Deutsche’s Kocic Explains How It Could All Dead End

Deutsche’s Kocic Explains How It Could All Dead End

Last year, it was a recession story. This year, it's a dollar/inflation story. Deutsche Bank's Stuart Sparks and Aleksandar Kocic have been hard at work lately hashing out the dollar nexus story and using it to construct a framework for understanding the mode of the curve and, ultimately, the likely path of Fed policy. To be clear, Deutsche's house view isn't for rapid rate cuts, and neither are Sparks and Kocic calling for them. Rather, what the two have developed over the past six or so mont
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14 thoughts on “Deutsche’s Kocic Explains How It Could All Dead End

  1. When you break economic cycles with endless manipulation the effects of more manipulation become subject to the laws of diminishing returns… Seems as though in this interlinked world there are winners and losers as a result of any action taken by especially the major parties…Subsequently there becomes a state of perpetual motion that seems chaotic and by definition could well be just that..The practice of Gamma hedging that H ….talks so much about could be a cause as well as an effect in this seemingly irrational equity run up that we are seeing….The wealth being concentrated in the hands of a few huge players also magnifies the effect of what is happening…

  2. H-Man, strange stuff on the COVID numbers. Bloomberg is reporting that China announced + 200 deaths since yesterday and, get this, over 14,000 new cases since yesterday! Futures sold off immediately.

  3. The next downturn is going to make 08/09 look like a blip. There is no silver bullet. The hope is to postpone it, give time to figure something out but there is no current solution, we are too far down the hole. MMT is not going to do it. The purging of the middle class will continue. I suspect we end up in a 30s depression on steroids leading to serious social unrest. It is going to get ugly as we never truly addressed the underlying causes (started all the way back in the 70s). Monetary policy has reached the limit.

  4. Interested in the end point. If I understand correctly, the thesis is that US and ROW will both be forced to chase each other down the rate hole – to zero? To where?

    I’m quite skeptical about US rates going negative. I think Euro rates are negative because of too many forced buyers of sovereign debt and too little such debt available given pesky fiscal rectitude.

    With US budget deficits headed for $2TR annually, and US investors seemingly more willing to chase risk for yield, I’m thinking zero.

    Okay, zero. Then what? Risk assets inflate, real economy flat, that doesn’t go on forever.

    Is the next phase … Crash / depression, a la 1929? Revolution, a la France? Some other way out?

    1. Either a population controlling war, a new virus, or some type of a rational NWO trading block alignment.
      My bet is – nothing at all; leading to decades of complacency, decadence, and a lot of drugs.
      I’m going into ‘srooms as a hedge.

  5. “Any questions?”

    Isn’t the US dollar the problem? Won’t the rest of the world eventually ditch the dollar, as its use seems to tbe toxic to the global economy. Or is it just a question of who goes first?

    “The dollar is our currency, but your problem.”
    Treasury Secretary John Connally to European finance ministers.

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