zenoxy (@zenoxy) • Hey
zenoxy (@zenoxy) • Hey
Publications
- Things I thought about today. ~ Chapter 8
Bitcoin halving is done, yet price isn't yet quite effectuate the demand supply equation. Is the high already too high for the smart money, or more so of a liquidity source factor awaiting the rate cut from the Fed? Bitcoin ETF set the institutionalised of the crypto money market, it is just a matter of timing before the mass adoption of Bitcoin as one of the many forms of medium of exchange, asides store of value. Ecosystem, like what have seen in Ethereum, is evolving within the Bitcoin network. Meme, Bitfi, Sats colorisation, layer-2 are all the rising stars. #To the moon or Mars?!#
- Things I thought about today. *~ Chapter 7*
The first impression people associated with wealth is money. The desire for money boils down to have more purchasing power and the easiness to achieve the best quality of life. You got the money, you got the goods and services that others is willing to offer in exchange of your money.
Before the money is designed, transactions amongst humans begin with a barter system. Money was then created, as transactions’ needs and varieties evolved, to cater for a more dynamic and ever-expanding human’s basic needs and necessities.
Think about it from a fundamental layer, it is the ability to fulfill the needs and necessities being the basis for human transactions. Money is just a medium to facilitate transactions.
Wealth itself is not just all about the money.
Wealthy in health, family and wisdom are also form of wealth. The ability to create and offer goods and services will lead to the so-called “Wealth in money”. Don’t chase for the money, let money chase for your true wealth - health, family and wisdom.
- Things I thought about today. *~ Chapter 6*
It has been awhile since my last post.
China near term outlook remains weak. Chinese equities corrected back to level last seen during Covid outbreak. The rally in China stocks market after reopening from Covid lockdown was short-lived, as macroeconomic data continue showing signs of deterioration. China A shares is now trading at 20% discount to its 20 years average 12M forwards price earnings ratio.
Flipping to the US side, interest rate remains elevated at 5.25% - 5.5% handle, with inflation trending lower, yet way above the 2% targeted rate set by the Federal Reserve. Jerome Powell delivered the message that the Fed is not yet done with fighting inflation, and the possibility of further rate hike is in the playbook. The market is not pricing in any rates cut from the Fed at least until the 1st half of 2024.
Flow of liquidity in the market remains limited outside of the US. US yields curve looks set to stage for the steepening path, as long term yields rise higher. On the other note, US Treasury has raised another $23 billion from the market just two weeks ago. US equities is now encroaching back to last peak level.
Bipolarization between the two largest economies in the world will continue for the foreseeable future. Is the US economy heading to a soft landing? Is China weakening economic situation inflicted by internal driven policy? What likely will be the outcome of it?
- 6 May 2023
- Things I thought about today. *~Chapter 5*
De-dollarization has been a hot topic in town. More people are questioning whether US dollar position as the global reserve currency is getting weaker. If US dollar no longer be the reserve currency, what else will then replace US Dollar as the new reserve currency?
US Dollar gains its reserve currency status after World War II, dethroning Great Britain Pound to become the primary currency for trade settlement. More countries are receptive to dual currencies set up for bilateral trades settlement, Saudi Arabia accepts Chinese Yuan as settlement currency for oil, China own version of SWIFT equivalent settlement infrastructure, and the uprise of central bank digital currency are all events that signal the decreasing needs of US Dollar as the intermediaries of trade.
What lends support to US Dollar strength is more beyond its economy, but includes other pillars like technology, diplomatic influence, geopolitical ecosystem and many more. And to what extent US dollar will be de-dollarize, if the trend is irreversible, remains to be observed. It might be a middle ground between the drastic end of left and right scenarios.
- Things I thought about today. ~*Chapter 3*
ChatGPT marks the advancement of humans in integrating AI into our daily lives. The theory of minds, mathematics, coding, visualization and ability to plan makes AI very much human alike, and hence has created fear among some for the risk of replacement.
Ironically, judging from the AI capabilities, the most impacted group of professions are actually the highly skilled workforce like Quant analyst, programmer, financial expert etc.. The safest group of people free from displacement risk are those from blue collar category. Does this mean, as AI becomes more advanced, humans can only thrive in work involving labor?
My own takes, this is not the case. The actual scenario might be the totally opposite. The highly skill profession will become more of a task visionary, and this profession will leverage on AI as task executioner to achieve the highest level of efficiency. As AI makes things more efficient, there will be more new things coming up, with creates new demands for more of these types of visionary talents who make things happen by leveraging on AI.
The broadcast between Jack Ma and Elon about AI sparked ripple, but I guess this could be what Jack Ma meant by his concept of LQ on his take on AI.
Like the past four big four revolutions, there are uncountable uncertainties, yet the only sure thing is humans will thrive together with the new technology – The law of nature.
- Things I thought about today. *~Chapter 3*
In an extreme situation, things can go beyond the norm. Bank run fear hits Credit Suisse badly. A typical free fall price drops common for crypto companies, now happens even in a well-established and regulated listed financial institutions. AT1 which ranks higher than equity in credit seniority totally wiped off whereas common equity holder remains as whole. Likelihood is, cost of funding for financial institutions moving forward will shift higher as one funding channel is impacted by reputation risk.
Drawing from the lesson, to truly protect and store wealth in long run, having an asset with limited supply, be it tangible or intangible form, is the way to go.? At least, history of gold price, and the fact that central banks still actively accumulating gold, proves it works even nowadays.
Ultimately, rule is set by human. Trust holds up to credibility. Once it tarnishes, it never be the same.
- Things I thought about today. *~Chapter 2*
The fundamental of financial system is built upon credibility, and liquidity is one part of the financial system equation.
The bank run crisis in SVB reveals how vulnerable a financial institution to the macroeconomic events. The past incidents involving Lehman Brothers, Celsius, 3AC and FTX, all has common pitfalls which is liquidity issue.
In an example of collateralization, essentially giving a haircut to the underlying derivatives as safe buffer. When drop in asset value triggers margin call, automatic settlement would have been executed to protect the counterparty position. While seemingly safe the buffer margin is thought to be mathematically, however, in the extreme situation things might not work out. The valuation of collateral can either drop significantly, or there is no taker from other players for disposal assets, all leads to the viscous liquidity spiral. Will hedging then mitigate the liquidity risk? Will a tighter regulation prevent such incident from happening?
The ripple effects from SVB have been mostly affecting startup companies, being the largest serving clientele base, but to what extent the effects will be, remains to discovered.
- Things I thought about today. *~Chapter 1*
Moore’s Law depicts economic and wealth dynamic quite sensibly in the context of technology advancement. The recent uprise of ChatGPT has brought our focus back into the AI, again. The continuous rapidly increasing mass practicability usage of AI technology is leading us to see the next moment of revolution. Perhaps, we are already in it with all the technology developments which are happening?
In the upstream where infrastructure serves as enabler, there are 5G, HDC and blockchains. Moving down midstream where processing and analytic play its part, there are big data, machine learning and smart contract. The output from the midstream activities then leads to IOT, AI and Web 3.0.
As these new developments start converging, new business model is evolving so does the economic and wealth dynamic.
- BANFF - The Future Like Never Before