From Short-term interest rate Research to Grand Strategy
Zoltan Pozsar, a senior research analyst at Credit Suisse known for his study of the short term interest system. This is commonly referred to as "plumbing", as short term products such as repo, money market funds is about liquidity management.
The field is viewed by many financiers as boring, as shorter maturity often imply very limited PnL. Zoltan recent posts articles that are more about grand-strategy.
Kaiser Franz I of Austria, 1815, image credit Wikicommons
These articles are shifting the narrative and therefore highly influential for macro analysts, and was noted amongst contrarian and anti-establishment savers such as: gold/precious metal bugs and crypto-hodlers:
- 7 Mar: Bretton Woods III. The sanctions announced by the G7 usher a new era, from Bretton Wood II where money is backed by Treasuries with unhedgeable confiscation risk to commodity money. He expects the RMB to play a much larger role in commodity pricing.
- 22 Aug: War and Interest Rates. The dampening of inflation using US interest rate by the Fed might be hampered by the War and geopolitical change. Zoltan notes that workers ask for higher pay, and that salary is a key component of the inflation self-perpetuation. He predicts that the fed hiking of interest rates will cause a recession.
- 24 Aug War and Industry. Germany was using cheap gas for industrial production and is going through a messy divorce. Similarly, America was using China cheap imports and is going through a divorce too. China wanted to produce higher technicity goods like 5g equipment and chips. US is not letting this happen. This points to an additional headwind for the world economy, as it needs to work out these divorces.
- 27 Dec: War and Commodity Encumbrance. By sanctioning Russia, the flow of commodity is being redirected so that they find new buyers. Zoltan also reacts to premier Xi visit to the GCC, where he discussed a new monetary system for buying oil using the CBDC bridge project by the PBOC, HKMA, Bank of Thailand and CBUAE.
- 29 dec: War and Statecraft. A bock with G7+Australia seems to be forming against a Brics+. Zoltan notes that Turkey, Saudi Arabia and Argentina applied to join BRICS. It should be noted that Iran, Algeria, and Egypt are also discussing adhesion, while Indonesia and Mexico want to do something about Lithium exporters.
- 6 Jan: War and Peace Investors are ill trained for war as all living investors, from Buffet to Soros have only flourished during a time of peace. Zoltan's inspiration are Pippa Malmgren (who says that WWIII already started), Kissinger (Nuclear-age cold-war theorist) and NIall Fergusson.
Zoltan's papers explain why "this time is different" but make no falsifiable claims about the future. The situation is so complex that he honestly explains that he has no idea how it will turn out. HE is in good company, as the same applies to Ray Dalio or the Pentagon.