Deer Point Macro @deerpointmacro Twitter profile

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Deer Point Macro

10 months

2024 Market Predictions: -Dollar should weaken however this will not be straight depreciation through 1H going into 2H risk skewed upside and weakness. - Global central banks should move more or less in lockstep so do not expect big moves in FX. -JPY underperformance to end

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Deer Point Macro

@deerpointmacro

2 years

Liquidity is starting to deteriorate, and a great insight into this is the Repo market. Failures to deliver (Bonds used as collateral in Repurchase agreements) have been elevated and are up 22% on a WoW basis. This is a sign of liquidity event brewing.

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Deer Point Macro

@deerpointmacro

6 months

Canadas rapid decline in productivity has been face ripping. In the early 80s Canada was 5th in output per hour against its OECD counterparts. Today Canada is 27th out of 32. Output per hour has deteriorated rapidly. When you favor housing over real economic assets this is

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Deer Point Macro

@deerpointmacro

6 months

Increase in taxes on capital gains for the wealthiest .13 per cent. This seems like the wrong policy decision. This can create what in economics jargon is known as lock in effects. Where assets are held, and capital is constrained from flowing to places with higher ROI and

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Deer Point Macro

@deerpointmacro

3 years

Housing prices to disposable income ratio has completely diverged. There is now no way a future income can justify these fundamentals until there is some return to the mean. The fact 90+% of Canadian net worth is tied to RE is worrying. Remember increase in cost reduces liquidity

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Deer Point Macro

@deerpointmacro

1 year

Canada can now only generated .32 cents of GDP for everyone 1 dollar of debt. Let that sink in, the decline comes from how rapid Canada has expanding financialization relative to productive parts of the economy.

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Deer Point Macro

@deerpointmacro

3 years

Canada is the only country in the G7 where R&D as a % of GDP has been on the decline over the passed 10 years. Canada has a massive innovation hole. This leads to a decrease in business investment

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Deer Point Macro

@deerpointmacro

3 years

Canada still the most indebted household sector in the G7. Most of this high indebtedness to no surprise comes on the back of mortgage debt. None of this debt is productive, or can lead to sustained economic growth.

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Deer Point Macro

@deerpointmacro

2 years

Swiss National Bank access largest dollar swap of 6.27B in the history of the data set. This comes on the back of massive widening within the CHF-USD cross-currency basis swap. IMO Dollar shortage + counterparty risk has locked the swiss out of the wholesale $ funding mrkt.

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Deer Point Macro

@deerpointmacro

9 months

Canada Economic History: In the 90s John Crow (BoC) took the interest rate up to 13% to fight inflation. At that time roughly 12 cents of every after tax dollar was going to service debt. When this happened it took Canada into a deep recession. Today: Interest rates are 5%, and

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Deer Point Macro

@deerpointmacro

7 months

Canada problem in a nut shell can be explained by the capital/output ratio. Canada now has to invest almost 37% of GDP to generate a single % of GDP. This is a large function of inefficiency. 5x higher to maintain same economic growth rate (from the late 70s), and 2x to maintain

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Deer Point Macro

@deerpointmacro

2 years

Canada interest rate futures continue to price downwards, showing essentially rates have peaked, and cuts should begin close to Q1 of next year.

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Deer Point Macro

@deerpointmacro

2 years

We get an inflation reading of 8.6% and BTC sells off… that makes it a true inflation hedge, and few understand this.

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Deer Point Macro

@deerpointmacro

3 years

Want to hear a joke? CAD

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Deer Point Macro

@deerpointmacro

1 year

Canada’s declining standard of living in one picture. As I have talked about the solow growth model a lot that model explains why Canada is struggling. Increased savings is a one time increase in the standard of living, but to maintain long run standards of living you have to

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Deer Point Macro

@deerpointmacro

3 years

Household debt to income is around 180% in Canada meaning for 1 dollar of disposable income they owe 1.80 to creditors. To put that into perspective the USA at the height of 2007 was only around 130%.

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Deer Point Macro

@deerpointmacro

2 years

BoC (Bank of 🇨🇦) has quite the needle thread. 🇨🇦 5Y CDS is at decade highs (trades like 🇵🇹 or 🇪🇸), and the FRA - OIS (proxy for risk within banking sector) at highs seen last in GFC. Tackling inflation is putting strain on financial stability.

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Deer Point Macro

@deerpointmacro

2 years

Live from the housing bubble capital of the world.

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Deer Point Macro

@deerpointmacro

3 years

What 17 million gets you in FL vs Vancouver.

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Deer Point Macro

@deerpointmacro

2 years

Swiss National Bank accessing Fed Swap Lines, this is the highest USD liquidity swap line the Swiss have accessed since the beginning of the pandemic. Dollar liquidity and the inability due to counter-party risk for certain banks to access dollar funding, contributing to stress.

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Deer Point Macro

@deerpointmacro

3 years

Surprise surprise Canada is #1 in showing signs of exuberance.

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Deer Point Macro

@deerpointmacro

3 years

What makes me most mad about Canada as an outsider (American) is Canada is a beautifully rich country. Instead of focusing on this and trying to strengthen these sectors, employing Canadians, exporting those commedities throughout the world they would rather pump housing.

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Deer Point Macro

@deerpointmacro

1 year

Global liquidity is starting to increase again, this has eased funding pressures. As a result we are seeing cross currency basis swap actually move into positive territory across a basket of advanced economies. Liquidity is flowing.

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Deer Point Macro

@deerpointmacro

2 years

Yep, this will do on a freezing Canadian night

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Deer Point Macro

@deerpointmacro

3 years

The productivity gap between 🇺🇸 vs 🇨🇦 is massive. The gap in productivity is one of the causes for higher incomes in the 🇺🇸. 🇺🇸 produce roughly $70 of value per hour vs 🇨🇦 $50. 🇺🇸 investment in M&E leads also to gap, as 🇨🇦 moves towards R/E. Source: Chart inspired by NBF

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Deer Point Macro

@deerpointmacro

3 years

“The biggest economic fallacy about housing is that ‘affordable housing’ requires government intervention in the housing market…… it is precisely government intervention in housing markets which has made previously affordable housing unaffordable.” - Thomas Sowell

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Deer Point Macro

@deerpointmacro

2 years

Mortgage credit tightening rapidly in Canada, on a YoY basis. Mortgage credit usually leads the housing index by about 1 quarter. This looks like more downside for Canadian housing, as bad news as new mortgage credit starts to dry up. Tightening lending standards across the board

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Deer Point Macro

@deerpointmacro

2 years

A person I have tremendous respect for said today, the stock market isn’t to be used to finance your life, vacation, school, bmw, and so on. It is simply a way to allocate capital. These words couldn’t ring more true.

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Deer Point Macro

@deerpointmacro

2 years

Harrowing statistics on state of Canadian healthcare. While Canada spends amongst some the largest as a % of GDP on healthcare, resources are atrocious, impatient suicides 2.1x OECD average, out of pocket spending is equal to US at 2.9, wait times amongst the worse in OECD.

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Deer Point Macro

@deerpointmacro

3 years

The tale of two econ. 🇺🇸&🇨🇦 one that values investment (relatively speaking) in real economic assets (equipment, machinery, and intellectual property) vs. one that decided that isn't important and residential R/E is the way to go. Ratio speaks volume Source:Chart inspired by NBE

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Deer Point Macro

@deerpointmacro

2 years

We are seeing the worst productivity since the 1960s and worst unit labor cost since the 1980s, how'd we get here. Subsidization of consumption and financialization of the economy has started to bite, years of underinvestment has killed the manufacturing and industrial base.

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Deer Point Macro

@deerpointmacro

1 year

Canadian pension fund woes. CPP points out if they use a closed group approach, that they have a casual shortfall of over a trillion dollars…

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Deer Point Macro

@deerpointmacro

3 months

Canada cannot sustain higher rates, which is why I expect the Bank of Canada to deliver another 50 basis points of cuts by year-end. Currently, R* in Canada is around 1.31%. I believe that over the next few years, R* in Canada will gradually decline towards the lower bound.

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Deer Point Macro

@deerpointmacro

2 years

Swiss swap lines Everyone who is saying that the liquidity crisis wasn’t real, and that there wasn’t a lack of dollar liquidity has missed the beat. USD are needed desperately. Euro$ futures curve was pricing in a liquidity even, and I think we’ve found it.

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Deer Point Macro

@deerpointmacro

3 years

Just heard @PierrePoilievre is running for prime minister I’m now long Canada. Even as an 🇺🇸 I believe he will do what’s best for Canadians he will build back the productivity and strength of the nation. Best of luck, and you have my support 🇺🇸❤️🇨🇦.

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Deer Point Macro

@deerpointmacro

6 months

Canadian corporations increasingly investing in tax havens and flight of capital is underway. Capital flight has long been underway with foreign investment opportunities specifically in tax havens become more attractive. As a percent of total investment we see it now at close

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Deer Point Macro

@deerpointmacro

1 year

This is critical to understand 👇

Live Monitor

@amlivemon

1 year

Example: China buys oil from Saudi Arabia… how does the money(Yuan in this case) get transferred to Riyadh? Beijing sends Yuan via NYFed(dollars) to Saudi Banks, who in turn trades that Yuan(via London) into dollars. Yuan->Dollars->Saudi Riyals->Saudi banks Or Yuan->Saudi

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Deer Point Macro

@deerpointmacro

2 years

Happy thanksgiving y’all.

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Deer Point Macro

@deerpointmacro

1 year

Canadian consumer mortgage and credit liabilities relative disposable income increased to 175%. Which means there is $1.75 of credit and mortgage debt for every dollar of disposable income. Driven by huge increase in interest obligations and massive decline in disposable income

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Deer Point Macro

@deerpointmacro

2 years

The FRA-OIS which is a measure of stress and risk brewing within the banking sector, has historically had a pretty close relationship with Credit Suisse 5y CDS. All the factors facing Europe are now seeing that indicator start to tick up again, and this could further stress CS.

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Deer Point Macro

@deerpointmacro

2 years

Persian food tonight @FinEconGlobal @agentgina1 and @goodkarma4344

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Deer Point Macro

@deerpointmacro

6 months

From the 70s-mid 80s Canada GDP capita growth PPP adjusted was 5th highest against the OECD. Today it’s 15th out of 32, and fallen rapidly since 2007. Thus Canada standard of living are deteriorating relative to almost half of its fellow OECD countries.

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Deer Point Macro

@deerpointmacro

2 years

Want to hear a joke? Bitcoins a store of value.

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Deer Point Macro

@deerpointmacro

2 years

Shoutout the people who I have learned from this year, happy new year, and thank you. @FinEconGlobal @SrivatsPrakash @concodanomics @SantiagoAuFund @profplum99 @MichaelKantro @leadlagreport @nancy__davis @gnoble79 @EPBResearch @AndreasSteno @David_Dierking @davevermilion

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Deer Point Macro

@deerpointmacro

3 years

The marginal productivity of debt has fallen rapidly in 🇨🇦. As the private non financial corporate debt ramped up at a tremendous rate over the past 25 years. Debt within 🇨🇦 has been diverted from uses that generate income. Thus pushing GDP generated per 1 dollar of debt lower

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Deer Point Macro

@deerpointmacro

2 years

@FinanceLancelot @WallStreetSilv Guy stole my Credit Suisse CDS chart, and it ended up being published in the FT under his name. Dude is a complete fraud.

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Deer Point Macro

@deerpointmacro

3 years

I’ve now come to realize there is only three large names on fintwit (there may be more than that)!I know of personally that really understand quantitative easing isn’t a liquidity injection but merely a reserve swap. They are @SantiagoAuFund @profplum99 @JeffSnider_AIP

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Deer Point Macro

@deerpointmacro

2 years

“Study after study, not only here but in other countries, show that the most affordable housing is where there has been the least government interference with the market-contrary to rhetoric.” -Thomas Sowell

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Deer Point Macro

@deerpointmacro

2 years

Again lack of dollar liquidity could sink 🇪🇺 into crisis. Deutsche and Credit Suisse 5y CDS against the EUR/USD cross currency basis swap 5y. As bank credit risk rise so does the premium for XCCY. Also as those banks have less access to wholesale dollar funding they get pinched.

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Deer Point Macro

@deerpointmacro

2 years

@nasmadotali Think Friedman summarized it perfectly here.

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Deer Point Macro

@deerpointmacro

1 year

This is what real food looks like. Crawfish boils y’all

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Deer Point Macro

@deerpointmacro

2 years

Demographics in 🇨🇦 is worse than 🇬🇧, 🇺🇸, 🇸🇪, 🇫🇷, and 🇧🇪. This is important 🇨🇦 has tons of mandatory spending by the government, as working pop falling, and tax base falling. Canadians already taxed to the brim, that’ll be paid for by BoC subsidizing and buying debt.

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Deer Point Macro

@deerpointmacro

2 years

Bad news for Canada and it’s service based economy. Extension of credit tracks movements within nominal consumption. With credit conditions tightening, borrowing to consume will no longer be a choice. Bad for 🇨🇦 economy, and bad for those who rely on credit to fund consumption.

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Deer Point Macro

@deerpointmacro

2 years

House prices in Canada had roughly followed changes in HELOC borrowing. Now what is more concerning is they are starting to borrow against home prices, as the values fall. Not a good sign. Can't use a house as an ATM to subsidize spending if home values fall.

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Deer Point Macro

@deerpointmacro

2 years

Fed Will Back Off. I have highlighted my thesis in my most recent substack. I discuss Friedman's interest rate fallacy, Fisher Effect, swap spreads, and cross currency basis swaps. Why ultimately it's pointed to pivot. Feel free to ask questions.

Fed Will Back Off

One of the things I’ve been vocal about is the Fed’s inability to be able to sustain interest rates, and their backing off from the current “tightening regime.” Yes, I put tightening in quotes...

deerpointmacro.substack.com

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Deer Point Macro

@deerpointmacro

1 year

Banks ranked by uninsured deposits, great chart by @VisualCap .

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Deer Point Macro

@deerpointmacro

3 years

In Canada mortgage debt is almost 90% of GDP, and mortgage debt growth was double that of GDP..... But there's no bubble... Totally logical...

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Deer Point Macro

@deerpointmacro

1 year

Canada the country that will have to make a decision between rate hikes or rising arrears. Canada quickly learning what happens when majority of your economy is tied to variable rate debt. Enjoy the show.

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Deer Point Macro

@deerpointmacro

2 years

Core capital goods new orders vs ISM new orders. ISM leads by 1 quarter, pointing to core capital goods going negative. As capital goods are used as a proxy for business spending plans, this would indicate that business spending will weaken.

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Deer Point Macro

@deerpointmacro

3 years

In Canada HELOC borrowing has been outpacing residential mortgages for the last 4 years. You have seen a massive increase in households trying to service both a HELOC and a mortgage. Even with low rates Canadians are struggling to carry debt. This is when the music stops.

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Deer Point Macro

@deerpointmacro

10 months

Holders of Chinese debt are shedding it at the fastest pace in history. People keep harping on the rise of the CNY as a global reserve, and it is true the rate at which it has grown as a % of CB reserves is impressive. However, the base effect is important this was coming off

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Deer Point Macro

@deerpointmacro

2 years

If you don’t understand macro and are relying on TA good luck. Welcome to a change in the business cycle.

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Deer Point Macro

@deerpointmacro

2 years

Mortgages in Canada outstanding % of GDP vs Household debt, what is driving most of the household debt in Canada is not surprisingly mortgage debt, the problem with this in the Canadian context is that debt is all variable. Higher rates will put further stress on households.

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Deer Point Macro

@deerpointmacro

3 years

People like to point out all the home equity in Canada, and that is great. But home equity is temporary. Debt is permanent.

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Deer Point Macro

@deerpointmacro

2 years

Unless banks change deposit rates the outflows of deposits from large and small banks will continue, and inflows within MMF funds will continue. Banks have to raise deposit rates now or deposits will continue to flee and AUM for MMF will continue to increase.

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Deer Point Macro

@deerpointmacro

2 years

Based on current projections of Bank of Canada interest rate hikes we will see household rates at rates we have not seen in the last 21 years (2001). However, bigger issue is Canadians have little buffer to withstand these higher rates.

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Deer Point Macro

@deerpointmacro

2 years

Market is calling the BoC bluff. The interconnectedness of the Canadian economy (R/E and everything that it entails accounts for 25% of GDP) is completely interest rate sensitive. Higher rates put massive upward impulse on debt service, and that puts pressure on FIs and household

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Deer Point Macro

@deerpointmacro

6 months

Canada love for residential investment outstripping investment in real economic assets. That love has lead to degradation in GDP per capita, productivity, and capital per worker. This has lead to a decline in the MRPD as debt is not being utilized to produce a revenue stream.

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Deer Point Macro

@deerpointmacro

2 years

Bad news for 🇨🇦 households strong negative wealth effects underway. Correlation nominal consumption and house prices within Canada. House prices nose diving, the ability to borrow against that inflated home price, and consume is taken away. Canadian consumption set to fall.

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Deer Point Macro

@deerpointmacro

1 year

Tonight was a great, and great meeting and conversation with @MichaelKantro

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Deer Point Macro

@deerpointmacro

3 years

What Canadians fail to realize is when individuals are highly indebted the interest rate is of crucial importance. What BoC is trying to do is keep Canadians from insolvency by rate suppression. However that has negative effect as this allows the insolvent to dig deeper into debt

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Deer Point Macro

@deerpointmacro

2 years

For the de-dollarizoooorrrr, and those who scream the USD is going to give way to the BRICS. Things you usually don't see USD share of globally disclosed FX reserves on a QoQ basis is up 47bps, and accounts for 58.36% of all reserves the CNY 2.69%. USD remains supreme.

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Deer Point Macro

@deerpointmacro

1 year

231,000 jobs came from the birth-death for the month of May. Yet, everyone seems to ignore this.

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Deer Point Macro

@deerpointmacro

2 years

Many underestimated the degree to which the dollar wrecking ball would wreak havoc on the world. Some of those who have been warning of this day deserve credit @SantiagoAuFund @MetreSteven @concodanomics @IceCapGlobal

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Deer Point Macro

@deerpointmacro

3 months

BRICs nations seeing large amount of outflows. The outflows/inflows into BRİCs countries tend to coincide with strong/weak dollar. As US assets outperform and are seen as risk free you have a continued bid and flows leaving EMs for the USA. The overall interest rate

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Deer Point Macro

@deerpointmacro

10 months

Merry Christmas everyone

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Deer Point Macro

@deerpointmacro

2 years

Should we be worried about TD & Canadian Banks? Well Canada systemic risk as a % of GDP needed to cover a short-fall would 12.47% of GDP. Which is the 3rd highest globally. Most of that comes from Bank sector. We can see systemic risk (nominal rise) as bank risk model is rising.

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Deer Point Macro

@deerpointmacro

8 months

Weather in Toronto today isn’t half bad.

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Deer Point Macro

@deerpointmacro

3 years

When interest rates are highest you actually see highest issuance of credit. This is opposite to what many believe. This works on the same end for low rates. Will be touching on this today with @OccidentalMonk1 . Source: FRED and special thanks to @Maroon_Macro

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Deer Point Macro

@deerpointmacro

2 years

Now steaks

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Deer Point Macro

@deerpointmacro

2 years

Fed pivot. If Fed doesn’t it is almost inevitable that Europe will be brought to its knees. Lack of collateral in form of treasury securities and lack of access for banks to wholesale dollar funding market equals huge trouble.

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Deer Point Macro

@deerpointmacro

2 years

Canadian 5y term has gone parabolic, home prices set for a bad year. 5y term is already putting a lot of pressure on borrowers. As interest rates rise present discount value changes, thus amount of home Canadians can afford deteriorates. Bad for indebted households.

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Deer Point Macro

@deerpointmacro

6 months

World commodity prices are ripping, but CAD is not feeling any of the benefits of that. There has been a long standing inverse relationship between USD dollar strength and commodity prices. Historically nations that are commodity producers see appreciation of the currency

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Deer Point Macro

@deerpointmacro

1 year

See y’all soon, will be live from 🇹🇷

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Deer Point Macro

@deerpointmacro

2 years

Happy easter to everyone who is celebrating. Nothing like a boil.

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Deer Point Macro

@deerpointmacro

1 year

Variable-rate mortgages within Canada are at risk. The BoC has highlighted how vulnerable variable rate mortgages with fixed payments are when interest rates increase. At some point these rate hikes mortgages reach a point where the monthly payment covers only the interest

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Deer Point Macro

@deerpointmacro

2 years

In the lows 70s in South Carolina perfect thanksgiving week weather.

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Deer Point Macro

@deerpointmacro

2 years

Zillow Rent coming down at a pretty rapid pace, the Feds CPI rent lags by almost 2 quarters, so we should start to see rent CPI peak this month or the following month followed by declines. Huge chunk of CPI starting to move the opposite way.

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Deer Point Macro

@deerpointmacro

2 years

The financial sector isn’t fine, and signs of stress are building rapidly. Looking at 3m (2x5)fra - ois we are seeing levels not seen since the GFC, and the spread has 4x since beginning of hear. Under these conditions normally Fed would be cutting. Policy error? Most certainly.

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Deer Point Macro

@deerpointmacro

2 years

In honor of Supply side Saturday.

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Deer Point Macro

@deerpointmacro

2 years

Büyük bir felaket yaşıyoruz. Bugün yaşanan deprem felaketinin ağır neticeleri ortaya çıktıkça acımız ve hüznümüz artıyor. A painful day, and as more news is released that pain increases. Thanks everyone for the wishes, and my family who is there is safe.

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Deer Point Macro

@deerpointmacro

7 months

GM

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Deer Point Macro

@deerpointmacro

2 years

Disinflationary alert flashing. As inventories builds new orders fall (broadly speaking). We are seeing inventories build as consumption declines, and as such no need for new orders. As elasticity of demand would tell us retailers will lower prices to drive to drive QD = lower PL

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Deer Point Macro

@deerpointmacro

1 year

A lot of misinformation about 30y auction today, and some even tweeting it went no bid. So no the 30y did not go no bid. Looking at the bid-to-cover (nominal dollar amount of bids received/nominal dollar amount of bids accepted) from todays auction. We can see demand for 30y,

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Deer Point Macro

@deerpointmacro

1 year

Fesenjaan 🤤

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Deer Point Macro

@deerpointmacro

3 years

Bad news for Canadian consumers. Inflation hitting its highest level on the 10y chart. New housing prices making a 10 year high. Core consumer prices also making a 10 year high. But don't worry those inflated house prices mean you can borrow more. So inflated prices are no worry.

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Deer Point Macro

@deerpointmacro

1 year

More economic woes in Canada. The government expenditure multiplier is now negative. This mean that if Canada continues to deficit spend it will reduce private GDP by about 1.03 dollars, which brings about a -0.03 cent reduction in real GDP. MOARRR DEBT to Generate less GDP.

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