Once a central banker, always a trend spotter. Veteran trader and Founder of Bleeding Edge Macro.
Melbourne, Australia
Joined March 2009
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Why is anybody surprised?
“Make America great again” policies are geared towards relocation of production inside USA. Of course there is going to be a demand for labour if local production increases. The risk is not a meltdown of the labour market, it is a melt up in long-term borrowing rates and inflation depending on the exact path of monetary and fiscal policy implementation.
If the equity market was to weaken, causes would be phase shift in the discount rate b/c where long term rates land. And margin compression which should follow increased bargaining power by labour and a higher cost of capital.
How did everyone get it so wrong?
This morning, the April Job Opening Labor Turnover (JOLTS) report was released.
The headline number:
*US APRIL JOB OPENINGS 7.391M; EST. 7.100M
---
The number of open jobs in the country INCREASED in April!
The same month that the collapsing "soft" (survey) data was supposed to be a leading indicator of a recession (Polymarket gave a 65% probability of recession), rising unemployment was also on the horizon. Combine that with the Liberation Day reaction in the stock market (-20%), and "bad stuff" was all but guaranteed.
Instead, companies were too busy filling out help-wanted advertising to get around to firing anyone in April. To repeat for emphasis, the stock market fell 20% in April, and companies responded by INCREASING the number of open jobs they were looking to fill.
Dan Groch retweeted
“If I wanted to ask ChatGPT something right now, about something we had talked about earlier, think about what would happen.”
This quoted post is unavailable.
It’s a two-bucket world 🧵
- Risk assets (equities, oil, copper, crypto, dollar) are tightly positively correlated.
- Safe-havens (long bonds, gold) are tightly negatively correlated.
That’s a textbook “risk-on vs safety” split, just exaggerated to extremes.
Actionables to track over the next week
#1 Bond/Gold correlation to each other
If it breaks positive, safety trade fragmenting
Could precede wider cross-asset volatility
#2 BTC vs ES correlation
First mover on liquidity turns
Decoupling would flag liquidity tightening
#3 DXY vs ES
Rare positive link—fragile
A single dovish data print can snap it
youtu.be/TquYYa5osPs?si=2QJU…
In Australia, we go to the polls this weekend to elect the Federal Govt
Tax policy (and economic ideology) is front and centre. In this video, wealth management entrepreneur Mark Bouris interviews Liberal party candidate Peter Dutton.
Incumbent left-oriented Labor party has costed a slew of tax grabs, including the familiar tax on unrealised capital gains.
An aging workforce is THE systemic issue in most developed world economies, and especially those countries hostile to migrants
Why?
**(1) Shrinking Tax Base and Ballooning Government Debt**
- With fewer workers supporting more retirees, government revenues decline just as expenditures (e.g. pensions, healthcare) rise. This often leads to higher deficits and debt.
- If investors demand a risk premium for rising debt levels (especially without offsetting productivity gains), interest rates could rise due to supply-demand dynamics in bond markets.
***Central Bank Policy**
- Central banks might manipulate rates lower to support weak growth and serviceability of government debt. There will be uncontrollable outlets eg long end rates and FX
- Alternatively, if inflation expectations become unanchored due to fiscal stress, they may be forced to hike rates into slowing growth.
- variant CB responses are why I think FX is an opportunity rich environment eg CHF vs USD
**Global Capital Flows and Safe Asset Demand**
- It was once consensus that ageing in multiple countries (especially developed ones) may mean global excess savings persist, keeping a lid on long-term rates. But economists have woken up to the fact that retirement means production capacity 🔽 production ➕ spending constant to ⬆️ as savings become consumption
- if investors lose confidence in a government’s fiscal path, capital flight can drive yields up (e.g., emerging markets, or historical cases like the Eurozone debt crisis).
**Technology vs Demographics **
- Productivity improvements, technological adoption, and immigration policies can mitigate ageing effects.
- an unfathomably large burden of hope rests on AI and robotics to supplement/magnify output from human labour
- Countries with strong institutions and credible monetary/fiscal policy may keep borrowing costs low despite demographics. Hence the FX opportunities
Dan Groch retweeted
this is definitely bezos’ idea. man is about to single-handedly save global trade.
🚨 Trump pivot watch:
Powell stays ✔️
China tariffs trimmed to ~60 % ✔️
Tech (phones/chips/autos) carved out ✔️
Result: stocks & USD pop 📈, gold slips, crude softens. Tail-risk fades, but growth-scare regime persists. Stay nimble.
Full read below 👇🏻
🔗 bleedingedgemacro.com/p/week…
4/ Second-order effects?
— TSMC, AMD, Broadcom: Supply chain exposure
— Alibaba, Tencent: China hyperscale buildout at risk
— ASML, Lam: Export controls could extend upstream
6/ I've said all year: this is a bear market running on vibes. Now the data is catching up.
NVDA is just the start.
We have entered the earnings downgrade phase.
7/ Full breakdown on the second- and third-order impacts, who’s next, and why NVDA is the canary.
Read the latest from Bleeding Edge Macro ↓
🔗 bleedingedgemacro.com/p/nvda…
2/ The U.S. just blocked exports of NVIDIA’s H20 chip to China.
This was the SKU designed to get around earlier restrictions.
Now it’s caught in a new round of enforcement—not tariffs, penalties.
1/ NVDA just dropped a $5.5B tape bomb.
Not on vibes—on data.
A short thread on why this is the first of many 👇
Dan Groch retweeted
On a 260 day lookback, the 10% gain in ES ranks as the largest relative move in its trading history with a z-score of 8.76
