Key takeaways

• Bitcoin often experiences significant price increases following financial shocks.
• The debt to GDP ratio has been growing rapidly despite banking restrictions.
• Financial stocks below their 200-day moving average can signal economic trouble.
• The current economic situation may lead to contagion effects similar to past crises.
• Fractional reserve banking can amplify economic risks due to leverage.
• The K-shaped recovery is influenced by AI and monetary policy, benefiting some while disadvantaging others.
• Inflation is expected to rise significantly in the next CPI print.
• The stock market’s weakness is not solely due to rising oil prices; financial stocks were already struggling.
• High oil prices could lead to a negative Q2 GDP due to inflation and reduced demand.
• The Fed will face challenges with private credit amidst volatile oil prices.
• Bitcoin’s price movements are often tied to broader economic conditions.
• Economic indicators suggest potential downturns when financial stocks are underperforming.
• The leverage in fractional reserve banking can lead to systemic risks.
• AI and quantitative easing are shaping current market dynamics.
• The Fed may need to prioritize saving private credit if oil prices remain high.

Guest intro

Jordi Visser is CEO of Visser Labs and Head of AI Macro Research at 22V. He is a veteran macro investor with over 30 years of experience, including 12 years at Morgan Stanley in emerging markets equity derivatives and as president and CIO of Weiss Multi-Strategy Advisers. He authors the VisserLabs Substack, analyzing macro trends, AI, and crypto markets.

Bitcoin’s performance post-financial shocks

• Bitcoin tends to perform well after financial shocks.

  — Jordi Visser

• Historical data shows Bitcoin rallies after financial problems.
• Financial crises often precede major Bitcoin price increases.

• The biggest rallies we have ever seen in Bitcoin are right after financial problems.

  — Jordi Visser

• Understanding Bitcoin’s historical performance helps predict future trends.
• Economic conditions heavily influence Bitcoin’s market behavior.
• Bitcoin’s resilience is evident in its post-crisis recoveries.
• Financial instability may drive investors towards Bitcoin as a safe haven.

Debt growth despite banking restrictions

• The debt to GDP ratio has grown rapidly despite restrictions on banks.

  — Jordi Visser

• The money supply has increased significantly alongside GDP growth.
• Fractional reserve banking contributes to rising national debt.

• The debt in the country has continued to grow due to the fractional reserve banking system.

  — Jordi Visser

• Economic policies have not curbed the growth of national debt.
• Rapid debt growth poses challenges for economic stability.
• Understanding the implications of debt growth is crucial for policymakers.
• Banking regulations have not effectively controlled debt expansion.

Economic signals from financial stocks

• Financial stocks being below their 200-day moving average indicates impending economic trouble.

  — Jordi Visser

• Technical analysis can predict economic downturns.
• Underperforming financial stocks often precede broader economic issues.

• When financial stocks are negative… that is when really bad things have happened.

  — Jordi Visser

• Monitoring financial stocks provides insight into economic health.
• Economic predictions can be made based on stock market indicators.
• Financial stocks serve as a barometer for economic conditions.
• Investors should be cautious when financial stocks underperform.

Contagion risks in the current economy

• The current economic situation could lead to significant contagion effects similar to past financial crises.

  — Jordi Visser

• Economic indicators suggest potential widespread financial impact.
• Contagion effects can destabilize the entire financial system.

• Can private credit be the kind of domino that tops over and creates this massive contagion?

  — Jordi Visser

• Understanding contagion risks is crucial for economic stability.
• Historical crises provide insight into potential future risks.
• The interconnectedness of financial systems increases contagion risk.
• Proactive measures are needed to mitigate potential contagion effects.

Risks of fractional reserve banking

• In a fractional reserve banking system, the leverage can amplify risks across the economy.

  — Jordi Visser

• Leverage in banking can lead to systemic economic risks.

• For every dollar you put in the bank… it gets levered out 10 times.

  — Jordi Visser

• Fractional reserve banking contributes to economic instability.
• Understanding banking mechanics is crucial for risk management.
• The banking system’s leverage can exacerbate financial crises.
• Policymakers need to address risks associated with fractional reserve banking.
• Economic stability requires managing the risks of leveraged banking.

The K-shaped recovery and its influences

• The current economic situation reflects a K-shaped recovery influenced by AI and monetary policy.

  — Jordi Visser

• Some sectors thrive while others struggle in a K-shaped recovery.
• AI and quantitative easing shape current economic dynamics.

• This K-shaped economy means some people are doing well and a lot of people are not well.

  — Jordi Visser

• Technological advancements contribute to economic disparities.
• Understanding the K-shaped recovery helps address economic inequalities.
• Policymakers need to consider the impacts of AI on economic recovery.
• The K-shaped recovery highlights the uneven distribution of economic benefits.

Inflation expectations and economic impact

• Inflation is expected to rise significantly in the next CPI print due to recent movements in truflation.

  — Jordi Visser

• Truflation indicates potential increases in consumer prices.
• Rising inflation impacts financial markets and policy decisions.

• I definitely think that the CPI is going to see… a pretty substantial move as well.

  — Jordi Visser

• Understanding inflation indicators is crucial for economic forecasting.
• Inflation affects purchasing power and economic growth.
• Policymakers need to address rising inflation to maintain economic stability.
• Investors should prepare for potential inflation-driven market changes.

Oil prices and stock market dynamics

• The stock market’s weakness is not solely due to oil prices; financial stocks were already struggling before oil’s rise.

  — Jordi Visser

• Financial stocks faced challenges before the increase in oil prices.

• The issues with financial stocks were already below the two hundred day moving average.

  — Jordi Visser

• Oil prices add complexity to stock market dynamics.
• Understanding the multifaceted nature of market dynamics is crucial.
• Stock market analysis requires considering multiple influencing factors.
• Rising oil prices exacerbate existing market weaknesses.
• Investors should consider oil prices in their market assessments.

Economic forecasts related to oil prices

• If oil prices remain high, Q2 GDP is likely to be negative due to inflation and reduced demand.

  — Jordi Visser

• High oil prices contribute to economic contraction.

• Q2 GDP is very likely to be negative if for no other reason just because inflation is gonna be high.

  — Jordi Visser

• Economic forecasts depend on current oil price trends.
• Understanding the impact of oil prices on GDP is crucial for economic planning.
• Policymakers need to address the economic implications of high oil prices.
• Investors should consider oil price trends in their economic assessments.
• High oil prices can lead to reduced consumer spending and economic growth.

Challenges for the Fed amid oil volatility

• The Fed will face significant challenges, particularly regarding private credit, as oil prices remain volatile.

  — Jordi Visser

• Oil price volatility complicates the Fed’s monetary policy decisions.

• The Fed is gonna be in a very difficult position… on saving the private credit side.

  — Jordi Visser

• The Fed must balance economic stability with rising oil prices.
• Understanding the Fed’s challenges is crucial for economic forecasting.
• Policymakers need to address the implications of oil volatility on monetary policy.
• The Fed’s decisions will impact financial markets and economic growth.
• Investors should monitor the Fed’s actions in response to oil price changes.