**updated everything to me MTD -- last update 10/11/22 @ 1pm PST
Add more charts to display the PnL for each day and the total
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Dashboard - October
Performance for October has skyrocketed right out of the gate, the only thing I am following are my trade balances, no matter what price does...if it's not near my balance area, no trade will take place and I am very patient to wait.
My style is a momentum trend trader. I do not do any mean reversion trades as most. I use Balance levels based on time as all trend start at balance. I do write a weekly and daily plan in a free substack: Trade Plans...Hope it helps people out
This is trading strictly Futures: NQ, ES, RTY, YM, MNQ, MES, MYM, M2K -- zero stock/forex/crypto trades here!
Sine I was asked about what the trading journal I am using...its this Trading Journal
This will give you 15% off your first month or yearly I think...hope that helps too + free trail from them too.....enjoy :)
This is direct on their site : "Invite other traders to join TradesViz to get discounts on your subscription! For every user who signs up using your unique link and buys a pro subscription, you get 15% off your next subscription bill and your referral gets a 15% discount on their first subscription plan bill!"
Since I received a bunch of question about Balance, one thing to note. It is NOT based on TPO (Market Profile) or Volume Profile, none of that is considered.
It is modeled after the Overnight drift, which was written by the FED in NY: Here is the link Overnight Drift
I figured out a way to use their data and their time to create a balance based on time, nothing to do with what people are assuming in the comments by talking about the basic stuff of Volume Profile or TPO's
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Calendar View
MFE & MAE Charts
Trades for 10/2
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Trades for 10/3
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Trades for 10/4
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Trades for 10/5
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Trades for 10/6
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Trades for 10/7
Trades for 10/9
Trades for 10/10
Trades for 10/11
Trade I took and just went to sleep -- stop was above balance as that level is good till 9am (pst) -- woke up and closed the trade and proceeded to trade a bit more --- see all the stats a above.
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I had made a prior post amount why you shouldn't buy the dip. https://www.reddit.com/CryptoCurrency/comments/wtbr4b/do_not_buy_the_dip/ .
This is a copy of my substack article here:https://sierre.substack.com/p/why-you-probably-shouldnt-buy-the?sd=pf
Comments on the last post were a real ride and a mixed bag. Thanks for those who read it and gave responses to the actual content and didn't react solely on their own feelings and sentiment. To the rest, well here we go again I guess. Many people are right in their responses that you shouldn't take a random post's advice as gold. I'm just laying out facts and the mostly likely possibility based on economic conventions, to my knowledge/POV anyway I suppose. Anyways here we go.
Europe

• In July, the Euro fell to parity with the US dollar. As of recently the Euro has fallen below the value of the US dollars. For reference, the 1 Euro = 1.2 USD in July 2021. If you know anything about forex you'd know a change in value of over 15% is absolutely MASSIVE, and fairly rare if we're speaking of developed nations economies. This is in addition to the 1% change in a month or so since July 2022. The Euro is at it's lowest value in 20 years.
• The Bank of England has officially predicted a recession. Citibank predicts UK inflation at 18% next year, a near half-century high, with inflation currently at 10%, a four decade high. This morning, OFGEM, the UK energy regulator, increase energy price cap by an unbelievable 80% with further room for revisions that may imply further increases.
• Germany has lost between 30-40% of their energy supply since the war's start due to cut-off from Russia. A complete cut-off could have Germany lose 225 billion dollars over the next two years. Further, droughts and high temperatures have resulted in water levels on the Rhine, a key transport route, dropping below the critical 40cm mark, limiting capacity, and causing delays and cancellations. Germany is expected to impose a gas levy on households.
• Italy has seen inflation ~8% a 36 year high. Prices surged for processed food (from 8.1% to 9.5%) and transportation services (from 7.2% to 8.9%). It sees growth forecasts slashed by almost 3%.
• Estonia, Latvia and Lithuania see inflation at 23.2%, 21.3% and 20.9% respectively.
• The trend continues across Europe. The euro-zone in general sees annual inflation is expected to be 8.9% in July 2022, up from 8.6% in June. Energy prices increase a whopping 39.7% since last year, the highest on record. The EU accounts for about 15% of world GDP. Hard times in Europe means no funds left to trade.

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US Job Cuts

• It is actually simpler for me to link here. It gives a LONG list of just some of the largest US companies laying-off tens of thousands of workers over the past few months. The list of company lay-offs grows by the day. That's a lot less income to spare to trade for a lot off people. More importantly, it's just a sign that company profits are drying up so there's no little money or appetite for risky crypto plays.
• Unemployment rising (and it's persistence) is a hallmark of a recession.

Car Repossessions

• Car repossessions are surging and Lisa Beilfuss Popeo, who covers the economy for Barron's, have reported a doubling of repossessions among prime borrowers. To be clear, prime borrowers are individuals/firms who the banks are generally certain would repay their loans and the first approved for loans. They are the last people you would ever want to hear not being able to replay loans because if they can't repay their loans, it's likely that very few others can either.

US Individuals and Households

• The last reading of US Household Net Worth is actually negative meaning households owe money(or assets) more than they own.
• The Graph below shows the Household Net Worth vs S&P 500 with a visual correlation. For those not convinced, the correlation value from 2013- 2022 is 0.414, a moderate correlation for economic data. However, if we use the post-Covid values to determine the lasting effects of the COVID economic fallout and response to date we get a correlation value of 0.643, a strong correlation value for economic data.
• From the graph, the most recent Household Net Worth Reading is from Q1 2022, while the most recent S&P value is from Q2 2022(hence the cut-off). This implies that we expect the already negative household net worth to fall quite a bit further, likely pushing us into a recession.
• I have already highlighted the 60% rise in consumer debt from May to June in my last post.
• With further regard to the falling S&P, crypto as of recent(July-Aug) has a 0.8-0.9 correlation with the S&P, an extremely high correlation.

China

• China accounts for about 18% of global GDP and is the world's largest exporter. It is fair to say that, as the world's largest export, any slowdown economic activity in China would mean an slowdown in the global economy.
• China continues their zero-Covid strategy as many millions have endured lockdowns to varying degrees in large such as Beijing, Xinjiang and Shanghai. While lockdowns have been officially lifted in many cities, even more like parts of Tibet and Hainan see fresh lockdowns. This is along with restrictions and controls across the entire state.
• Real estate drives about 25-30% of China’s economic activity, and housing represents 70% of household wealth. Almost 30% of all bank loans are property-related. 21 major developers have defaulted on their debts in the last year.
• China's real estate market stand at 2.4 trillion dollars. Housing sales volume fell between 30-40% year-on-year since the beginning of 2022 across 100 major Chinese cities. Consultancy firm Capital Economics estimates that about 30 million newly developed properties remained unsold last year, while about 100 million more were likely to have been bought but not occupied. Home prices dropped for the 11th straight month in July. Many Chinese have chosen to not to pay their mortgages which ANZ Research estimates to affect about $222 billion of loans.
• Some property developers have gone so far as to accept watermelons, wheat and onions as payment for property. The government has been encouraging citizens to purchase more property. One government official has gone as far as to tell citizens to two purchase as much as four homes. The panic is obvious.
• 6 billion dollars have been stolen from the customer's deposit due to fraud by Henan Xincaifu Group Investment Holding Co. and citizens are in uproar amid chaos in the banking system.
• China is in a terrible position that feeds upon itself. Property developers are see falling sales and are going bankrupt/defaulting, so banks see less profit and/or take losses on non-performing loans, while lockdowns further limit appetite for healthy business loan while increasing distressed/risky loans, all the while everyone's value fall as real estate crashes.
• China has actually cut interest rates, twice in two weeks, in an effort to stimulate growth while most other countries raise rates to fight inflation. The Chinese remninbi or yuan has declined, falling as much as 7% in 3 months earlier this year. It recently fell to a 2 year low.
• China is also facing climate change problems as their rivers dry up such as the Yangtze, the world’s third largest river, seeing water levels in it's main trunk fall below the average of the last 5 years with entire sections and dozens of tributaries disappearing. This has then further created shortages of energy from hydropower. Companies such as Toyota, Foxconn and Tesla are among companies who have been forced to temporarily suspend plant operations.

Food Prices

• Per national geographic, the world diet is 45% comprised of grains. Of this, 19% is rice, 18% is wheat and 5% corn(3% other cereals). Between Ukraine and Russia, the amount of percentage of world grain supply is 14% of corn, 30% of barley and 27% of wheat(Radio Free Europe/Radio Liberty 2022).
• Now by various studies, lack of fertilizer can reduce crop yields by 30-60%. Corn in particular is sensitive to nitrogen(fertilizer) levels.
• Per CNBC, again, Russia and Ukraine together make up 28% of the fertilizer exports. Further, Russia accounts for 11% of the world’s urea, and 48% of the ammonium nitrate, key ingredients in making fertilizer.
• We have seen effective prices for fertilizers climb ~3X - 5X times(~300-500%) where they were before the pandemic. They are up ~1.4- ~3X(140%-~300%) since the start of 2022.

Prices of inputs to fertilizer

• You may have notice the prices of at least two of the inputs fall and seem to be leveling off. This might be a good thing, kinda except for the fact that these prices are still sky high and have simply just stopped increasing. But keep this in mind.

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Grain Prices

• (I found out how to make the graph less ugly)
• These three commodities largely account for around 50% of the world's diet. They have increased 30-40% pre-pandemic. They increased a few percentage points since the beginning of 2022. But the point is the prices are still high.
• Again we see prices decrease after a massive surge earlier this year. This should be good.
• The problem is that food prices(among almost everything else) falls during a true economic recession. It's either we have sky high prices with inflation or low(er) prices but the value of all your possessions and net worth fall. Same difference. That by the way is the "secret" to the Fed fighting inflation. They can't. We either have high and rising prices and struggle to keep up or stable prices but we fall into a recession and our asset value falls amid mass lay-offs.
• EDIT: Just a few minutes ago, Fed chain Powell warned that inflation fight will "bring some pain". How ironic life is sometimes. Expect high rates, and you know what that means for markets.

Russia accounted for around 3% of global GDP. Sanctions have written off much of that value from global trade. I'm not sure I need to speak at length about the collapse of Sri Lanka and Pakistan. Bangladesh has now approached the IMF for a bailout. Cuba has been suffering daily blackouts and fuel shortages and has devalued the Cuban peso by 500%. Chile also is on the brink of a recession. I could go on. I have highlighted a number of countries in this article but of course, we also know that high inflation is a issue in virtually every country worldwide while also having to struggling with huge floods, high temperatures and droughts. These are global issues.
[Warning - the following paragraph is for economic nerds]
We are also seeing the beginning of what is called contango in oil futures(WTI) which basically implies a falling demand for oil immediate oil access which typically precipitates recession in addition to treasury bill shortages as the Fed reduces its purchases, and eurodollar and treasury curves being heavily inverted. I may do a deep-dive on bond and futures curves another another time as it's a pretty complex topic.
Believe me when I say I left out quite a lot of data that could be seen as questionable even if they were particularly damning. I made sure to include statements like "at a three decade high" to indicate that citizens are not accustomed to coping with such high prices and likely that wages would not be able to keep pace with inflation. I realised only near the end of writing this I maybe should have added sources but, c'mon this in Reddit. But seriously, pretty much all this data is very easily verifiable within a single google search. So sure, you should take some random dude-on-Reddit's advice but the fact is the economic fundamentals look pretty terrible. I don't wanna be that doom and gloom guy but simply believing markets will pump won't make them pump.
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Protect your pockets. That's all from me. Take care out there.

By Jan 13, we may see edit: 66% or more of the float essentially spoken for (not even including retail). If insiders in this scenario DRS' d Bbby, we'd be at a 39% DRS'd versus Gamestonk at 26% of their total float. Late filings often signal major transactions like M&A. I'll go through some examples with BBBY these past 6 months. 13F filers like Icahn can file certain securities like BBBY shares confidentially if disclosing would give away "trade secrets" and this can cause filing delays.
The bond filings were late several days and happened the day after the 13f cutoff Nov 15. Edit: Doesn't look like the bond deals were involved with affiliates under the standstill (explained below) so these particular late filings are kind of puzzling.
Whether or not a confidential 13F was approved or applied for, under 5% ownership from Nov 15th won't be disclosed until Feb 14 for 13f filers. This would present a good opportunity to accumulate atm on the open market or in private offerings that are a part of the atm program if the 19.9% cap hadn't been reached by mid Nov.
As of Nov 18th BBBY mentioned they had 117.3 million shares. The 2.7 mill conversions started on Nov 14th, and would be required to be submitted by Nov 29. The 11.7 million conversions started on the 16th and was required to file within 15 days, or Dec 1. So why both late? My guess, is they are related somehow.
(Image for mobile browsing) https://imgur.com/a/krXqLQw
Patty Wu's form 3 was submitted the last minute so to speak (last day with a 2 day grace from the weekend).
10b51c has a confidentiality option in regards to a trading plan to sell on a certain date by an activist investor like Cohen.
From Cohen's original 13d filing "...among other things, the purchase or sale of Shares on the open market or in private transactions including through a trading plan created under Rule 10b5-1(c) or otherwise...."
Which means Cohen may have had a plan to sell in Aug way ahead of time. What's more likely, a sell on the same date as Arnal by chance or a trading plan written ahead of time?
Fyi - The 144 he signed means there was nothing "off" about the books related to his sell. His 13d/a on 8/18 was over 3 months and 2 weeks late (not timely as per the requirement and would require an exceptional circumstance(s)). It also appears, if Cohen was still a 13d filer for BBBY he would have to add affiliate "group member" share counts of BBBY on his 13d, even if they were below 5% each. His sales at the end of a 13f filing period allowed accumulation under 5% each to begin among his affiliates without being noticed by the broader market.
HSR among other government bodies are backlogged with mergers. There is a 400% increase in premerger filings and the accelerated filing program is on pause. Dragonfly's only branch that is designated as an acquirer of businesses has amended their annual filing to be done later. (A Furniture LLC that head of M&A at Dragonfly is associated with, also had a Texas filing that was dated shortly before the standstill on 3/23 (standstill date 3/24, 3/25).
Four institutional investors / individuals could accumulate up to 23.34 million shares or 19.9% under the standstill contract currently. Done outside of the companies knowledge would be considered problematic, but the standstill allows his known affiliates to hold/aquire.
Institutions with an average buy in over 16.00 a share hold another 36 million. Meaning combined with the standstill 19.9% Cohen and affiliates share limit, over 50% of shares. That's just the first couple pages of many 13f filers that hold BBBY from the Whale Wisdom site (Blackrock over 12 million shares, average buy in $25). I think we could see additional heavy buying Jan3 for the next 10 days (before 13d filings would be due for new BBBY owners over 5% of outstanding shares). If institutions continue to hold and the 19.9% is matched again by Cohen and affiliates over Jan 3 - Jan 13, the float could be over 3/4ths spoken for - AND THAT's NOT EVEN INCLUDING RETAIL. With a major announcement, institutions will expect higher prices and they will wait to sell. And if the insiders DRS 39% of the float or more....
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Background theory expanded upon - Private shares through the atm (which can include private sales) are being offered (edit ran more numbers) in large part to people acquiring the company. Best example is Oct 25 and/or Oct 26. 4 million shares issued over a day or 2, and the highest price rise in over 45 days.
If you can hold shares in addition to a buyout, it makes sense to get shares cheap. It means among other things, you could offer shareholders a higher price or better share exchange because you acquired them cheaper.
This could be the case with the private bond conversions as well.
Edit: Ran some numbers -Based on the definition of the box 10 (which I forgot about), and then read some of the exceptions) I don't think the private bond conversions are directly linked to affiliates in the standstill.
Events in Nov around bond conversions
11-14 first "sales" bond conversions of 2.7 mil to Funicular
11-16 first extension filing of bonds to 11-18 and first "sales" as 11.7 mil shares from bond conversions to 7 institutional investors registered in Connecticut and Delaware)
11-19 first teddy tweet *
11-20 Date of Cohen interview...*(see my interpretation post)
11-21 bond offering extended to Dec 5
11-21 Icahn S3 1.2 bil raise (can be used for aquisitions) adds 400 mil on 424b5 form.
11-21 (somewhat) cryptic Sagittarius 11/22 bbby instagram images bb&breal.jk
11-24 make Teddy making Thanksgiving Great Again Tweet
11-28 Pulte (I always think Bill Pulman) Only the Young! Remember this tweet, it will be very important one day.
11-30 Cocaine Bear response tweet "Finally"
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Total atm shares issued
12,000,000 on first offering (First 3 million shares raise 30 million at $10.00 each average)
9,987,305 From $150 million offering.
21,987,305 Total shares in atm offerings (it's been noted there's been no information on additional atm offerings since the filing Nov 21) Think that was u/muppenx that mentioned.
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14,429,465 total of bond conversions of 11,667,021 + 2,762,444
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36,416,770 million Total atm + bond share conversions
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23,340,000 total affiliates can currently hold
If most of the private at the money shares issued (which can be private) were given to affiliates of RC, that would account for most of them but still give affiliates a couple more million shares they could acquire and be under the 19.9% cap.
1,352,695 would still be available if they got "all " the atm share offerings, but my guess would be not the 3 million shares that were sold for 10.00 each. So maybe there is still another 4,352,695 at least they could acquire and be under the 19.9% cap if they haven't already done so on the open market.
This latest bond extension started on Dec 5th which goes to the 19th. If it is extended yet another time for 14 days, that will bring us to the end of the standstill agreement on Jan 2 (credit a couple people I think mentioned including u/MarkTib1109 u/97Minutes).
Recent and upcoming 13f position reporting dates
August 15, 2022
November 14, 2022 (Day of Funicular 2.7 million private bond deal
February 14, 2023
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Sources and other links
https://www.ecfr.gov/search?search%5Bdate%5D=current&search%5Bquery%5D=bank+holding+company&view=standard
https://www.law.cornell.edu/cftext/17/230.145
Share count updates timeline
80,362,695 (Aug 27), 3,000,000 (first of 12 mil issuance for 30 mil in sales) to add 5,795,534 more from total 12 mil to be issued arriving at 86,158,229, 1,987,845 issued Oct 14-24 iarriving at 88,146,074 , 4,216,621 shares issued (privately I believe) Oct 25 and/or Oct 26 arriving at 92,362,695, 2,762,444 private bond deal issuance arriving at 95,125,139 Nov 14 , 11,667,021 private bond deal issuance aNov 16 arriving at 106,792,160 shares outstanding , and 10,507,840 issued at some point past Oct 28th filing of share count to arrive at with bond conversions to 117.3 mil on nov 21.
https://www.computershared.net/?bot=drsbot https://www.gurufocus.com/stock/BBBY/ownership
Patty Wu filing - https://www.sec.gov/Archives/edgadata/886158/000183988222020332/0001839882-22-020332-index.htm
15 day Form D deadline https://www.federalregister.gov/documents/2013/07/24/2013-16884/amendments-to-regulation-d-form-d-and-rule-156
https://carofin.com/knowledge-base/security/rule-506c-private-placements/
https://www.sec.gov/corpfin/divisionscorpfinguidancereg13d-interphtm chock full page. search percentage
For instance, if you manage more than 5% in the shares of an issuer and the percentage managed increases or decrease by more than 1% (whether through a transaction or other event), you must amend your 13D filing. 1% change (material increase)
https://www.foley.com/en/insights/publications/2022/02/sec-proposes-amendments-13d-and-13g-reporting
https://www.sec.gov/divisions/investment/guidance/im-guidance-2013-08.pdf
https://btlaw.com/en/insights/alerts/2022/changes-coming-in-2023-for-form-13f-content-and-confidential-treatment-requests
https://whalewisdom.com/stock/bbby
13f confidential
https://www1.villanova.edu/content/dam/villanova/VSB/assets/marc/marc2011/Why%20Do%20Firms%20File%20for%20Confidential%20Treatment_.pdf
https://www.dodd-frank.com/2013/10/sec-provides-additional-guidance-on-form-13f-confidential-treatment-requests/
https://www.sec.gov/divisions/investment/guidance/im-guidance-2013-08.pdf
he Premerger Notification Office (PNO) has faced a dramatic increase in merger notification filings in 2021. The PNO received 4,130 filings in the 2021 calendar year compared to 1,637 filings in 2020 fiscal year. This volume nearly doubles the highest annual volume received in any of the past ten fiscal years (2,111 filings in 2018). The early termination program remains suspended (early approval)
https://btlaw.com/insights/alerts/2022/sec-proposes-important-changes-to-section-13-beneficial-ownership-reporting-rules
https://www.dentons.com/en/insights/alerts/2022/january/26/hart-scott-rodino-act-notification-thresholds-increase-for-2022
https://corpgov.law.harvard.edu/2019/06/23/the-timing-of-schedule-13d/
Courts have likewise consistently held that a “prompt” amendment is one made in less than ten calendar days.
This exemption from state blue sky laws does not apply to Section 4(a)(2) exemptions
https://chambers.com/articles/what-is-the-difference-between-section-4-a-2-and-regulation-d
https://www.tuckerellis.com/lingua-negoti-blog/missed-form-d-filings-are-there-consequences-to-operating-in-stealth-mode/
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13g https://ibkr.info/article/2654#:~:text=Rule%2013d%2D2%20of%20the,on%20a%20Schedule%2013D%20occur.
The Schedule 13D must be amended “promptly” to report any material change in the information provided, including any acquisition or disposition of 1% or more of the class. Rule 13d-2(a)
https://www.mintz.com/sites/default/files/viewpoints/orig/14/2015/02/Memo_-Summary-of-Schedule-13D-and-13G-Filing-Obligations-DOC1.pdf
Definition of “Promptly” for Schedule 13D and 13G Filings The determination of what constitutes “promptly” is based upon the facts and circumstances surrounding the materiality of the change in information triggering the filling obligation and the filing person’s previous disclosures. Any delay beyond the date the filing can reasonably be made may not be considered prompt.
item 4 13d
10b5 1 c optional disclosure
https://www.sec.gov/rules/proposed/2022/33-11013.pdf

As the Fed begins their journey into a deflationary blizzard, they are beginning to break markets across the globe. As the World Reserve Currency, over 60% of all international trade is done in Dollars, and USDs are the largest Foreign Exchange (Forex) holdings by far for global central banks. Now all foreign currencies are crashing against the Dollar as the vicious feedback loops of Triffin’s Dilemma come home to roost. The Dollar Milkshake has begun.
The Fed, knowingly or unknowingly, has walked into this trap- and now they find themselves caught underneath the Sword of Damocles, with no way out…
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Sword Of Damocles
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“The famed “sword of Damocles” dates back to an ancient moral parable popularized by the Roman philosopher Cicero in his 45 B.C. book “Tusculan Disputations.” Cicero’s version of the tale centers on Dionysius II, a tyrannical king who once ruled over the Sicilian city of Syracuse during the fourth and fifth centuries B.C.
Though rich and powerful, Dionysius was supremely unhappy. His iron-fisted rule had made him many enemies, and he was tormented by fears of assassination—so much so that he slept in a bedchamber surrounded by a moat and only trusted his daughters to shave his beard with a razor.
As Cicero tells it, the king’s dissatisfaction came to a head one day after a court flatterer named Damocles showered him with compliments and remarked how blissful his life must be. “Since this life delights you,” an annoyed Dionysius replied, “do you wish to taste it yourself and make a trial of my good fortune?” When Damocles agreed, Dionysius seated him on a golden couch and ordered a host of servants wait on him. He was treated to succulent cuts of meat and lavished with scented perfumes and ointments.
Damocles couldn’t believe his luck, but just as he was starting to enjoy the life of a king, he noticed that Dionysius had also hung a razor-sharp sword from the ceiling. It was positioned over Damocles’ head, suspended only by a single strand of horsehair.
From then on, the courtier’s fear for his life made it impossible for him to savor the opulence of the feast or enjoy the servants. After casting several nervous glances at the blade dangling above him, he asked to be excused, saying he no longer wished to be so fortunate.”
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Damocles’ story is a cautionary tale of being careful of what you wish for- Those who strive for power often unknowingly create the very systems that lead to their own eventual downfall. The Sword is often used as a metaphor for a looming danger; a hidden trap that can obliterate those unaware of the great risk that hegemony brings.
Heavy lies the head which wears the crown.
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There are several Swords of Damocles hanging over the world today, but the one least understood and least believed until now is Triffin’s Dilemma, which lays the bedrock for the Dollar Milkshake Theory. I’ve already written extensively about Triffin’s Dilemma around a year ago in Part 1.5 and Part 4.3 of my Dollar Endgame Series, but let’s recap again.
Here’s a great summary- read both sides of the dilemma:
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Triffin's Dilemma Summarized

(Seriously, stop here and go back and read Part 1.5 and Part 4.3 Do it!)

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Essentially, Triffin noted that there was a fundamental flaw in the system: by virtue of the fact that the United States is a World Reserve Currency holder, the global financial system has built in GLOBAL demand for Dollars. No other fiat currency has this.
How is this demand remedied? With supply of course! The United States thus is forced to run current account deficits - meaning it must send more dollars out into the world than it receives on a net basis. This has several implications, which again, I already outlined- but I will list in summary format below:

1. The United States has to be a net importer, ie it must run trade deficits, in order to supply the world with dollars. Remember, dollars and goods are opposite sides of the same equation, so a greater trade deficits means that more dollars are flowing out to the world.
2. (This will devastate US domestic manufacturing, causing political/social/economic issues at home.)
3. These dollars flow outwards into the global economy, and are picked up by institutions in a variety of ways.
4. First, foreign central banks will have to hold dollars as Foreign Exchange Reserves to defend their currency in case of attack on the Forex markets. This was demonstrated during the Asian Financial Crisis of 1997-98, when the Thai Baht, Malaysian Ringgit, and Philippine Peso (among other East Asian currencies) plunged against the Dollar. Their central banks attempted to defend the pegs but they failed.
5. Second, companies will need Dollars for trade- as the USD makes up over 60% of global trade volume, and has the deepest and most liquid forex market by far, even small firms that need to transact cross border trade will have to acquire USDs in order to operate. When South Africa and Chile trade, they don’t want to use Mexican Pesos or Korean Won- they want Dollars.
6. Foreign governments need dollars. There are several countries already who have adopted the Dollar as a replacement for their own currency- Ecuador and Zimbabwe being prime examples. There’s a full list here.
7. Third world governments that don’t fully adopt dollars as their own currencies will still use them to borrow. Argentina has 70% of it’s debt denominated in dollars and Indonesia has 30%, for example. Dollar-denominated debt will build up overseas.

The example I gave in Part 1.5 was that of Liberia, a small West African Nation looking to enter global trade. Needing to hold dollars as part of their exchange reserves, the Liberian Central Bank begins buying USDs on the open market. The process works in a similar fashion for large Liberian export companies.
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Dollar Recycling
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Essentially, they print their own currency to buy Dollars. Wanting to earn interest on this massive cash hoard when it isn’t being used, they buy Treasuries and other US debt securities to get a yield.
As their domestic economy grows, their need and dependence on the Dollar grows as well. Their Central Bank builds up larger and larger hoards of Treasuries and Dollars. The entire thesis is that during times of crisis, they can sell the Treasuries for USD, and use the USDs to buy back their own currency on the market- supporting its value and therefore defending the peg.
This buying pressure on USDs and Treasuries confers a massive benefit to the United States-
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The Exorbitant Privilege
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This buildup of excess dollars ends up circulating overseas in banks, trade brokers, central banks, governments and companies. These overseas dollars are called the Eurodollar system- a 2016 research paper estimated the size to be around $13.8 Trillion USD. This system is not under official Federal Reserve jurisdiction so it is difficult to get accurate numbers on its size.
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https://preview.redd.it/92wcmhdb0uq91.png?width=691&format=png&auto=webp&s=20dbaf63f75ff6f2e255fff06e6f48c03170b11b
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This means the Dollar is always artificially stronger than it should be- and during financial calamity, the dollar is a safe haven as there are guaranteed bidders.
All this dollar denominated debt paired with the global need for dollars in trade creates strong and persistent dollar demand. Demand that MUST be satisfied.
This creates systemic risk on a worldwide scale- an unforeseen Sword of Damocles that hangs above the global financial system. I’ve been trying to foreshadow this in my Dollar Endgame Series.
Triffin’s Dilemma is the basis for the Dollar Milkshake Theory posited by Brent Johnson.
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The Dollar Milkshake

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Milkshake of Liquidity
In 2021, Brent worked with RealVision to create a short summary of his thesis- the video can be found here. I should note that Brent has had this theory for years, dating back to 2018, when he first came on podcasts and interviews and laid out his theory (like this video, for example).
Here’s the summary below:
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“A giant milkshake of liquidity has been created by global central banks with the dollar as its key ingredient - but if the dollar moves higher this milkshake will be sucked into the US creating a vicious spiral that could quickly destabilize financial markets.
The US dollar is the bedrock of the world's financial system. It greases the wheels of global commerce and exchange- the availability of dollars, cost of dollars, and the level of the dollar itself each can have an outsized impact on economies and investment opportunities.
But more important than the absolute level or availability of dollars is the rate of change in the level of the dollar. If the level of the dollar moves too quickly and particularly if the level rises too fast then problems start popping up all over the place (foreign countries begin defaulting).
Today however many people are convinced that both the role of the Dollar is diminishing and the level of the dollar will only decline. People think that the US is printing so many dollars that the world will be awash with the greenback causing the value of the dollar to fall.
Now it's true that the US is printing a lot of dollars – but other countries are also printing their own currencies in similar amounts so in theory it should even out in terms of value.
But the hidden issue is the difference in demand. Remember the global financial system is built on the US dollar which means even if they don't want them everybody still needs them and if you need something you don't really have much choice. (See DXY Index):
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DXY Index
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Although many countries like China are trying to reduce their reliance on dollar transactions this will be a very slow transition. In the meantime the risks of a currency or sovereign debt crisis continue to rise.
But now countries like China and Japan need dollars to buy copper from Australia so the Chinese and the Japanese owe dollars and Australia is getting paid in dollars.
Europe and Asia currently doing very limited amount of non-dollar transactions for oil so they still need dollars to buy oil from saudi and again dollars get hoovered up on both sides
Asia and Europe need dollars to buy soybeans from Brazil. This pulls in yet more dollars - everybody needs dollars for trade invoices, central bank currency reserves and servicing massive cross-border dollar denominated debts of governments and corporations outside the USA.
And the dollar-denominated debt is key- if they don't service their debts or walk away from their dollar debts their funding costs rise putting great financial pressure on their domestic economies. Not only that, it can lead to a credit contraction and a rapid tightening of dollar supply.
The US is happy with the reliance on the greenback they own the settlement system which benefits the US banks who process all the dollars and act as gatekeepers to the Dollar system they police and control the access to the system which benefits the US military machine where defense spending is in excess of any other country so naturally the US benefits from the massive volumes of dollar usage.
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Other countries have naturally been grumbling about being held hostage to the situation but the choices are limited. What it does mean is that dollars need to be constantly sucked out of the USA because other countries all over the world need them to do business and of course the more people there are who need and want those dollars the more is the pressure on the price of dollars to go up.
In fact, global demand is so high that the supply of dollars is just not enough to keep up, even with the US continually printing money. This is why we haven't seen consistently rising US inflation despite so many QE and stimulus programs since the global financial crisis in 2008.
But, the real risk comes when other economies start to slow down or when the US starts to grow relative to the other economies. If there is relatively less economic activity elsewhere in the world then there are fewer dollars in global circulation for others to use in their daily business and of course if there are fewer in circulation then the price goes up as people chase that dwindling source of dollars.
Which is terrible for countries that are slowing down because just when they are suffering economically they still need to pay for many goods in dollars and they still need to service their debts which of course are often in dollars too.
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So the vortex begins or as we like to say the dollar milkshake- As the level of the dollar rises the rest of the world needs to print more and more of its own currency to then convert to dollars to pay for goods and to service its dollar debt this means the dollar just keeps on rising in response many countries will be forced to devalue their own currencies so of course the dollar rises again and this puts a huge strain on the global system.
(see the charts below:)
JPY/USD
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GBP/USD
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EUUSD
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To make matters worse in this environment the US looks like an attractive safe haven so the US ends up sucking in the capital from the rest of the world-the dollar rises again. Pretty soon you have a full-scale sovereign bond and currency crisis.
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We're now into that final napalm run that sees the dollar and dollar assets accelerate even higher and this completely undermines global markets. Central banks try to prevent disorderly moves, but the global markets are bigger and the momentum unstoppable once it takes hold.
And that is the risk that very few people see coming but that everyone should have a hedge against - when the US sucks up the dollar milkshake, bad things are going to happen.
Worst of all there's no alternatives- what are you going to use-- Chinese Yuan? Japanese Yen? the Euro??
Now, like it or not we're stuck with a dollar underpinning the global financial system.”
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Why is it playing out now, in real time?? It all leads back to a tweet I made in a thread on September 16th.
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Tweet Thread about the Yuan
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The Fed, rushing to avoid a financial crisis in March 2020, printed trillions. This spurred inflation, which they then swore to fight. Thus they began hiking interest rates on March 16th, and began Quantitative Tightening this summer.
QE had stopped- No new dollars were flowing out into a system which has a constant demand for them. Worse yet, they were hiking completely blind-
Although the Fed is very far behind the curve, (meaning they are hiking far too late to really combat inflation)- other countries are even farther behind!
Japan has rates currently at 0.00- 0.25%, and the Eurozone is at 1.25%. These central banks have barely begun hiking, and some even swear to keep them at the zero-bound. By hiking domestic interest rates above foreign ones, the Fed is incentivizing what are called carry trades.
Since there is a spread between the Yen and the Dollar in terms of interest rates, it thus is profitable for traders to borrow in Yen (shorting it essentially) and buy Dollars, which can earn 2.25% interest. The spread would be around 2%.
DXY rises, and the Yen falls, in a vicious feedback loop.
Thus capital flows out of Japan, and into the US. The US sucks up the Dollar Milkshake, draining global liquidity. As I’ve stated before, this has seriously dangerous implications for the global financial system.
For those of you who don’t believe this could be foreseen, check out the ending paragraphs of Dollar Endgame Part 4.3 - “Economic Warfare and the End of Bretton Woods” published February 16, 2022:
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Triffin's Dilemma is the Final Nail
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What I’ve been attempting to do in my work is restate Triffins’ Dilemma, and by extension the Dollar Milkshake, in other terms- to come at the issue from different angles.
Currently the Fed is not printing money. Which is thus causing havoc in global trade (seen in the currency markets) because not enough dollars are flowing out to satisfy demand.
The Fed must therefore restart QE unless it wants to spur a collapse on a global scale. Remember, all these foreign countries NEED to buy, borrow and trade in a currency that THEY CANNOT PRINT!
We do not have enough time here to go in depth on the Yen, Yuan, Pound or the Euro- all these currencies have different macro factors and trade factors which affect their currencies to a large degree. But the largest factor by FAR is Triffin’s Dilemma + the Dollar Milkshake, and their desperate need for dollars. That is why basically every fiat currency is collapsing versus the Dollar.
The Fed, knowingly or not, is basically in charge of the global financial system. They may shout, “We raise rates in the US to fight inflation, global consequences be damned!!” - But that’s a hell of a lot more difficult to follow when large G7 countries are in the early stages of a full blown currency crisis.
The most serious implication is that the Fed is responsible for supplying dollars to everyone. When they raise rates, they trigger a margin call on the entire world. They need to bail them out by supplying them with fresh dollars to stabilize their currencies.
In other words, the Fed has to run the loosest and most accommodative monetary policy worldwide- they must keep rates as low as possible, and print as much as possible, in order to keep the global financial system running. If they don’t do that, sovereigns begin to blow up, like Japan did last week and like England did on Wednesday.
And if the world’s financial system implodes, they must bail out not only the United States, but virtually every global central bank. This is the Sword of Damocles. The money needed for this would be well in the dozens of trillions.
The Dollar Endgame Approaches…
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Q&A

(Many of you have been messaging me with questions, rebuttals or comments. I’ll do my best to answer some of the more poignant ones here.)

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Q: I’ve been reading your work, you keep saying the dollar is going to fall in value, and be inflated away. Now you’re switching sides and joining the dollar bull faction. Seems like you don’t know what you’re talking about!
A: You’re mixing up my statements. When I discuss the dollar losing value, I am referring to it falling in ABSOLUTE value, against goods and services produced in the real economy. This is what is called inflation. I made this call in 2021, and so far, it has proven right as inflation has accelerated.
The dollar gaining strength ONLY applies to foreign currency exchange markets (Forex)- remember, DXY, JPYUSD, and other currency pairs are RELATIVE indicators of value. Therefore, both JPY and USD can be falling in real terms (inflation) but if one is falling faster, then that one will lose value relative to the other. Also, Forex markets are correlated with, but not an exact match, for inflation.
I attempted to foreshadow the entire dollar bull thesis in the conclusion of Part 1 of the Dollar Endgame, posted well over a year ago-
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Unraveling of the Currency Markets
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I did not give an estimate on when this would happen, or how long DXY would be whipsawed upwards, because I truly do not know.
I do know that eventually the Fed will likely open up swap lines, flooding the Eurodollar market with fresh greenbacks and easing the dollar short squeeze. Then selling pressure will resume on the dollar. They would only likely do this when things get truly calamitous- and we are on our way towards getting there.
The US bond market is currently in dire straits, which matches the prediction of spiking interest rates. The 2yr Treasury is at 4.1%, it was at 3.9% just a few days ago. Only a matter of time until the selloff gets worse.
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Q: Foreign Central banks can find a way out. They can just use their reserves to buy back their own currency.
Sure, they can try that. It’ll work for a while- but what happens once they run out of reserves, which basically always happens? I can’t think of a time in financial history that a country has been able to defend a currency peg against a sustained attack.
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Global Forex Reserves
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They’ll run out of bullets, like they always do, and basically the only option left will be to hike interest rates, to attract capital to flow back into their country. But how will they do that with global debt to GDP at 356%? If all these countries do that, they will cause a global depression on a scale never seen before.
Britain, for example, has a bit over $100B of reserves. That provides maybe a few months of cover in the Forex markets until they’re done.
Furthermore, you are ignoring another vicious feedback loop. When the foreign banks sell US Treasuries, this drives up yields in the US, which makes even more capital flow to the US! This weakens their currency even further.
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FX Feedback Loop
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To add insult to injury, this increases US Treasury borrowing costs, which means even if the Fed completely ignores the global economy imploding, the US will pay much more in interest. We will reach insolvency even faster than anyone believes.
The 2yr Treasury bond is above 4%- with $31T of debt, that means when we refinance we will pay $1.24 Trillion in interest alone. Who's going to buy that debt? The only entity with a balance sheet large enough to absorb that is the Fed. Restarting QE in 3...2…1…
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Q: I live in England. With the Pound collapsing, what can I do? What will happen from here? How will the governments respond?
England, and Europe in general, is in serious trouble. You guys are currently facing a severe energy crisis stemming from Russia cutting off Nord Stream 1 in early September and now with Nord Stream 2 offline due to a mysterious leak, energy supplies will be even more tight.
Not to mention, you have a pretty high debt to GDP at 95%. Britain is a net importer, and is still running government deficits of £15.8 billion (recorded in Q1 2022). Basically, you guys are the United States without your own large scale energy and defense sector, and without Empire status and a World Reserve Currency that you once had.
The Pound will almost certainly continue falling against the Dollar. The Bank of England panicked on Wednesday in reaction to a $100M margin call on British pension funds, and now has begun buying long dated (10yr) gilts, or government bonds.
They’re doing this as inflation is spiking there even worse than the US, and the nation faces a currency crisis as the Pound is nearing parity with the Dollar.
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BOE announces bond-buying scheme (9/28/22)
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I will not sugarcoat it, things will get rough. You need to hold cash, make sure your job, business, or investments are secure (ie you have cashflow) and hunker down. Eliminate any unnecessary purchases. If you can, buy USDs as they will likely continue to rise and will hold value better than your own currency.
If Parliament goes through with more tax cuts, that will only make the fiscal situation worse and result in more borrowing, and thus more money printing in the end.
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Q: What does this mean for Gamestop? For the domestic US economy?
Gamestop will continue to operate as I am sure they have been- investing in growth and expanding their Web3 platform.
Fiat is fundamentally broken. This much is clear- we need a new financial system not based on flawed 16th fractional banking principles or “trust me bro” financial intermediaries.
My hope is that they are at the forefront of a new financial system which does not require centralized authorities or custodians- one where you truly own your assets, and debasement is impossible.
I haven’t really written about GME extensively because it’s been covered so well by others, and I don’t feel I have that much to add.
As for the US economy, we are still in a deep recession, no matter what the politicians say- and it will get worse. But our economic troubles, at least in the short term (6 months) will not be as severe as the rest of the world due to the aforementioned Dollar Milkshake.
The debt crisis is still looming, midterms are approaching, and the government continues to deficit spend as if there’s no tomorrow.
As the global monetary system unravels, yields will spike, the deleveraging will get worse, and our dollar will get stronger. The fundamental factors continue to deteriorate.
I’ve covered the US enough so I'll leave it there.
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Q: Did you know about the Dollar Milkshake Theory before recently? What did you think of it?
Of course I knew about it, I’ve been following Brent Johnson since he appeared on RealVision and Macrovoices. He laid out the entire theory in 2018 in a long form interview here. I listened to it maybe a couple times, and at the time I thought he was right- I just didn’t know how right he was.
Brent and I have followed each other and been chatting a little on Twitter- his handle is SantiagoAuFund, I highly recommend you give him a follow.
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Twitter Chat
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I’ve never met him in person, but from what I can see, his predictions are more accurate than almost anyone else in finance. Again, all credit to him- he truly understands the global monetary system on a fundamental level.
I believed him when he said the dollar would rally- but the speed and strength of the rally has surprised me. I’ve heard him predict DXY could go to 150, mirroring the massive DXY squeeze post the 1970s stagflation. He could very easily be right- and the absolute chaos this would mean for global trade and finance are unfathomable.
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History of DXY
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Q: The Pound and Euro are falling just because of the energy crisis there. That's it!
Why is the Yen falling then? How about the Yuan? Those countries are not currently undergoing an energy crisis. Let’s review the year to date performance of most fiat currencies vs the dollar:
Japanese Yen: -20.31%
Chinese Yuan: -10.79%
South African Rand: -10.95%
English Pound: -18.18%
Euro: -14.01%
Swiss Franc: -6.89%
South Korean Won: -16.73%
Indian Rupee: -8.60%
Turkish Lira: -27.95%
There are only a handful of currencies positive against the dollar, the most notable being the Russian Ruble and the Brazilian Real- two countries which have massive commodity resources and are strong exporters. In an inflationary environment, hard assets do best, so this is no surprise.
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Q: What can the average person do to prepare? What are you doing?
Obligatory this is NOT financial advice
This is an extremely difficult question, as there are so many factors. You need to ask yourself, what is your financial situation like? How much disposable income do you have? What things could you cut back on? I can’t give you specific ideas without knowing your situation.
Personally, I am building up savings and cutting down on expenses. I’m getting ready for a severe recession/depression in the US and trying to find ways to increase my income, maybe a side hustle or switching jobs.
I am holding my GME and not selling- I still have some shares in Fidelity that I need to DRS (I know, sorry, I was procrastinating).
For the next few months, I believe there will be accelerating deflation as interest rates spike and the debt cycle begins to unwind. But like I’ve stated before, this will lead us towards a second Great Depression very rapidly, and to avoid the deflationary blizzard the Fed will restart QE on a scale never seen before.
QE Infinity. This will be the impetus for even worse inflation- 25%+ by this time next year.
It’s hard to prepare for this, and easy to feel hopeless. It’s important to know that we have been through monetary crises before, and society did not devolve into a zombie apocalypse. You are not alone, and we will get through this together.
It’s also important to note that we are holding the most lopsided investment opportunity of a generation. Any money you put in there can be grown by orders of magnitude.
We are at the end of the Central Bankers game- and although it will be painful, we will rid the world of them, I believe, and build a new financial system based on blockchains which will disintermediate the institutions. They have everything to lose.
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Q: I want to learn more, where can I do? What can I do to keep up to date with everything?
You can start by reading books, listening to podcasts, and checking the news to stay abreast of developments. I have a book list linked at the end of the Dollar Endgame posts.
I’ll be covering the central bank clown show on Twitter, you can follow me there if you like. I’ll also include links to some of my favorite macro people below:

• Peruvian Bull (my only account)
• Lyn Alden
• Luke Gromen
• Brent Johnson
• Raoul Pal
• Andreas Steno Larsen
• Jeffrey Snider

I’m still finishing up the finale for Dollar Endgame- I should have it out soon. I’m also writing an addendum to the series which is purely Q&A to answer questions and concerns. Sorry for the wait.
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Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person.