The Iran war caused inflation and market interest rate suppression measures, so Besant chose financial repression.
There were two scenarios: tightening and liquidity supply through financial repression.
Ultimately, he declared that he would supply liquidity,
and although bonds have not yet been purchased, they will start to be purchased from September 9th. The scale is said to be about $1 trillion.
This has clearly established the direction of dollar index weakening,
and Bitcoin and gold are likely to rise for the time being.
Especially in the virtual currency sector, short position liquidation is occurring, leading to a short squeeze, resulting in a large recent increase. Liquidity supply coincides with this, and if it were the original cycle, it would have entered an uptrend around October to December. However, it appears that we are entering the cycle earlier.
If liquidity is injected, there may be a relief rally in risky assets such as technology stocks for a while...
But looking at the long cycle, it's ultimately an illusion.
Moreover, it seems that we should see this as a short-term QE due to the Treasury Department's intervention. However, since the scale is smaller than the Fed's intervention, it is more likely that liquidity will be supplied to dollar-denominated assets such as gold and Bitcoin rather than blowing wind into technology stocks.
If there is a tailwind for technology stocks, short positions will be strongly liquidated, and for the time being, holding short positions will be a risky risk.
Besant has set a deadline of September 9th to see what happens. Ultimately, releasing liquidity and buying bonds will likely add fuel to the fire of inflation.
Kevin Wash's remarks at the Jackson Hole meeting are becoming increasingly important. If the Treasury Department signals that it will supply liquidity in the same way, the market will react significantly. On the other hand, if they choose tightening instead of the Treasury Department, the Treasury Department's direction will be meaningless and send the wrong signal to the market, further stimulating the bond market.
There is no reason to go through such a difficult process. Just make peace with Iran. However, Trump chose a long fight with Iran and is preparing to fight by tightening his belt instead of taking painkillers and enduring the pain.
It seems that now is the time to reposition assets based on future direction.
