Aquila Flash Part 3 – cryptocurrencies

El Salvador has adopted Bitcoin as its official national currency. Other small countries with traditionally weak currencies might also replace their national currencies, or the US dollar, with a privately-created cryptocurrency. Large countries with geopolitical ambitions will adopt their own state-controlled cryptocurrencies so as not to give up seigniorage gains and to continue pursuing an independent monetary policy.

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Aquila Flash Part 2 – cryptocurrencies

Cryptocurrencies are on the rise worldwide. Central banks themselves, with their policies of negative real interest rates and exploding money supply, are to blame for this. Indeed, they are probably the main culprits. Almost all countries are considering the introduction of their own cryptocurrencies and would want to ban private cryptocurrencies should these become too successful.

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Aquila Flash Bundestag election

The Bundestag election result is likely to be neutral for the markets. The Fed's move to policy normalization indicates higher interest rates are coming. This will hit Tech stocks. A bigger spread between short and long rates means the maturity transformation business of banks will become more profitable.

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Aquila Flash weak economic growth and a real estate crisis in China

Peking’s policies of debt containment have left skid marks on Chinese economy, and they are hurting China’s property market.

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Aquila Flash US infrastructure package

The Senate’s passing of a $1 trillion infrastructure package with the support of 19 Republican senators, including Senate Minority Leader Mitch McConnell, shows the Biden Administration still has momentum behind its government spending objectives. Discussion is now focused on the much bigger ($3.5 trillion) Budget package which includes new social programs and climate measures. We worry that the financial markets have become accustomed to more or less permanent monetary and fiscal policy stimuli. If investor expectations are not met, we see a danger of market dislocations.

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Aquila Flash wave of regulation of tech companies

Not only in China, but also in the US and even the EU, governments are concerned about the ubiquitous power of Big Tech. The influence of their platforms on elections, the security of vast amounts of consumer data and the exploitation of workers are increasingly putting these companies under the spotlight of authorities. In the US, congressional hearings have been held and antitrust lawsuits filed, so far without far-reaching consequences. In China, on the other hand, the government is tightening the reins and the political system allows for quicker action.

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