🔔 Putin makes everything OK... then it's not...

Right, before we get into today's piece, shout out to Macrodesiac partner Syscoin.

Their coin is in an interesting spot here too, with a nice over/under pattern having been formed 👀

Soooooo...

David here.

Another ridiculous headline day.

And it's only 12pm (as of writing)...

Check out how DAX futures has reacted to the two headlines I want to note...

One thing I've been mentioning to Macrodesiac Premium members in the Discord and recent pieces is to focus on the base case.

That base case is coordinated tightening and a bad economic backdrop.

The headlines associated with war are catalysts to fuel the discontent of the current data.

THAT IS IT.

What's going on currently is a game of tennis over the conflict.

You'll see one side say something, and the other then deny it with something tangential.

I'm taking the morals out of this debate since markets unfortunately, don't care about those elements.

And the market has a short memory, and has had one for a rather long time now.

Take the talks that Russia and Ukraine keep having...

They talk for the sake of talking.

Putin wants surrender, whilst the Ukrainians will never grant that.

Yet the market keeps reacting positively to these talks, initially, as if there is a glimmer of hope that the broader market moves are even reacting to said war.

The environment that we are in is very much a sell the rip one...

And how could it not be?

Take a peek at the V-DAX, the VIX for the DAX, mighty inventive.

With volatility up here, combined with the economic backdrop, risk to reward remains skewed to the downside...

US equities are in a bit of a different regime, with less emphasis being placed on the war due to lack of proximity to it, but in my view BIGGER issues at play, with rate hikes coming into focus on Wednesday.

So far, we haven't really seen much cause for concern, albeit, equities are a good few hundred points off their all time highs...

But as I noted in this brief piece on TradingView earlier this week, there should be extreme caution adhered to going forward.

Check it out below...

I outlined the cause for concern back on Feb 17th to the Premium guys in this piece...

Since then, high yield credit spreads are up 20bps...

The below is an up to date picture on why all this matters...

Here's the crux of it...

When money on the interbank, but also amongst non-financial lending which has had a massive uplift in the last 10 years or so, gets tight, the cracks start to REALLY appear.

At the end of the day, liquidity is what matters and funding markets are how liquidity crosses from asset, to asset, to consumer, to business.

Pay attention to liquidity, and it'll pay you.

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