Michael Creadon’s Post

Fed Day. And the stakes are high. As always. From The Wall Street Journal: "LIVE MARKETS: Federal Reserve Interest-Rate Decision Looms -- The Fed is expected to signal that it is ready to keep rates higher for longer after wage growth picked up at the start of the year and remained well above its prepandemic pace. Analysis: Fed's No-Need-to-Cut Camp Is Feeling Emboldened" That about sums it up. The Bulls on Yields like me have been dead wrong and the Bond Bear Vigilantes who went into hibernation for so long are back, winning, and growling like we haven't seen in some time. If you look at the Federal Reserve Scoreboard with respect to their equally-important two mandates it looks currently like this: A. Maximum Employment: Winning B. Inflation: Losing To the extent central bankers want to be good at their jobs, take a guess at which aspect of their duel mandate requirements they need to work on. Hint: Guess B. Notice C: the Stock Market; isn't even a choice. Jay Powell doesn't care about your SEP-IRA that much, unless it's a true Lehman-like crisis. And with equities near all-time highs and the AI tailwind bubble behind us, the last thing the Federal Reserve gives a hoot about this afternoon is the S&P 500. See; I say things like this from time to time and then everyone gets mad at me, but I don't make these things up, I just report the cold-hearted facts back to you. That is all. Now, if it were me I'd like to see the Fed go a little bit more hawkish today. We know higher rates can kill off inflation, so why wait - take the darn medicine. No one wants to hear that but you can't hope you're way out of a supply-shock, inflationary spiral. You need to choke off the money supply and this will lead to some near-term pain but it will put us on a "glide-path" - one of the best Fed made-up terms ever - to sobriety on surging producer and consumer costs. See the punchbowl; take the punchbowl away. Everyone get home safely. Don't forget to tip the kind waitstaff, either.

I don't know what childbirth feels like but, boy, let me tell you about what it's like to move money around in crypto these days. While the memeists will tell you how easy it is, I beg to differ. I have spent the better half of a week trying to get a minuscule amount of ETH or SOL onto Coinbase from Chase & sent over to Phantom. "Tinkers to Evers to Chance", as the old Cubs 5-4-3 double play chant went years ago. Aside from the fact cash gets tied up in the banking system for 3 days, you can't buy SOL with ETH directly on Phantom, a Solana wallet. If you Google this, you'll read how easy is it. Go try it. I just spent 4 hours trying to make it work & couldn't. Resume: Been in crypto seven years, ran a 100-person futures team for 20 years. Result: Can't swap ETH to SOL on Phantom. Please go for it and tell me how simple you find it to be. Next: You have to convert to USDC. #easy But there are minimum transaction amounts plus gas fees. So you have to swap USDC into USDC Solana to get you almost home to buy Solana on Phantom. I keep picturing a pizza delivery person driving up and down the Chicago Skyway paying $6.10 each way per toll in an endless loop: ETH to USDC: fee. Metamask to Phantom: fee. Chase to Coinbase: fee. USDC to USDC Solana: if you guessed "fee" you are catching on much faster than me. I swear I just turned $50 hard-earned dollars into $14 in this crypto circle of joy. This, my friends, is the real barrier to entry. It's not the SEC. It's the fact you need like 11 degrees in "Blockchain Science" to convert a basic coin into simple dollars to spend. And don't blame the banks, either. They're connected on Plaid; that part is easy. Let me tell you a story and maybe you heard this one before. I was at Victoria Falls on the Zimbabwe/Zambia border once. With two guys my friends will know; one is now a filmmaker, the other a priest. We go to the local casino. We start playing blackjack. I have no idea what was going on but all we kept doing is winning. We literally had so much cash we were stuffing it into our socks. We go to cash out. We ask for dollars, pounds, rand, anything really besides all these useless Zambian dollars. We were leaving the country the next morning. It's so late by the time we get ready to leave & there are no cabs. There are a couple young boys on mules, though. They look at us, we look back. They ask in proper English: "Do you need a ride?" We say: "Yes". They reply: "Climb aboard." We proceed to ride on the backs of the mules - maybe one was a pony - to the campsite a mile away, and then we unstuff our pockets & socks to give them more Zambian cash - the only currency they've probably ever seen - then they're likely to have seen in their lifetimes thus far. They're so giddy they almost fall off the mules, and pony. This runaround parable is both true & to a certain extent the basic functionality of crypto for primitive, some might say advanced, users today. You know what they say in Harare.

Read this from my neighbor and friend Padraic (Paddy) Stanton, CIMA® earlier today. "Paddy" is an advisor with Franklin Templeton. His firm recently wrote in a company report about the reasons for the growing interest in private credit: *Private credit has historically delivered an “illiquidity premium” relative to public-- market equivalents * Private credit can serve as an alternative source of income * Private credit has historically delivered attractive risk-adjusted results relative to traditional fixed income * Private credit can provide diversification benefits relative to traditional fixed income At Rialto Markets, we couldn't be more excited about the prospects for growth in this area ourselves. Which is why we are building out a platform to emphasize wider distribution of private credit, secondary trading and even tokenization. Every leading market participant seems to believe this space will grow, and will grow in an enormous fashion. We're hard pressed to disagree. One thing I have reflected upon lately is my own experience at the CBOT seeing the transition from the pit to the screen. Talked about for years, the overall step change took about a decade to reach completion in the bond market. It was, in the end, a slow, gradual process. It never seemed terribly disruptive day-to-day. But now look at. The floors are empty. The screens are populated. The surging demand for private credit is so large the big banks can't even handle it themselves, nor am I sure they want to. And that's kinda the whole point, isn't it. It's still early days in the growth of private credit markets. With low interest rates seemingly stuck near zero forever, this space was always a bit of a backwater. No longer. New platforms, technologies, entrants, software, and ideas will flood the market. We welcome the competition; the opportunity. And the chance to offer solutions, we think, a cut above the rest. Contact us if you'd like to learn more about what Rialto Markets is doing in private credit. You may be surprised what you learn - and who we are already doing business with.

The somber scene at Saint Rita High School this morning on the south side of Chicago. A young Latino police officer named Luis Huesca was killed on patrol in neighboring Gage Park recently. His gun was reportedly stolen in a carjacking and the assailant turned on him. Left behind are a loving family, tons of grieving fellow officers and a torn, divided tempestuous city. This city - my city; where I was raised and live and parent my own two children - is long, unfortunately, on violence and short - anyone can see - on immediate solutions. In addition to Officer Huesca, 141 other city residents this year have been slain throughout the city. It's not even May yet. History tells us the guns come out in full force in a few more weeks. And then, Lord only knows what. Like everything in this town, death gets political fast. The family of Officer Huesca asked the sitting mayor of the city not to attend the services. Too disruptive. Some comments on the campaign trail a while back left many of those whose job it is "To Protect and Serve" deeply unimpressed and woefully disappointed. Battle lines get drawn. And redrawn. And then you get this, tragically. As if often the case, I don't know all the exact details; but like any fool I can't possibly ignore the final outcome. Said the late patrolman's fellow commander: "We weren't just partners. We were brothers; inseparable in duty and in life. Beyond the badge and uniform, Luis was my rock, my map. He guided me through the storms of life, helping me become a better version of myself". On this day, please say a prayer. Others take risks for us many don't appreciate. Take time to recognize the commitment, valor and sacrifice of mere strangers. That'll be both a start - and something for greater society to build on.

Military historians will tell you Germany lost WWII because they took on a two-front conflict against the United States and Russia simultaneously. Ultimately, they were spread too thin. In financial markets, sometimes the overall turbulence feels almost like war. The Bank of Japan has a real problem on its hands. A two-front battle of its own. Time will tell if it can handle both. On one hand, their currency is falling apart. Last night, it traded the cheapest against the dollar since 1990; this, of course, is right around the time their equity bubble from the 1980s imploded. This meltdown in equities was far worse than the future tech implosion we saw here a decade or so later in the plummeting dot.com years. Separately, Japan knows they have to keep interest rates down - or else. So they're spending gobs of money to control and manipulate their bond market. This has literally been going on nonstop for decades, mind you. Last night, they intervened in foreign exchange markets to prop up the yen. How long can this duel-threat fantasy keep going? I will tell you this about currency traders. They will push the limits of what central banks can handle. It's like the boy who cried wolf parable. Traders crush the yen because they know the Bank of Japan is worried about rates; the BOJ steps in to calm things down and revert to some sort of pretend mean. Rinse and repeat. Until. Guys like George Soros come onto the scene and punish the state-backed bankers. If you had to rate the biggest risks to the global geopolitical economy in order at present I would venture to say they would look something like this: 1 - Global conflict (Taiwan, for instance) 2- Inflation 3 - Japan currency drama 4 - Trade war with China 5 - Japan bond-market drama 6 - U.S. election We don't need a problem right now out of Tokyo but we may get one. These things come at you at blinding speed. Don't take your eye off it. Guarantee the yen gets tested again soon in a big way; just watch. #Japan #Yen #FX #Currencies

Benign start to the week as everything across the board is mostly flat to begin the new five-day stretch - stocks, bonds, currencies, metals, and energies unchanged across the board so far. The VIX went out at 15 Friday and that thing is going to get hammered on Monday morning, you'd assume, as no new news continues in a way to be good news. We're learning to deal with "higher for longer" in terms of the cost of money and while I wouldn't go so far as to say this is a good thing, it does continue to point to the robustness of the national economy. Maybe I'm just a sucker for anything even remotely positive, but I understand there are imminent peace talks or "prolonged pause" discussions in Cairo on Gaza, and any hint of a protracted stalemate or an end to war would be wildly excellent for the entire region, likely send gas prices tumbling, put a ceiling on inflation; maybe. I saw a report the Suez Canal had lost 50% of its commerce in recent months due to the conflagration in the region. The reduced shipment of goods hurts your pocketbook and mine. One can only hope, right. Crypto is quiet, again. And this is always a time to reflect on what comes next. It's pure speculation to even discuss but you do have to wonder what a change in administration would like for digital assets. Could you imagine if our country went from backward looking to forward looking on this topic - what would that look like. For comparison sake, I think you can probably look at Europe versus the United States in the competition for AI. It's been a pretty good run for MSFT, Meta, and Alphabet in the past 5 years (all up a couple hundred percent or so), not to mention Nvidia - up 1800% in the last 60 months. Last year, for instance, ChatGPT's Sam Altman said he would stop doing business in the Europe Union if his company couldn't find a way to work within their rules system. To say there's a lot at stake is an understatement. Saudi Arabia plans to create a $40 billion fund to invest in artificial intelligence, The New York Times reported on March 19, citing three sources briefed on the plans. Broadly speaking, a looser AI regulatory environment seems to have catapulted America into the lead on artificial intelligence. Less enforcement = greater economic outcomes. It's a theory, at least. Can't say for sure whether this would mean something in crypto, too. But I sorta, kinda have a hunch. Please DYOR. This isn't financial advice. #AI #Crypto #PrivateEquity

My main thesis on bitcoin, ever since I first discovered it at a CME event in Florida with Don and Jared, is that it's a currency. I still see it that way. Increasingly, others seem to have a similar view. Earlier this month, the International Monetary Fund (for crying out loud) came out with a lengthy report highlighting the advantages of cross-border, foreign-exchange flows in smaller, developing economies. The paper is called: "A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers" and was published April 5, 2024. Let me sum it up by using a concise Tweet by the great Matthew Hougan of Bitwise Asset Management. He Tweeted: "The paper notes: “The magnitudes of the estimated Bitcoin cross-border flows are sizeable with respect to several countries’ GDP, especially in those which experience relatively small capital flows.” This finding is repeated throughout the paper. It makes sense: People in countries facing either capital controls or limited access to the global economy are using bitcoin as a release valve. People have called bitcoin a tool for economic freedom. The data in this paper provides a proof point that it's being used exactly for that." His words not mine. The IMF wrote this; not him. Nor me. No one in the world perhaps better understands what's happening on the ground economically in places like Honduras, Bhutan and Angola better than the IMF. This paper is a proper demonstration of the fact that in G7 countries bitcoin is a luxury you can opt into or out of - it's your choice entirely. On a relative basis, the dollar, yen, euro, renminbi, pound and franc are strong. A hundred or other currencies likely won't make it. BTC appears to have staying power while other tiny currencies found in places like Lebanon, Ecuador and Mail have an uphill battle to say the least.

I haven't been exactly glued in on financial markets this week but the moves today are confounding in my limited estimation. Broadly speaking, data on inflation and economic growth both disappointed and yet stocks and bonds both rallied and looked past the scary headlines. The bigger picture ordeal is rate expectations have flipped on their head in recent months. Even folks like Mohamed El-Erian and Diane Swonk are cautioning re: a more hawkish and less benevolent Fed. Trust me: it's not just me! Today's move doesn't make a ton of sense in light of moderate storm clouds brewing but it is only one day so not worth overreacting. Short-covering could be an explanation, I suppose. Crypto, for its part, is moving lower. I see the BTC bulls making more noise than the stealthy, under-the-radar bears. I can't possibly give you a coherent explanation of where digital assets will be in 3-6 months but I have learned the hard way in the past that when glorious run ups suddenly fail, they have a tendency to do in spectacular fashion. We'll see. I'm perfectly neutral at present though naturally long term I'm a believer. Don't shoot me for suggesting nothing goes straight up forever. Please DYOR. This isn't financial advice. Meantime, I think it pretty much makes sense to cancel the 2024-25 NFL season. The view from the fanbase of the Monsters of the Midway is unambiguous after the Caleb Williams - Rome Odunze smorgasbord: you're all playing for second places now. It's gonna be like 1985 all over again in these parts.

It's Draft Day in the NFL, and in Chicago no one is on pins and needles. We're taking this guy - Caleb Williams - the former USC Heisman winner. And all the rest of the league can do is sit back and envy us. This is not your father's Sid Luckman, ladies and gentlemen. In other news, the Bears are building a new domed stadium set for completion in 2028/29. Shockingly, no one can agree who is going to pay for it. So, that saga continues. Everyone in town has strong opinions with what to with the #9 pick, which we also own. I am in the "trade down" camp, just because I think it's so much fun to stockpile future draft capital, but I guess we'll lean on GM Ryan Poles since he's in charge and does this for a living. I do not. The Wall Street Journal wrote this morning the obituary for 2024 rate cuts. What a disappointment. I see gas prices near my kid's travel baseball games at $4.99 per gallon and that simply boggles my mind. I thought Nobel Laureate Paul Krugman declared already we had "won" the battle over surging inflation. Guess not. Somehow, I hear reports from local realtors residential real estate is still buzzing, nonetheless, as we head deeper into a warmer spring. You've gotta live somewhere, right? Apparently some are gambling they can buy now and refinance later. I like that bet if you look at this over a longer-term view. Eventually, the cost of money will go down. I keep saying it; one of these days or years I've gotta be right. As for the NFL Draft, I am very excited to see where local product J.J. McCarthy gets selected. He went to rival Nazareth High School, a couple miles from where I grew up. I hear he's a great kid with an amazing family. I hope where ever he ends up he absolutely crushes it. A second Michigan Man in Boston would certainly be an interesting story line. Good luck to all the athletes and their teams.

Fake news hits crypto. Again. Saw this monster move in Hedera aka Hashgraph and thought to myself: "Good for them - great ecosystem." The coin had literally doubled to become at one point a $6 billion protocol. The reason: BlackRock reportedly would be using the network to tokenize real world assets with two companies I am also fond of called Ownera and Archax. I almost wrote a post to write about how cool it is. But held off until the morning. By the time I woke up, there were widespread reports BlackRock, in fact, would not be participating or certainly not at the level previously discussed. The Hedera HBAR token promptly fell back down. Cointelegraph: "Hedera’s HBAR token pumps 96% on misinterpreted BlackRock announcement -- A widely misinterpreted announcement from the HBAR Foundation has sparked confusion among crypto influencers and sent the price of HBAR token soaring." I have no idea the true connection, if any, between BlackRock and Hedera. I will say this as a general observation from the trenches of the startup world for seven years now: press releases sometimes fall into a dangerous territory of word association crossfire. In the never ending promise of doing something big, some small fintech concerns overreach. They get way too far over their skies. Again, no insight into what happened with this particular story or where and whether the a breakdown occurred. Or why. But my general view on public relations and press releases is it must be grounded with more certainty in fact: how much revenue will be generated; what are the specifics of the deal; who paid what to whom for what service. Less hyperbole; more details on numbers and business and commerce. A press release isn't aspirational; it's a statement of truth. Anything short of that is a waste of time and an unnecessary headache and headfake. And no self-respecting journalist, more importantly, would write a story about gibberish, anyways. Where was the "misinterpretation" on this one? No clue. But I have plenty of idea most fintech press releases I've read since 2017 are a mirage. Industry wide, this is a problem. You know what they say in Dubai.