, socialist central planning,” he says. That the response feels pointed is perhaps because his parents flew to New York for his graduation only to find his PhD defense had been canceled over concerns about its content. He would wait another year before receiving his doctorate.

Saifedean’s first brush with Bitcoin would occur soon after.

Arriving in New York in the summer of 2011, he had told himself he would buy 100 bitcoin for $100, but as the price quickly spiked above $30, he was turned away due to the expense and his conceited conviction that Bitcoin would almost certainly fail.

All the while, he would remain convinced gold was the answer to issues in the financial system, even attempting to found a startup to allow users to transfer the precious metal with the ease of popular digital apps like PayPal. (He would go to Switzerland to scout for physical vaults and claims to have had interest among provisional investors.)

Yet, Saifedean was then far from alone in thinking actively and thoughtfully about alternative finance, and he’d soon become more outspoken in airing his distrust in the legacy system.

Dated from late 2011 and early 2012, his initial appearances on “The Keiser Report” showcase what would become the next subject of his ongoing academic work — the idea that the United States was no longer a free market capitalist system.

Max Keiser, the show’s host, recalls trying to get Saifedean to see Bitcoin’s potential at the time but claims his attempts were rebuffed. (“He hated it,” Keiser says now.) Saifedean doesn’t remember it exactly that way but admits he remained “uninformed” on the subject until 2013. (He vaguely recalls the Keiser discussion but isn’t exactly sure it happened.)

Either way, as the price of bitcoin rose toward $1,000 that year, Saifedean began to rethink his skepticism, sending a series of emails to Keiser seeking advice on how to buy. Shortly after, he would make his first purchase and begin dating his wife in the same week.

It’s perhaps because of this personal journey that Saifedean increasingly sees his financial and domestic stability as intertwined.

“The profound heart of all of this is that it is the hardness of the money that reflects on the time preference. That is what Bitcoin allowed me to discover in myself and allowed me to put it in the book. When you have a way to store value for the future, you can provide for your future.”

“I know a lot of people who have done the same thing,” he continues, “they get into Bitcoin and get married. They started to think about the future.”


Still, if the legacy of “The Bitcoin Standard” is the clarity with which it described the economic problems Bitcoin solves, debate remains on the extent of the societal impact of its solution.

On hand to emphasize the divide is Bitcoin Magazine’s own Aaron van Wirdum. A technology reporter in the field since 2013, his interactions with Saifedean quickly reveal how claims core to “The Fiat Standard” can feel taboo for those to whom Bitcoin is more science than politics.

Indeed, arguments quickly flare around whether removing government money from economies can have downstream impacts on healthcare, wellness and conservation, with conversation turning tense around the idea these subjects have any domain in Bitcoin at all.

Amid one discussion on how outlooks among users have clearly evolved on the matter, it’s Saifedean who uses the floor to claim Bitcoin critics all “want to eat bugs [and] wear a mask.”

Aaron calls the remark a pivot of subject, and Saifedean wastes no time in punching back.


Oh yeah, you were one of the [COVID] hysterics at some point. Oh god. 


Well, it should have been tackled early and hard.

The conversation quickly escalates, with Saifedean arguing those who think like Aaron are no more than gullible cowards who have been manipulated by the Chinese Communist Party, big pharmaceutical companies and mainstream media into becoming modern fascists.

The exchange is laced with criticism against accomplices far and wide, from podcaster Peter McCormack and Microsoft founder Bill Gates (it’s not clear which exactly is part of what he calls “the manboob squad”) to Nassim Taleb (the Lebanese author who wrote the introduction to “The Bitcoin Standard” and with whom he is now engaged in a public feud).

In the span of some minutes, he’ll argue the media has been complicit in creating widespread belief in what amounts to misinformation about the virus and its transmissibility, all the while admonishing governments for using totalitarianism to fight a disease that can effectively be countered with “healthy living, nutrition, and basic hygiene.”

“There’s money in authoritarianism, there’s money to be made from surveillance, and the TV viewers go along,” Saifedean says, by now ignoring the cooling food in front of him. 

As time goes by, Aaron is able to interject less and less, his final comment something along the lines of, “Do we agree that there’s a virus?” Attempts to find a middle ground only seem to make Saifedean more irate as he builds to his crescendo.

“How many years and how many shots is it going to take for you to see this isn’t about the shots or the masks? You’ve been suckered into handing over generations of freedoms that your children are never going to get back.”

“I respect your right to be gullible and stay at home. Why can you not respect my right to risk my life? It’s not about health, it’s about control. Wake the fuck up! Wake the fuck up!”

The debate is one that will reoccur over the four-day trip but never with quite the same passion. Saifedean later refers to Aaron’s insistence on “poisoning” him with the vaccine as a “disagreement among friends,” the comment offering a more muted but no less acerbic take.

If Aaron is offended by the conversation, he’s adept at hiding it. When you’ve worked through the bitter parts of Bitcoin’s formative years, getting yelled at is simply part of the trade. Still, it’s worth noting this behavior is a target for Saifedean’s critics, who worry it politicizes discussion of a neutral technology with no bearing on broader lifestyle choices.


But even as he wields it as a weapon, it’s hard not to admire the zeal with which Saifedean embraces the freedoms Bitcoin has afforded him. If you’re not the target of his animosities, he’s enjoyable company with a deep interest in food and music, and Beirut brings out his inner aficionado.

This sentimentality is understandable when you consider he’d experience a career renaissance here in 2015, when back again in Beirut, he’d publish a breakout paper that argued bitcoin was the only cryptocurrency likely to experience long-term adoption.

“The coexistence of bitcoin and government currencies is an unstable equilibrium: the longer bitcoin exists, the more likely it is to continue, and the more attractive it becomes compared to traditional currencies,” it reads.

Yet, if that work seemed tepid at times (including an obligatory passage about how innovations are often outmoded), more assertive work would soon follow. “Blockchain Technology: What Is It Good For?” and “Can Cryptocurrencies Fulfill the Functions of Money?,” bolder papers that more forcefully argued for Bitcoin as an agent of change, would appear in 2016.

But even as these works spread his message among academics, Saifedean says they did little more than encourage him to spend time “arguing on Facebook.” That’s when his wife convinced him to buckle down and write a book. Penned in two-and-a-half months thereafter, “The Bitcoin Standard” was an attempt to set the record straight, and the sales suggest it did.

For Saifedean, it’s the market reception that he finds most validating. Far from life in the fallow university system defined in “The Fiat Standard,” where paper mills compete for state handouts, he’s expanding his books into a new website,, for a global customer base.

“I had to take all these incredible ideas about the world and try to write this disgusting drivel that could get past the journals nobody reads that controlled my career,” he says with no small satisfaction. “Now, I can get on the keyboard and write.”

In his mind, this is how all industries should operate, with creators giving value to consumers, not a boss who has access to the money printer. Instead, he sees his former profession (and the world at large) as full of depressed people who “don’t get to do anything of value at all.”

“You see a lot of stories of people who feel a lot of emptiness, and you don’t see that with Bitcoiners,” he continues. “[In Bitcoin], you’ve settled on this money that is the final form of money and you can save it, and you know that it’s there.”

It’s these statements that perhaps best explain how Saifedean has influenced outlooks on the future of Bitcoin itself. I argue there’s a widespread confidence now, absent from earlier times, that Bitcoin is an inevitability requiring nothing more than passive acceptance.

It’s a point we debate back and forth, with Saifedean asserting, as he has in his work, that it’s only a steady increase in value over time that will make Bitcoin more mainstream. If this sounds “unidealistic,” he’s keen to assert he’s not an evangelist, nor does he think Bitcoin needs any kind of activist outreach to accelerate its adoption.

“Hard money cannot stay niche,” he says. “If number go up, everyone is going to want in.”


This debate will resurface again in microcosm at a meetup later, when it becomes clear even Beirut’s Bitcoiners don’t exactly see it as a solution to the crisis. Perspectives vary, but even as conversation slips between English and Arabic, prognosis remain as dim as the pub lighting.

Wrapped in a banker’s scarf and blue blazer, Gabor sits bespectacled as he argues why the local policy institute he works for believes the best course is to establish a currency board that can encourage the central bank to back its deposits with full U.S. dollar reserves.

Soon, Saifedean is careening into our conversation from across the room, eager to play Bitcoin defender. “If it’s a committee, it’s central planning, but if you call it a board, it’s not,” he says amid protests. “If you’re not solving the problem, the money printer, you’re just jerking off.”

At the heart of the debate is Saifedean’s central thesis from “The Bitcoin Standard” — politicians that benefit from inflation have no incentive to stop it, a problem that Bitcoin, by removing government from money management, solves by design.

“Tell them to stop bitching and moaning and start buying bitcoin!” he roars.

Still, for his part, Gabor seems set on impressing the practicalities of the matter. “If they stop printing, who will pay the salaries?” he says. “If you start at this level, you have no chance of convincing them.”

Marco, a former pharmacist and the founder of the meetup group, can’t help but agree, at least out of Saifedean’s earshot. As he explains it, local Lebanese believe the crisis to be political in nature. “They say that it can be solved with a snap of a finger. There’s always an excuse,” he says. “It’s America, or Iran, or Hezbollah, whatever you want.”

Others say Lebanon has weathered similar storms before: In the 1980s, the lira inflated wildly against the U.S. dollar only to eventually stabilize. “People still believe that this is a very similar situation,” Marco continues. “They don’t see the need to use a parallel alternative market yet.”

Most believe the near-term solution is for the country to officially adopt the U.S. dollar, but not because they see any defect with bitcoin. Rather, they seem to believe it just wouldn’t gather popular support here, even if the country took the same progressive steps as El Salvador.

“We have a physics professor going live on TV, saying it twice in the same interview, that the solution for stopping the lira’s situation is shutting down the fucking internet,” Marco adds. “You tell me we can convince these people to buy bitcoin?”

A currency dealer who trades with locals over Telegram and Binance concurs, noting most of the sales he conducts are actually for the U.S. dollar stablecoin Tether. He says Lebanese want the safety of the U.S. dollar, and that to many, crypto stablecoins are the next best thing.

Gabor adds that this is how he even grows his own bitcoin position, buying USDT and selling it on an exchange when the price dips. “Most of the local Bitcoiners don’t want to sell,” he adds.

Amid the debate, the group prompts me to test the theory by conducting a trade over Telegram, so I post a message offering to sell $250 worth of bitcoin for U.S. dollars. Within a minute, I’ve received a reply from someone eager to conduct the sale.

What follows is a bizarre encounter where I shuffle into a black Mercedes only to be told by our dealer he “never touches bitcoins.” He continues to assume I want Tether, asking “ERC-20 or Tron?” until we eventually abandon the poorly translated trade.

When we return to the bar, we find the talk has taken its own unexpected turn, with Saifedean denouncing the failures of republican governments in the region. The idea will feel familiar to Saifedean readers who know his stance on monarchies as the preferred, low time preference form of state rule. But even in a bar where everyone is eager for a copy of “The Fiat Standard,” his vision for a more peaceful Middle East perhaps comes off as more polarizing than intended.

“Look at Jordan, they have security, infrastructure that works, and an entirely livable, civilized country. Plus, the Hashemites can get you 24-hour electricity,” he says, chiding the table.

To the amazement of attendees, he goes on to suggest Jordan’s ruling family might even hold the keys to resolving broader regional strife. Though they are Sunni Muslim, they are direct descendants of the prophet Muhammad, which makes them popular among Shia Muslims.

Since the entire Sunni–Shia schism, he reasons, comes from Shia anger at Sunni betrayal of the house of Hashem after the prophet’s death, only the Hashemites can mend the breach, which has turned increasingly bloody and bitter in recent decades.

“But Jordan isn’t exactly a free market economy,” objects Michael, an ex-student of Saifedean.

“We just need to orange pill His Majesty so he shuts down the parliament and ministries and all the central planners, leaving only the army and the royal court!” he exclaims, adding: “The rest of the region will want to join the Hashemites.”


Back in the car, days of discussion appear to have finally piqued Ibrahim’s interest in Bitcoin.

We’re on our way to the Shrine of Our Lady of Lebanon, fighting stop-and-go traffic en route to the nearby national monument when his questions begin to pour forth. Should he do anything with the “other cryptocurrencies?” What does it mean when we say “China banned Bitcoin”?

He’s been busy Googling since we met, and while he was formerly impressed by a speech Saifedean gave in May, he’s on the sidelines with no money invested in bitcoin.

Ibrahim’s admission is made all the more surprising when he relays that most of his money is stuck in his bank account, all but inaccessible due to withdrawal limits.

It’s something Saifedean just can’t seem to understand. On leaving university life in 2019, he’d immediately convert his severance pay into bitcoin. (He even sent his sister-in-law to the bank directly with his dealer, so as not to waste any time.) Factoring capital controls, he’d take a 40% cut on the payment, but says the gains in bitcoin have made up for it.

“It’s like [the GIF of] George Clooney when he’s walking away from the explosion,” he recalls. “It hit 3,000 [liras to the dollar], then the numbers tumbled one after another.”

Later, we’re passing the largest Christmas tree in Lebanon as the conversation resumes.

Aaron is still probing Saif about his feelings on Big Oil, attempting to get him to admit there’s such a thing as “negative externalities” that humans need governments to help solve.


They exist in situations where property rights are not well defined.


Right, but who owns the ozone layer? 


(quietly) What is fiat? 

The question is so innocent it almost doesn’t register, and I take the bullet as Saif and Aaron turn back, lost in a battle of egos running deep. The list of talking points that follows feels like a greatest hits of Saifedean’s work — the mobility problem with gold, how and why paper notes replaced it, and why bitcoin is now the best way to move value across time and space.

It’s a testament to his influence, but also to the difficulty of ever really explaining Bitcoin fully. The deeper you go, the more questions always seem to remain.


My cousin told me recently there was a security upgrade... who does that? 


[Turning back] Yeah Saif, who does that? 


If you’re running the code, you decide what code you want. You can decide anything, but the thing only works if you don’t change anything. 


But it did change... 

The conversation feels worn now, so much so that as potholes rattle the car, the stream of Arabic cursing that follows seems almost like a therapeutic break.

In the shock to the senses that follows, I can’t help but wonder about our time preference, if we’ve lapsed too far into our own complacency, too sure some climax was bound to happen.

In solidarity with the sentiment, I decide to override my own central planning, asking Saifedean how he’d like to end the article. “Hookers, cocaine, gunfight? You want to watch drug dealers fight in Bakka?” he responds.

Fate intervenes when, just down the street from our destination, he asks me abruptly, “Oh, so did you sell your bitcoin yesterday?”

I turn back and tell the tale. The shock is visible on Saif’s face, his eyes wide, mouth ajar.


That’s a sad way to end the story.

We’re at our destination now, abruptly swapping handshakes.

It’s an empty feeling as the car rolls along. As if after so many manic sword swings, the great bull had finally bled, and we were left sitting with some great and sobering wrong.


It’s not soon after that we’re again at the hotel, and I’m lost looking at waves lapping into mist as Ibrahim turns to the subject of payment.

I’m out of dollars by now but figure an ATM might be near. If nothing else, it could be the set up for another ending, another caper, a final quest that could tie the ragged ends of a trip that has seemed to end abruptly, the false note struck in the car still ringing.

I almost don’t hear the words as he finally breaks the silence.

“I will do it,” Ibrahim says, half as if he’s still convincing himself. The words are quick, hushed, paired with a kind of stowaway smile.

Some minutes later he’s marveling as bits fly through cyberspace, and Bitcoin, that great central bank in the sky, reassigns our private keys, the soft magic making what was mine his, for all time, forever, or as long as we can hold it.

It’s a tiny rebellion against the fiat world, to be sure.

Out there in the night, there remain the big banks, self-important soldiers, and all the tentacles of the expanding, encroaching global state. But it’s these moments where it’s clear it might be our aspirations more than our answers that really matter most.

“Wow,” Ibrahim says, looking down at the soft glow of his phone.

You can see it for a second — the reflection on all the ATMs, the broke central banks, the arguments over ripped bills — the understanding that it could all be so easily wiped away.

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Social media calls for a boycott of the club’s upcoming match against Liverpool seem to mostly becoming from outside the UK.



United fans are calling for a stadium boycott – but the majority live thousands of miles from Old Trafford. warasit phothisuk/Shutterstock

After years of underachievement on the field, Manchester United was supposed to bounce back this Premier League season.

But an opening game home defeat to Brighton and Hove Albion, followed by an embarrassing capitulation away at Brentford, has left United bottom of the Premier League, with zero points. This has prompted former club captain Gary Neville to assert that the club has now reached rock bottom.

In protest, fans have taken to social media to call for a boycott of United’s next game, Monday’s home clash against historic rivals Liverpool. Organised around the hashtag #EmptyOldTrafford, many posts take aim at the club’s owners, the Glazer family, who critics accuse of prioritising the club’s commercial activity and global reach over performance on the pitch.

As part of a longitudinal research project monitoring football clubs and social media, we sampled 21,610 tweets featuring the #EmptyOldTrafford hashtag between Saturday 13 August to Monday 15 August 2022. What we found was striking. It appears that a majority of Twitter users encouraging fans not to attend the Liverpool game are based outside the UK and may never even have attended a game at Old Trafford.

This would suggest that the club’s strategy of recruiting fans worldwide for commercial reasons may be backfiring. In building a huge following across the world, United may also have inadvertently cultivated a community of global social media activists intent on influencing how the club is run.

United’s commercial success

Fans, followers and pundits frequently target the blame for United’s descent from greatness at its owners, the Glazers, a family of US sports entrepreneurs who took control of the club in 2005.

The Glazers’ focus on the commercial development of United has seen the club constantly feature towards the top of financial performance and brand valuation league tables. In 2012, it generated US$478 million (£396 million) in revenues, which reached a pre-pandemic peak of US$796 million in 2019.

Such revenues are also a result of the club’s pursuit of overseas fan engagement. This appears to have been very successful. In one study, it was estimated that United has 1.1 billion worldwide fans and followers. In another study, it was identified that the Manchester club has upwards of 170 million followers across all social media platforms. That’s enough to fill Old Trafford 2,292 times.

Thai Manchester United fans
Manchester United is regarded as the world’s most-supported sports team. mooinblack/Shutterstock

Fan frustration

In May 2020, United fans’ frustration about poor results manifested itself in a pitch protest against the Glazers, leading to a home game against Liverpool being postponed. Just last season, fans had also planned mass walkouts during games to express their discontent, but few fans actually left the stadium on these occasions.

This time around, calls for a walkout have been amplified by social media. Our map of accounts using the #EmptyOldTrafford hashtag shows that United fans and followers from a multitude of countries have been calling for people to stay away from the game against Liverpool, including significant clusters in the US, west Africa and India.

A map showing global clusters of twitter activity
The protest hashtag has been used across the world. Wasim Ahmed, Author provided

We themed the tweets according to their content, colour coding them on our map. Some explicitly criticised the owners, while others focused on encouraging loyal fans to join the protest.

A table of the themes grouped by the researchers
We grouped tweets into four main themes. Simon Chadwick, Author provided

Curiously, we noted that of the inflammatory aggressive clusters, the biggest is centred in Nigeria. One reason for this could be that the club has a significant fan base in the west African country, perhaps following its signing-on loan in 2020 of Nigerian international Odion Ighalo. Another reason could be that Nigerian celebrities including Adekunle Gold, Uche Jombo and Mayorkun have ridiculed Manchester United online.

There is a third explanation. It’s possible that Nigerian troll farms are being specifically engaged to spread the #EmptyOldTrafford hashtag, though by whom and for what purpose is unclear. What is clear from our work is that the largest number of Twitter accounts involved in the hashtag were only established this year. That’s often a sign that accounts have been created for a specific purpose.

It could be that fans are joining Twitter with the intention of supporting the protest. Alternatively, one might argue that new users are more vehement in expressing their views about United and the Glazers. But if troll farms have helped the #EmptyOldTrafford hashtag trend on Twitter, it suggests there are some worrying new developments on social media that top football clubs must address.

Pressure on the Glazers

Manchester United fans will be aware that ticket revenue accounts for a tiny proportion of the club’s total income. If the #EmptyOldTrafford protest is successful and the stadium is conspicuously empty for the Liverpool game, it may only serve as a passing embarrassment for the club’s owners.

But a football club with global ambitions is subject to global scrutiny and criticism, especially in the age of social media. A one-off stadium protest may not rattle sponsors and commercial partners, but the ongoing discontent of the global audience they’re trying to reach may well do.

Even if the atmosphere at Monday’s fixture is muted, our findings suggest that United’s global fan base has found its voice. It’s that development, rather than events in Manchester, that may ultimately encourage the club’s owners to address United’s decade-long slide to Premier League mediocrity.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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Joe Biden’s Inflation Reduction Act “Secretly” Brought To You By Bill Gates

Joe Biden’s Inflation Reduction Act "Secretly" Brought To You By Bill Gates

The Democrats’ "Inflation Reduction Act" – which according to…



Joe Biden's Inflation Reduction Act "Secretly" Brought To You By Bill Gates

The Democrats' "Inflation Reduction Act" - which according to the Congressional Budget Office will raise taxes on the middle class to the tune of $20 billion - not to mention unleash an army of IRS agents on working class Americans over the next decade, was made possible by Bill Gates and (in smaller part) Larry Summers, who have been known to hang out together.

Pals hanging out

The bill, of course, was signed yesterday.

In a Tuesday Bloomberg article that reads more like a newsletter for the Gates fan club, the billionaire Microsoft co-founder recalls how earlier this year, as moderate Democratic Senators Joe Manchin and Kyrsten Sinema continued to block the tax-and-spend legislation over concerns that it would raise taxes on the middle class (it will), Gates says he tapped into a relationship with Manchin that he'd been cultivating since at least 2019.

Gates was banking on more than just his trademark optimism about addressing climate change and other seemingly intractable problems that have been his focus since stepping down as Microsoft’s chief executive two decades ago. As he revealed to Bloomberg Green, he has quietly lobbied Manchin and other senators, starting before President Joe Biden had won the White House, in anticipation of a rare moment in which heavy federal spending might be secured for the clean-energy transition.

Those discussions gave him reason to believe the senator from West Virginia would come through for the climate — and he was willing to continue pressing the case himself until the very end. “The last month people felt like, OK, we tried, we're done, it failed,” Gates said. “I believed it was a unique opportunity.” So he tapped into a relationship with Manchin that he’d cultivated for at least three years. “We were able to talk even at a time when he felt people weren’t listening.” -Bloomberg

We know, gag us with a spoon.

Apparently Gates and Manchin's bromance began when the billionaire wooed the West Virgina Senator at a 2019 meal in Seattle, in an effort to garner support for clean-energy policy. Manchin at the time was the senior-most Democrat on the energy committee.

"My dialogue with Joe has been going on for quite a while," said Gates.

After Manchin walked (again) on the bill last December over concerns that it would exacerbate the national debt, inflation, the pandemic, and amid geopolitical uncertainty with Russia, Gates jumped into action. A few weeks later, he met with Manchin and his wife, Gayle Conelly Manchin, at a DC restaurant, where they talked about what West Virginia needed. Manchin understandably wanted to preserve jobs at the center of the US coal industry, while Gates suggested that coal plant workers could simply swap over to nuclear plants - such as those from Gates' TerraPower.

Manchin apparently wasn't convinced, announcing on Feb. 1 that "Build Back Better" (the Inflation Reduction Act's previous iteration) was "dead."

In an effort to convince him otherwise, Democrats pulled together a cadre of economists and other Manchin influencers - including former Treasury Secretary Lawrence Summers, who convinced Manchin that the bill wouldn't raise taxes on the middle class, or add to the deficit.

Collin O’Mara, chief executive officer of the National Wildlife Federation, recruited economists to assuage Manchin’s concerns — including representatives from the University of Chicago and the Wharton School of the University of Pennsylvania. Senator Chris Coons of Delaware brought in a heavyweight: former Treasury Secretary Lawrence Summers, who has spent decades advising Democrats. 

The economists were able to “send this signal that [the bill’s] going to help with the deficit,” O’Mara said. “It’s going to be slightly deflationary and it’s going to spur growth and investment in all these areas.” Through this subtle alchemy, clean-energy investments could be reframed for Manchin as a hedge against future spikes in oil and gas prices and a way to potentially export more energy to Europe. -Bloomberg

Gates also sprang into action again on July 7, when Manchin was spotted at the Sun Valley media conference in Idaho - which Gates also attended.

"We had a talk about what was missing, what needed to be done," Gates said. "And then after that it was a lot of phone calls."

Gates looks back at the new law with satisfaction. He achieved what he set out to do. “I will say that it's one of the happier moments of my climate work,” Gates said. “I have two things that excite me about climate work. One is when policy gets done well, and this is by far the biggest moment like that.” His other pleasure comes from interviewing people at climate and clean-tech startups: “I hear about this amazing new way to make steel, cement and chemicals.” -Bloomberg

"I don’t want to take credit for what went on," says Gates - in the article about how he gets credit for what went on.

Tyler Durden Wed, 08/17/2022 - 10:11

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Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields

Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields

Futures were grinding gingerly higher, perhaps celebrating the…



Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields

Futures were grinding gingerly higher, perhaps celebrating the end of the Cheney family's presence in Congress, and looked set to re-test Michael Hartnett bearish target of 4,328 on the S&P (which marked the peak of yesterday's meltup before a waterfall slide lower when spoos got to within half a point of the bogey), when algos and the few remaining carbon-based traders got a stark reminder that central banks will keep hammering risk assets after the UK reported a blistering CPI print, which at a double digit 10.1% was not only higher than the highest forecast, but was the highest in 40 years.

The print appeared to shock markets out of their month-long levitating complacency, and yields - both in the UK and the US - spiked...

... and with yields surging, futures had no choice but to notice and after trading at session highs just before the UK CPI print, they have since tumbled more than 40 points and were last down 0.85% or 37 points to 4,271.

Nasdaq 100 futures retreated 0.9% signaling a selloff in technology names will continue. The dollar rose as investors awaited the minutes of the Fed’s last policy meeting for clues on policy makers’ sensitivity to weaker economic data.

In US premarket trading, retail giant Target slumped 4% after reporting earnings that missed expectations despite still predicting a rebound. Applied Materials and PayPal dropped at least 1.3%. Tech stocks are the forefront of the growing pessimism over equity valuations on the back of Fed rate increases. The S&P 500 had posted a small gain on Tuesday, aided by earnings reports from retailers Walmart Inc. and Home Depot. Here are some of the other biggest U.S. movers today:

  • Manchester United (MANU US) rises as much as 17% in US premarket trading before trimming most of the gains, after Tesla CEO Elon Musk said he was buying the English football club but later added that he was joking.
  • Hill International (HIL US) shares rise 61% in premarket trading hours after it announced Global Infrastructure Solutions will commence an all-cash tender offer for $2.85/share in cash, representing a premium of 63% to the last closing price.
  • BioNTech (BNTX US) was initiated with a market perform recommendation at Cowen, which expects demand for Covid-19 vaccines to mirror annual flu trends as the pandemic enters its endemic phase.
  • Bed Bath & Beyond (BBBY US) shares surge 20% in premarket trading, putting the stock on track for its sixth day of gains. The home-goods company has helped reinvigorate a wave of meme stock buying
  • Agilent (A US) saw its price target boosted at brokers as analysts say the scientific testing equipment maker’s results were strong thanks to growth in biopharma and a recovery in China, while the company’s guidance was on the conservative side. Shares rose .
  • Jefferies initiated coverage of Waldencast Plc (WALD US) class A with a buy recommendation as analyst Stephanie Wissink sees 29% upside potential.
  • Sea Ltd. (SE US) ADRs slipped as much as 2.1% in US premarket trading, extending Tuesday’s declines, as Morgan Stanley cut its PT on expectations of slowing growth at the Shopee owner’s e-commerce business in the third quarter.
  • Weber (WEBR US) downgraded to sell from neutral at Citi, which says there are too many concerns to remain on the sidelines, including a decline in point-of-sale traffic and macro factors like inflation weighing on consumer demand

In the past two months, US stocks rallied on signs of peaking inflation and an earnings-reporting season that saw four out of five companies meeting or beating estimates. Boosted by relentless systematic (CTA) buying and retail-driven short squeezes, as well as a surge in buybacks, stocks recovered more than 50% of the bear market retracement. Yet, continuing rate hikes and the likelihood of a recession in the world’s largest economy are weighing on sentiment. Meanwhile, concern is growing that Fed rate setters will remain focused on the fight against inflation rather than supporting growth.

“We expect the FOMC minutes to have a hawkish tilt,” Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. “We would not be surprised if the minutes show the FOMC considered a 100 basis-point increase in July.”

In Europe, the Stoxx 600 fell after a strong start amid signs the continent’s energy crisis is worsening. Benchmark natural-gas futures jumped as much as 5.1% on expectations the hot weather will boost demand for cooling. In the UK, consumer-price growth jumped to 10.1%, sending gilts tumbling. Real estate, retailers and miners are the worst performing sectors. The Stoxx 600 Real Estate Index declined 2%, making it the worst-performing sector in the wider European market, as focus turned to UK inflation that soared to double digits for the first time in four decades and also to today's FOMC minutes. German and Swedish names almost exclusively account for the 10 biggest decliners. TAG Immobilien drops 5.4%, Wallenstam is down 4.7%, Castellum falls 4% and LEG Immobilien declines 3.3%. The sector tumbles on rising bond yields, with 10y Bund yield up 11bps, and dwindling demand for Swedish real estate amid rising rates.

Earlier on Wednesday, stocks rose in Asia amid speculation that China may deploy more stimulus to shore up its ailing economy while Japanese exporters were boosted by a weaker yen. After a string of weak data driven by a property-sector slump and Covid curbs, China’s Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to bolster pro-growth measures. The MSCI Asia Pacific Index advanced as much as 0.8%, with consumer-discretionary and industrial stocks such as Japanese automakers Toyota and Honda among the leaders on Wednesday. The benchmark Topix erased its year-to-date loss. Chinese food-delivery platform Meituan also rebounded after dropping more than 9% in the previous session on a Reuters report that Tencent may divest its stake in the firm. Chinese stocks erased declines early in the day, as investors hoped for more economic stimulus after a surprise rate cut on Monday failed to excite the market. Premier Li Keqiang has asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures.

“I believe policymakers have the tools to prevent a hard landing if needed,” Kristina Hooper, chief global market strategist at Invesco, said in a note. “I find investors are overly pessimistic about Chinese stocks -- which means there is the potential for positive surprise.” Asia’s stock benchmark is trading at mid-June levels as traders attempt to determine the trajectory of interest-rate hikes and economic growth globally -- as well as the impact of China’s property crisis and Covid policies. Meanwhile, minutes of the US Federal Reserve’s July policy meeting, out later Wednesday, will be carefully parsed. New Zealand stocks closed little changed as the country’s central bank raised interest rates by a half percentage point for a fourth-straight meeting. Australia's S&P/ASX 200 index rose 0.3% to close at 7,127.70, supported by materials and consumer discretionary stocks. South Korea’s benchmark missed out on the rally across Asian equities, as losses by large-cap exporters weighed on the measure

In FX, the Bloomberg Dollar Spot Index rose as the dollar gained versus most of its Group-of-10 peers. The pound was the best G-10 performer while gilts slumped, led by the short end and sending 2-year yields to their highest level since 2008, after UK inflation accelerated more than expected in July. The yield curve inverted the most since the financial crisis as traders ratcheted up bets on BOE rate hikes in money markets, wagering on 200 more basis points of hikes by May. The euro traded in a narrow range against the dollar while the region’s bonds slumped, led by the front end. Scandinavian currencies recovered some early European session losses while the aussie, kiwi and yen extended their slide in thin trading. EUR/NOK one-day volatility touched a 15.12% high before paring ahead of Norges Bank’s meeting Thursday where it may have to raise rates by a bigger margin than indicated in June given Norway’s inflation exceeded forecasts for a fourth straight month, hitting a new 34-year high. Consumer sentiment in Norway fell to the lowest level since data began in 1992, according to Finance Norway. New Zealand’s dollar and bond yields both rose in response to the Reserve Bank hiking rates by 50bps, while flagging concern about labor market pressures and consequent wage inflation; the currency subsequently gave up gains in early European trading. The Aussie slumped after data showing the nation’s wages advanced at less than half the pace of inflation in the three months through June, backing the Reserve Bank’s move to give itself more flexibility on interest rates.

In rates, treasuries held losses incurred during European morning as gilt yields climbed after UK inflation rose more than forecast. US 10-year around 2.87% is 6.5bp cheaper on the day vs ~13bp for UK 10-year; UK curve aggressively bear-flattened following inflation data, with long-end yields rising about 10bp. Front-end UK yields remain cheaper by ~20bp, off session highs, leading a global government bond selloff. US yields are higher on the day by by 4bp-7bp; focal points of US session are 20-year bond auction and FOMC minutes release an hour later. Treasury auctions resume with $15b 20-year bond sale at 1pm ET; WI 20-year yield at around 3.35% is ~7bp richer than July’s sale, which stopped 2.7bp through the WI level.

In commodities, oil fluctuated between gains and losses, and was in sight of a more than six-month low -- reflecting lingering worries about a tough economic outlook amid high inflation and tightening monetary policy.  Spot gold is little changed at $1,774/oz

Looking at the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July.

Market Snapshot

  • S&P 500 futures down 0.3% to 4,293.00
  • STOXX Europe 600 little changed at 443.30
  • MXAP up 0.5% to 163.48
  • MXAPJ up 0.2% to 530.38
  • Nikkei up 1.2% to 29,222.77
  • Topix up 1.3% to 2,006.99
  • Hang Seng Index up 0.5% to 19,922.45
  • Shanghai Composite up 0.4% to 3,292.53
  • Sensex up 0.5% to 60,168.83
  • Australia S&P/ASX 200 up 0.3% to 7,127.68
  • Kospi down 0.7% to 2,516.47
  • German 10Y yield little changed at 1.06%
  • Euro little changed at $1.0178
  • Gold spot down 0.0% to $1,775.21
  • U.S. Dollar Index little changed at 106.50

Top Overnight News from Bloomberg

  • More market prognosticators are alighting on the idea of benchmark Treasury yields sliding to 2% if the US succumbs to a recession. That’s an out-of-consensus call, compared with Bloomberg estimates of about a 3% level by the end of this year and similar levels through 2023. But it’s a sign of how growth worries are forcing a rethink in some quarters
  • The euro-area economy grew slightly less than initially estimated in the second quarter as signs continue to emerge that momentum is unraveling. Output rose 0.6% from the previous three months between April and June, compared with a preliminary reading of 0.7%, Eurostat said Wednesday
  • Egypt became a prime destination for hot money by tethering its currency and boasting the world’s highest interest rates when adjusted for inflation
  • Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, posted its biggest loss since the pandemic as rate hikes, surging inflation and Russia’s invasion of Ukraine spurred volatility. It lost an equivalent of $174 billion in the six months through June, or 14.4%

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings, but with gains capped overnight ahead of the FOMC Minutes and as participants digested another 50bps rate hike by the RBNZ. ASX 200 swung between gains and losses with the index indecisive amid a slew of earnings and with strength in the consumer sectors offset by underperformance in tech, energy and healthcare. Nikkei 225 climbed above the 29,000 level with the index unfazed by mixed data releases in which Machinery Orders disappointed although both Exports and Imports topped forecasts. Hang Seng and Shanghai Comp were somewhat varied with Hong Kong led higher by tech amid plenty of attention on Meituan after reports its largest shareholder Tencent could reduce all or the bulk of its shares in the Co. which a Tencent executive later refuted, while the mainland was less decisive amid headwinds from the ongoing COVID situation and with power restrictions disrupting activity in Sichuan, although reports also noted that Chinese Premier Li told top provincial officials that they must have a sense of urgency to consolidate the economic recovery and reiterated to step up macro policies.

Top Asian News

  • RBNZ hiked the OCR by 50bps to 3.00%, as expected, while it stated that conditions need to continue to tighten and they agreed that maintaining the current pace of tightening remains the best means. RBNZ also agreed that further increases in the OCR were required to meet the remit objective and that domestic inflationary pressures had increased since May. Furthermore, the RBNZ raised its projections for the OCR and inflation with the OCR seen at 3.69% in Dec. 2022 (prev. 3.41%) and at 4.1% for both Sept. 2023 and Dec. 2023 (prev. 3.95%), while it sees annual CPI at 4.1% by Sept. 2023 (prev. 3.0%).
  • RBNZ Governor Orr stated at the press conference that they are not forecasting a recession but expected below-potential growth amid subdued consumer spending. Governor Orr also stated that they did not discuss a 75bps rate hike today and that 50bps moves have been orderly and sufficient, while he added that getting rates to 4% would buy comfort for the policy committee and that a Cash Rate of around 4% is unambiguously above neutral and sufficient to meet the inflation mandate.
  • Chongqing, China is to curb power use for eight days for industry.
  • China’s Infrastructure Boom Gets Swamped by Property Woes
  • Tencent 2Q Revenue Misses Estimates
  • Hong Kong Denies Democracy Advocates Security Law Jury Trial
  • UN Expert Says Xinjiang Forced Labor Claims ‘Reasonable’
  • Singapore’s COE Category B Bidding Hits New Record
  • Delayed Deals Add to Floundering Singapore IPO Market: ECM Watch

European bourses have dipped from initial mixed/flat performance and are modestly into negative territory, Euro Stoxx 50 -0.5%. Stateside, futures are under similar pressure awaiting fresh corporate updates and the July FOMC Minutes, ES -0.6%. Fresh drivers relatively limited throughout the session with known themes in play and focus on upcoming risk events; stocks also suffering on further hawkish yield action. Lowe's Companies Inc (LOW) Q1 2023 (USD): EPS 4.68 (exp. 4.58), Revenue 27.47 (exp. 28.12bln); expect FY22 total & comp. sales at bottom-end of outlook range, Operating Income and Diluted EPS at top-end. Target Corp (TGT) Q1 2023 (USD): EPS 0.39 (exp. 0.72), Revenue 26.0bln (exp. 26.04bln); current trends support prior guidance.

Top European News

  • German Gas to Last Less Than 3 Months if Russia Cuts Supply
  • European Gas Surges Again as Higher Demand Compounds Supply Pain
  • Entain Falls; Citi Views Fine Negatively but Notes Steps by Firm
  • UK Inflation Hits Double Digits for the First Time in 40 Years
  • Receives Registration as UK Cryptoasset Provider


  • Greenback underpinned ahead of US retail sales data and FOMC minutes, DXY holds tight around 106.500.
  • Pound pegged back after spike in wake of stronger than expected UK inflation metrics, Cable hovers circa 1.2100 after fade into 1.2150.
  • Kiwi retreats following knee jerk rise on the back of hawkish RBNZ hike, NZD/USD near 0.6300 from 0.6380+ overnight peak.
  • Aussie undermined by marginally softer than anticipated wage prices and lower RBA tightening bets in response, AUD/USD well under 0.7000 vs 0.7026 at one stage.
  • Yen weaker as yield differentials widen again, but Euro cushioned by more pronounced EGB reversal vs USTs, USD/JPY probes 21 DMA just below 135.00, EUR/USD bounces from around 1.0150 towards 1.0200.
  • Loonie and Nokkie soft amidst latest slippage in oil, USD/CAD closer to 1.2900 than 1.2800, EUR/NOK nudging 9.8600 within 9.8215-9.8740 range.

Fixed Income

  • Debt retracement ongoing and gathering pace ahead of Wednesday's key risk events.
  • Bunds now closer to 154.00 than 156.00 and 157.00 only yesterday, Gilts not far from 114.50 vs almost 116.00 and 117.00+ earlier this week and T-note sub-119-00 vs 119-31 at best on Monday.
  • Sonia strip hit hardest as markets price in aggressive BoE hikes in response to UK inflation data toppy already elevated expectations.


  • Crude benchmarks are currently little changed overall, having recovered from a bout of initial pressure; newsflow thin awaiting fresh JCPOA developments
  • Spot gold is little changed overall but with a slight negative bias as the USD remains resilient and outpaces the yellow metal as the haven of choice.
  • Aluminium is the clear outperformer amid updates from Norsk Hydro that they are shutting production at their Slovalco site (175k/T year) by end-September, due to elevated energy prices.
  • OPEC Sec Gen says he sees a likelihood of an oil-supply squeeze this year, open for dialogue with the US. Still bullish on oil demand for 2022. Too soon to call the outcome of the September 5th gathering. Spare capacity at around the 2-3mln BPD mark, "running on thin ice".
  • US Private Inventory Data (bbls): Crude -0.4mln (exp. -0.3mln), Cushing +0.3mln, Gasoline -4.5mln (exp. -1.1mln), Distillates -0.8mln (exp. +0.4mln).
  • Shell (SHEL LN) announced it is to shut its Gulf of Mexico Odyssey and Delta crude pipelines for two weeks in September for maintenance, according to Reuters.
  • Uniper (UN01 GY) says the energy supply situation in Europe is far from easing and gas supply in winter remains "extremely challenging".
  • China sets the second batch of the 2022 rare earth mining output quota at 109.2k/T, via Industry Ministry; smelting/separation quota 104.8k/T.


  • China's military is to partake in a military exercise in Russia, their participation has nothing to do with the international situation.
  • Taiwan's Defence Ministry says they have detected 21 Chinese aircraft and five ships around Taiwan on Wednesday, via Reuters.
  • Iran is calling on the US to free jailed Iranian's, says they are prepared for prisoner swaps, via Fars.

US Event Calendar

  • 07:00: Aug. MBA Mortgage Applications, prior 0.2%
  • 08:30: July Retail Sales Advance MoM, est. 0.1%, prior 1.0%
  • 08:30: July Retail Sales Ex Auto MoM, est. -0.1%, prior 1.0%
  • 08:30: July Retail Sales Control Group, est. 0.6%, prior 0.8%
  • 10:00: June Business Inventories, est. 1.4%, prior 1.4%
  • 14:00: July FOMC Meeting Minutes

DB's Tim Wessel concludes the overnight wrap

Starting in Europe, where the looming energy crisis remains at the forefront. An update from our team, who just published the fourth edition of their indispensable gas monitor (link here), where they note the surprisingly fast rebuild of German gas storage, driven by reductions in industrial activity, reduces the risk that rationing may become reality this winter. Many more insights within, so do read the full piece for analysis spanning scenarios. Keep in mind, that while gas may be available, it is set to come at a higher clearing price, which manifest itself in markets yesterday where European natural gas futures rose a further +2.64% to €226 per megawatt-hour, just shy of their closing record at €227 in March. But, that’s still well beneath their intraday high from March, where at one point they traded at €345. Further, one-year German power futures increased +6.30%, breaching €500 for the first time, closing at €507. Germany is weighing consumer relief measures in light of climbing consumer prices and also announced that planned nuclear facility closures would be “temporarily” postponed.

The upward energy price pressure and attenuated (albeit, not eliminated) risk of rationing pushed European sovereign yields higher. 10yr German bunds climbed +7.1bps to 0.97%, while 10yr OATs kept the pace, increasing +7.4bps. 10yr BTPs increased +15.9bps, widening sovereign spreads, while high yield crossover spreads widened +10.2bps in the credit space.

Equities were resilient, however, with the STOXX 600 posting a +0.16% gain after flitting around a narrow range all day. Regional indices were also robust to climbing energy prices, with the DAX up +0.68% and the CAC +0.34% higher. In the States the S&P 500 registered a modest +0.19% gain, with the NASDAQ mirroring the index, falling -0.19%. Retail shares drove the S&P on the day, with the two consumer sectors both gaining more than +1%, following strong earnings reports from Wal Mart and Home Depot.

Treasury yields also climbed, but the story was the further flattening in the curve. 2yr yields were +7.5bps higher while 10yr yields managed to increase just +1.6bps, leaving 2s10s at its second most negative close of the cycle at -46bps. 10yr yields are another basis point higher this morning. A hodgepodge of data painted a mixed picture. Housing permits beat expectations (+1674k vs. +1640k) while starts (+1446k vs. +1527k) fell to their slowest pace since February 2021. However, under the hood, even permits weren’t necessarily as strong as first glance, as single family permits fell -4.3% with gains in multifamily pushing the aggregate higher. Indeed, year-over-year, single family permits have now fallen -11.7% while multifamily permits are +23.5% higher. So the single family housing market continues to feel the impact of Fed tightening. Meanwhile, industrial production climbed +0.6% month-over-month (vs. +0.3%), with capacity utilization hitting its highest level since 2008 at 80.3%.

Drifting north of the border, Canadian inflation slowed to 7.6% YoY in July in line with estimates, while the average of core measures climbed to a record 5.3%. Bank of Canada Governor Macklem penned an opinion piece saying that while it looks like inflation may have peaked, “the bad news is that inflation will likely remain too high for some time.” In turn, Canadian OIS rates by December climbed +16.2bps.

In other data, the expectations component of the German ZEW survey fell to -55.3, its lowest level since October 2008 at the depths of the GFC. In the UK, regular pay (excluding bonuses) fell by -3.0% in real terms over the year to April-June 2022, its fastest decline on record.

On the Iranian nuclear deal, EU negotiators reportedly found Iran’s response constructive, though Iran still had some concerns. Notably, Iran is looking for guarantees that if a future US administration withdraws from the JCPOA the US will "have to pay a price”, seeking insulation from the vagaries of representative democracy.

Asian equity markets are trading higher after Wall Street’s solid performance overnight. The Nikkei (+0.76%) is leading gains across the region with the Hang Seng (+0.57%), the Shanghai Composite (+0.23%) and the CSI (+0.51%) all rebounding from its opening losses this morning. US futures are struggling to gain traction this morning with the S&P 500 (-0.02%) and NASDAQ 100 (-0.09%) trading just below flat.

The Reserve Bank of New Zealand lifted its official cash rate (OCR) for the fourth consecutive time by an expected +50bps to 3%, a seven-year high, while bringing forward the estimate of future rate increases. The central bank expects the OCR will reach 3.69% at the end of this year and expects it to peak at 4.1% in March 2023, higher and sooner than previously forecast.

Early morning data coming out from Japan showed that exports rose +19.0% y/y in July (v/s +17.6% expected) posting 17 straight months of gains while imports advanced +47.2% (v/s +45.5% expected) driven by global fuel inflation and a weakening yen. With the imports outweighing exports, the nation reported trade deficit for the 14th consecutive month, swelling to -2.13 trillion yen in July (v/s -1.91 trillion yen expected) compared to a revised deficit of -1.95 trillion yen in June.

In terms of the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July.

Tyler Durden Wed, 08/17/2022 - 07:55

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