DATA MINING WITH SUPERALGORES

Old pots produce the best soup.

Science has always inspired indicator design. From physics to signal processing, many indicators use concepts from mechanical engineering, electronics, and probability. In Superalgos' Data Mining section, we've explored using thermodynamics and information theory to construct indicators and using statistical and probabilistic techniques like reduced normal law to take advantage of low probability events.

An asset's price is like a mechanical object revolving around its moving average. Using this approach, we could design an indicator using the oscillator's Total Energy. An oscillator's energy is finite and constant. Since we don't expect the price to follow the harmonic oscillator, this energy should deviate from the perfect situation, and the maximum of divergence may provide us valuable information on the price's moving average.

Definition of the Harmonic Oscillator in Few Words

Sinusoidal function describes a harmonic oscillator. The time-constant energy equation for a harmonic oscillator is:

With

Time saves energy.

In a mechanical harmonic oscillator, total energy equals kinetic energy plus potential energy. The formula for energy is the same for every kind of harmonic oscillator; only the terms of total energy must be adapted to fit the relevant units. Each oscillator has a velocity component (kinetic energy) and a position to equilibrium component (potential energy).

The Price Oscillator and the Energy Formula

Considering the harmonic oscillator definition, we must specify kinetic and potential components for our price oscillator. We define oscillator velocity as the rate of change and equilibrium position as the price's distance from its moving average.

Price kinetic energy:

It's like:

With

and

L is the number of periods for the rate of change calculation and P for the close price EMA calculation.

Total price oscillator energy =

Given that an asset's price can theoretically vary at a limitless speed and be endlessly far from its moving average, we don't expect this formula's outcome to be constrained. We'll normalize it using Z-Score for convenience of usage and readability, which also allows probabilistic interpretation.

Over 20 periods, we'll calculate E's moving average and standard deviation.

We calculated Z on BTC/USDT with L = 10 and P = 21 using Knime Analytics.

The graph is detrended. We added two horizontal lines at +/- 1.6 to construct a 94.5% probability zone based on reduced normal law tables. Price cycles to its moving average oscillate clearly. Red and green arrows illustrate where the oscillator crosses the top and lower limits, corresponding to the maximum/minimum price oscillation. Since the results seem noisy, we may apply a non-lagging low-pass or multipole filter like Butterworth or Laguerre filters and employ dynamic bands at a multiple of Z's standard deviation instead of fixed levels.

Kinetic Detrender Implementation in Superalgos

The Superalgos Kinetic detrender features fixed upper and lower levels and dynamic volatility bands.

The code is pretty basic and does not require a huge amount of code lines.

It starts with the standard definitions of the candle pointer and the constant declaration :

let candle = record.current
let len = 10
let P = 21
let T = 20
let up = 1.6
let low = 1.6

Upper and lower dynamic volatility band constants are up and low.

We proceed to the initialization of the previous value for EMA :

if (variable.prevEMA === undefined) {
    variable.prevEMA = candle.close
}

And the calculation of EMA with a function (it is worth noticing the function is declared at the end of the code snippet in Superalgos) :

variable.ema = calculateEMA(P, candle.close, variable.prevEMA)
//EMA calculation
function calculateEMA(periods, price, previousEMA) {
    let k = 2 / (periods + 1)
    return price * k + previousEMA * (1 - k)
}

The rate of change is calculated by first storing the right amount of close price values and proceeding to the calculation by dividing the current close price by the first member of the close price array:

variable.allClose.push(candle.close)
if (variable.allClose.length > len) {
    variable.allClose.splice(0, 1)
}
if (variable.allClose.length === len) {
    variable.roc = candle.close / variable.allClose[0]
} else {
    variable.roc = 1
}

Finally, we get energy with a single line:

variable.E = 1 / 2 * len * variable.roc + 1 / 2 * P * candle.close / variable.ema

The Z calculation reuses code from Z-Normalization-based indicators:

variable.allE.push(variable.E)
if (variable.allE.length > T) {
    variable.allE.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allE.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allE[i]
    }
    variable.MA = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allE[i] - variable.MA, 2)
    }
    variable.sigma = Math.sqrt(variable.SQ / T)
variable.Z = (variable.E - variable.MA) / variable.sigma
} else {
    variable.Z = 0
}
variable.allZ.push(variable.Z)
if (variable.allZ.length > T) {
    variable.allZ.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allZ.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allZ[i]
    }
    variable.MAZ = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allZ[i] - variable.MAZ, 2)
    }
    variable.sigZ = Math.sqrt(variable.SQ / T)
} else {
    variable.MAZ = variable.Z
    variable.sigZ = variable.MAZ * 0.02
}
variable.upper = variable.MAZ + up * variable.sigZ
variable.lower = variable.MAZ - low * variable.sigZ

We also update the EMA value.

variable.prevEMA = variable.EMA

Conclusion

We showed how to build a detrended oscillator using simple harmonic oscillator theory. Kinetic detrender's main line oscillates between 2 fixed levels framing 95% of the values and 2 dynamic levels, leading to auto-adaptive mean reversion zones.

Superalgos' Normalized Momentum data mine has the Kinetic detrender indication.

All the material here can be reused and integrated freely by linking to this article and Superalgos.

This post is informative and not financial advice. Seek expert counsel before trading. Risk using this material.

Who is AMTD Digital?

An unknown Hong Kong corporation joined the global megacaps worth over $500 billion on Tuesday.

The American Depository Share (ADS) with the ticker code HKD gapped at the open, soaring 25% over the previous closing price as trading began, before hitting an intraday high of $2,555.

At its peak, its market cap was almost $450 billion, more than Facebook parent Meta or Alibaba.

Yahoo Finance reported a daily volume of 350,500 shares, the lowest since the ADS began trading and much below the average of 1.2 million.

Despite losing a fifth of its value on Wednesday, it's still worth more than Toyota, Nike, McDonald's, or Walt Disney.

The company sold 16 million shares at $7.80 each in mid-July, giving it a $1 billion market valuation.

Why the boom?

That market cap seems unjustified.

According to SEC reports, its income-generating assets barely topped $400 million in March. Fortune's emails and calls went unanswered.

Website discloses little about company model. Its one-minute business presentation film uses a Star Wars–like design to sell the company as a "one-stop digital solutions platform in Asia"

The SEC prospectus explains.

AMTD Digital sells a "SpiderNet Ecosystems Solutions" kind of club membership that connects enterprises. This is the bulk of its $25 million annual revenue in April 2021.

Pretax profits have been higher than top line over the past three years due to fair value accounting gains on Appier, DayDayCook, WeDoctor, and five Asian fintechs.

AMTD Group, the company's parent, specializes in investment banking, hotel services, luxury education, and media and entertainment. AMTD IDEA, a $14 billion subsidiary, is also traded on the NYSE.

“Significant volatility”

Why AMTD Digital listed in the U.S. is unknown, as it informed investors in its share offering prospectus that could delist under SEC guidelines.

Beijing's red tape prevents the Sarbanes-Oxley Board from inspecting its Chinese auditor.

This frustrates Chinese stock investors. If the U.S. and China can't achieve a deal, 261 Chinese companies worth $1.3 trillion might be delisted.

Calvin Choi left UBS to become AMTD Group's CEO.

His capitalist background and status as a Young Global Leader with the World Economic Forum don't stop him from praising China's Communist party or celebrating the "glory and dream of the Great Rejuvenation of the Chinese nation" a century after its creation.

Despite having an executive vice chairman with a record of battling corruption and ties to Carrie Lam, Beijing's previous proconsul in Hong Kong, Choi is apparently being targeted for a two-year industry ban by the city's securities regulator after an investor accused Choi of malfeasance.

Some CMIG-funded initiatives produced money, but he didn't give us the proceeds, a corporate official told China's Caixin in October 2020. We don't know if he misappropriated or lost some money.

A seismic anomaly

In fundamental analysis, where companies are valued based on future cash flows, AMTD Digital's mind-boggling market cap is a statistical aberration that should occur once every hundred years.

AMTD Digital doesn't know why it's so valuable. In a thank-you letter to new shareholders, it said it was confused by the stock's performance.

Since its IPO, the company has seen significant ADS price volatility and active trading volume, it said Tuesday. "To our knowledge, there have been no important circumstances, events, or other matters since the IPO date."

Permabears awoke after the jump. Jim Chanos asked if "we're all going to ignore the $400 billion meme stock in the room," while Nate Anderson called AMTD Group "sketchy."

It happened the same day SEC Chair Gary Gensler praised the 20th anniversary of the Sarbanes-Oxley Act, aimed to restore trust in America's financial markets after the Enron and WorldCom accounting fraud scandals.

The run-up revived unpleasant memories of Robinhood's decision to limit retail investors' ability to buy GameStop, regarded as a measure to protect hedge funds invested in the meme company.

Why wasn't HKD's buy button removed? Because retail wasn't behind it?" tweeted Gensler on Tuesday. "Real stock fraud. "You're worthless."

(The author's opinions should not be used to make investment decisions or as a recommendation to invest.)

The pandemic and social media pseudoscience have made us all epidemiologists, for better or worse. Flattening the curve, social distancing, lockdowns—remember? Some of you may remember R0 (R naught), the number of healthy humans the average COVID-infected person infects. Thankfully, the world has moved on from Greater China's nightmare. Politicians have refocused their talent for misdirection on getting their constituents invested in the war for Russian Reunification or Russian Aggression, depending on your side of the iron curtain.

Humanity battles two fronts. A war against an invisible virus (I know your Commander in Chief might have told you COVID is over, but viruses don't follow election cycles and their economic impacts linger long after the last rapid-test clinic has closed); and an undeclared World War between US/NATO and Eurasia/Russia/China. The fiscal and monetary authorities' current policies aim to mitigate these two conflicts' economic effects.

Since all politicians are short-sighted, they usually print money to solve most problems. Printing money is the easiest and fastest way to solve most problems because it can be done immediately without much discussion. The alternative—long-term restructuring of our global economy—would hurt stakeholders and require an honest discussion about our civilization's state. Both of those requirements are non-starters for our short-sighted political friends, so whether your government practices capitalism, communism, socialism, or fascism, they all turn to printing money-ism to solve all problems.

Free money stimulates demand, so people buy crap. Overbuying shit raises prices. Inflation. Every nation has food, energy, or goods inflation. The once-docile plebes demand action when the latter two subsets of inflation rise rapidly. They will be heard at the polls or in the streets. What would you do to feed your crying hungry child?

Global central banks During the pandemic, the Fed, PBOC, BOJ, ECB, and BOE printed money to aid their governments. They worried about inflation and promised to remove fiat liquidity and tighten monetary conditions.

Imagine Nate Diaz's round-house kick to the face. The financial markets probably felt that way when the US and a few others withdrew fiat wampum. Sovereign debt markets suffered a near-record bond market rout.

The undeclared WW3 is intensifying, with recent gas pipeline attacks. The global economy is already struggling, and credit withdrawal will worsen the situation. The next pandemic, the Yield Curve Control (YCC) virus, is spreading as major central banks backtrack on inflation promises. All central banks eventually fail.

Here's a scorecard.

In order to save its financial system, BOE recently reverted to Quantitative Easing (QE).

BOJ Continuing YCC to save their banking system and enable affordable government borrowing.

ECB printing money to buy weak EU member bonds, but will soon start Quantitative Tightening (QT).

PBOC Restarting the money printer to give banks liquidity to support the falling residential property market.

Fed raising rates and QT-shrinking balance sheet.

80% of the world's biggest central banks are printing money again. Only the Fed has remained steadfast in the face of a financial market bloodbath, determined to end the inflation for which it is at least partially responsible—the culmination of decades of bad economic policies and a world war.

YCC printing is the worst for fiat currency and society. Because it necessitates central banks fixing a multi-trillion-dollar bond market. YCC central banks promise to infinitely expand their balance sheets to keep a certain interest rate metric below an unnatural ceiling. The market always wins, crushing humanity with inflation.

BOJ's YCC policy is longest-standing. The BOE joined them, and my essay this week argues that the ECB will follow. The ECB joining YCC would make 60% of major central banks follow this terrible policy. Since the PBOC is part of the Chinese financial system, the number could be 80%. The Chinese will lend any amount to meet their economic activity goals.

The BOE committed to a 13-week, GBP 65bn bond price-fixing operation. However, BOEs YCC may return. If you lose to the market, you're stuck. Since the BOE has announced that it will buy your Gilt at inflated prices, why would you not sell them all? Market participants taking advantage of this policy will only push the bank further into the hole it dug itself, so I expect the BOE to re-up this program and count them as YCC.

In a few trading days, the BOE went from a bank determined to slay inflation by raising interest rates and QT to buying an unlimited amount of UK Gilts. I expect the ECB to be dragged kicking and screaming into a similar policy. Spoiler alert: big daddy Fed will eventually die from the YCC virus.

Threadneedle St, London EC2R 8AH, UK

Before we discuss the BOE's recent missteps, a chatroom member called the British royal family the Kardashians with Crowns, which made me laugh. I'm sad about royal attention. If the public was as interested in energy and economic policies as they are in how the late Queen treated Meghan, Duchess of Sussex, UK politicians might not have been able to get away with energy and economic fairy tales.

The BOE printed money to recover from COVID, as all good central banks do. For historical context, this chart shows the BOE's total assets as a percentage of GDP since its founding in the 18th century.

The UK has had a rough three centuries. Pandemics, empire wars, civil wars, world wars. Even so, the BOE's recent money printing was its most aggressive ever!

BOE Total Assets as % of GDP (white) vs. UK CPI

Now, inflation responded slowly to the bank's most aggressive monetary loosening. King Charles wishes the gold line above showed his popularity, but it shows his subjects' suffering.

The BOE recognized early that its money printing caused runaway inflation. In its August 2022 report, the bank predicted that inflation would reach 13% by year end before aggressively tapering in 2023 and 2024.

Aug 2022 BOE Monetary Policy Report

The BOE was the first major central bank to reduce its balance sheet and raise its policy rate to help.

The BOE first raised rates in December 2021. Back then, JayPow wasn't even considering raising rates.

UK policymakers, like most developed nations, believe in energy fairy tales. Namely, that the developed world, which grew in lockstep with hydrocarbon use, could switch to wind and solar by 2050. The UK's energy import bill has grown while coal, North Sea oil, and possibly stranded shale oil have been ignored.

WW3 is an economic war that is balkanizing energy markets, which will continue to inflate. A nation that imports energy and has printed the most money in its history cannot avoid inflation.

The chart above shows that energy inflation is a major cause of plebe pain.

The UK is hit by a double whammy: the BOE must remove credit to reduce demand, and energy prices must rise due to WW3 inflation. That's not economic growth.

Boris Johnson was knocked out by his country's poor economic performance, not his lockdown at 10 Downing St. Prime Minister Truss and her merry band of fools arrived with the tried-and-true government remedy: goodies for everyone.

She released a budget full of economic stimulants. She cut corporate and individual taxes for the rich. She plans to give poor people vouchers for higher energy bills. Woohoo! Margret Thatcher's new pants suit.

My buddy Jim Bianco said Truss budget's problem is that it works. It will boost activity at a time when inflation is over 10%. Truss' budget didn't include austerity measures like tax increases or spending cuts, which the bond market wanted. The bond market protested.

30-year Gilt yield chart. Yields spiked the most ever after Truss announced her budget, as shown. The Gilt market is the longest-running bond market in the world.

The Gilt market showed the pole who's boss with Cardi B.

Before this, the BOE was super-committed to fighting inflation. To their credit, they raised short-term rates and shrank their balance sheet. However, rapid yield rises threatened to destroy the entire highly leveraged UK financial system overnight, forcing them to change course.

Accounting gimmicks allowed by regulators for pension funds posed a systemic threat to the UK banking system. UK pension funds could use interest rate market levered derivatives to match liabilities. When rates rise, short rate derivatives require more margin. The pension funds spent all their money trying to pick stonks and whatever else their sell side banker could stuff them with, so the historic rate spike would have bankrupted them overnight. The FT describes BOE-supervised chicanery well.

To avoid a financial apocalypse, the BOE in one morning abandoned all their hard work and started buying unlimited long-dated Gilts to drive prices down.

Another reminder to never fight a central bank. The 30-year Gilt is shown above. After the BOE restarted the money printer on September 28, this bond rose 30%. Thirty-fucking-percent! Developed market sovereign bonds rarely move daily. You're invested in His Majesty's government obligations, not a Chinese property developer's offshore USD bond.

The political need to give people goodies to help them fight the terrible economy ran into a financial reality. The central bank protected the UK financial system from asset-price deflation because, like all modern economies, it is debt-based and highly levered. As bad as it is, inflation is not their top priority. The BOE example demonstrated that. To save the financial system, they abandoned almost a year of prudent monetary policy in a few hours. They also started the endgame.

Let's play Central Bankers Say the Darndest Things before we go to the continent (and sorry if you live on a continent other than Europe, but you're not culturally relevant).

Pre-meltdown BOE output:

FT, October 17, 2021 On Sunday, the Bank of England governor warned that it must act to curb inflationary pressure, ignoring financial market moves that have priced in the first interest rate increase before the end of the year.

On July 19, 2022, Gov. Andrew Bailey spoke. Our 2% inflation target is unwavering. We'll do our job.

August 4th 2022 MPC monetary policy announcement According to its mandate, the MPC will sustainably return inflation to 2% in the medium term.

Catherine Mann, MPC member, September 5, 2022 speech. Fast and forceful monetary tightening, possibly followed by a hold or reversal, is better than gradualism because it promotes inflation expectations' role in bringing inflation back to 2% over the medium term.

When their financial system nearly collapsed in one trading session, they said:

The Bank of England's Financial Policy Committee warned on 28 September that gilt market dysfunction threatened UK financial stability. It advised action and supported the Bank's urgent gilt market purchases for financial stability.

It works when the price goes up but not down. Is my crypto portfolio dysfunctional enough to get a BOE bailout?

Next, the EU and ECB. The ECB is also fighting inflation, but it will also succumb to the YCC virus for the same reasons as the BOE.

Frankfurt am Main, ECB Tower, Sonnemannstraße 20, 60314

Only France and Germany matter economically in the EU. Modern European history has focused on keeping Germany and Russia apart. German manufacturing and cheap Russian goods could change geopolitics.

France created the EU to keep Germany down, and the Germans only cooperated because of WWII guilt. France's interests are shared by the US, which lurks in the shadows to prevent a Germany-Russia alliance. A weak EU benefits US politics. Avoid unification of Eurasia. (I paraphrased daddy Felix because I thought quoting a large part of his most recent missive would get me spanked.)

As with everything, understanding Germany's energy policy is the best way to understand why the German economy is fundamentally fucked and why that spells doom for the EU. Germany, the EU's main economic engine, is being crippled by high energy prices, threatening a depression. This economic downturn threatens the union. The ECB may have to abandon plans to shrink its balance sheet and switch to YCC to save the EU's unholy political union.

France did the smart thing and went all in on nuclear energy, which is rare in geopolitics. 70% of electricity is nuclear-powered. Their manufacturing base can survive Russian gas cuts. Germany cannot.

My boy Zoltan made this great graphic showing how screwed Germany is as cheap Russian gas leaves the industrial economy.

$27 billion of Russian gas powers almost $2 trillion of German economic output, a 75x energy leverage. The German public was duped into believing the same energy fairy tales as their politicians, and they overwhelmingly allowed the Green party to dismantle any efforts to build a nuclear energy ecosystem over the past several decades. Germany, unlike France, must import expensive American and Qatari LNG via supertankers due to Nordstream I and II pipeline sabotage.

American gas exports to Europe are touted by the media. Gas is cheap because America isn't the Western world's swing producer. If gas prices rise domestically in America, the plebes would demand the end of imports to avoid paying more to heat their homes.

German goods would cost much more in this scenario. German producer prices rose 46% YoY in August. The German current account is rapidly approaching zero and will soon be negative.

German PPI Change YoY

German Current Account

The reason this matters is a curious construction called TARGET2. Let’s hear from the horse’s mouth what exactly this beat is:

TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. Central banks and commercial banks can submit payment orders in euro to TARGET2, where they are processed and settled in central bank money, i.e. money held in an account with a central bank.

Source: ECB

Let me explain this in plain English for those unfamiliar with economic dogma.

This chart shows intra-EU credits and debits. TARGET2. Germany, Europe's powerhouse, is owed money. IOU-buying Greeks buy G-wagons. The G-wagon pickup truck is badass.

If all EU countries had fiat currencies, the Deutsche Mark would be stronger than the Italian Lira, according to the chart above. If Europe had to buy goods from non-EU countries, the Euro would be much weaker. Credits and debits between smaller political units smooth out imbalances in other federal-provincial-state political systems. Financial and fiscal unions allow this. The EU is financial, so the centre cannot force the periphery to settle their imbalances.

Greece has never had to buy Fords or Kias instead of BMWs, but what if Germany had to shut down its auto manufacturing plants due to energy shortages?

Italians have done well buying ammonia from Germany rather than China, but what if BASF had to close its Ludwigshafen facility due to a lack of affordable natural gas?

I think you're seeing the issue.

Instead of Germany, EU countries would owe foreign producers like America, China, South Korea, Japan, etc. Since these countries aren't tied into an uneconomic union for politics, they'll demand hard fiat currency like USD instead of Euros, which have become toilet paper (or toilet plastic).

Keynesian economists have a simple solution for politicians who can't afford market prices. Government debt can maintain production. The debt covers the difference between what a business can afford and the international energy market price.

Germans are monetary policy conservative because of the Weimar Republic's hyperinflation. The Bundesbank is the only thing preventing ECB profligacy. Germany must print its way out without cheap energy. Like other nations, they will issue more bonds for fiscal transfers.

More Bunds mean lower prices. Without German monetary discipline, the Euro would have become a trash currency like any other emerging market that imports energy and food and has uncompetitive labor.

Bunds price all EU country bonds. The ECB's money printing is designed to keep the spread of weak EU member bonds vs. Bunds low. Everyone falls with Bunds.

Like the UK, German politicians seeking re-election will likely cause a Bunds selloff. Bond investors will understandably reject their promises of goodies for industry and individuals to offset the lack of cheap Russian gas. Long-dated Bunds will be smoked like UK Gilts. The ECB will face a wave of ultra-levered financial players who will go bankrupt if they mark to market their fixed income derivatives books at higher Bund yields.

Some treats People: Germany will spend 200B to help consumers and businesses cope with energy prices, including promoting renewable energy.

That, ladies and germs, is why the ECB will immediately abandon QT, move to a stop-gap QE program to normalize the Bund and every other EU bond market, and eventually graduate to YCC as the market vomits bonds of all stripes into Christine Lagarde's loving hands. She probably has soft hands.

The 30-year Bund market has noticed Germany's economic collapse. 2021 yields skyrocketed.

30-year Bund Yield

ECB Says the Darndest Things:

Because inflation is too high and likely to stay above our target for a long time, we took today's decision and expect to raise interest rates further.- Christine Lagarde, ECB Press Conference, Sept 8.

The Governing Council will adjust all of its instruments to stabilize inflation at 2% over the medium term. July 21 ECB Monetary Decision

Everyone struggles with high inflation. The Governing Council will ensure medium-term inflation returns to two percent. June 9th ECB Press Conference

I'm excited to read the after. Like the BOE, the ECB may abandon their plans to shrink their balance sheet and resume QE due to debt market dysfunction.

Eighty Percent

I like YCC like dark chocolate over 80%. ;).

Can 80% of the world's major central banks' QE and/or YCC overcome Sir Powell's toughness on fungible risky asset prices?

Gold and crypto are fungible global risky assets. Satoshis and gold bars are the same in New York, London, Frankfurt, Tokyo, and Shanghai.

As more Euros, Yen, Renminbi, and Pounds are printed, people will move their savings into Dollars or other stores of value. As the Fed raises rates and reduces its balance sheet, the USD will strengthen. Gold/EUR and BTC/JPY may also attract buyers.

Gold and crypto markets are much smaller than the trillions in fiat money that will be printed, so they will appreciate in non-USD currencies. These flows only matter in one instance because we trade the global or USD price. Arbitrage occurs when BTC/EUR rises faster than EUR/USD. Here is how it works:

1. An investor based in the USD notices that BTC is expensive in EUR terms.

2. Instead of buying BTC, this investor borrows USD and then sells it.

3. After that, they sell BTC and buy EUR.

4. Then they choose to sell EUR and buy USD.

5. The investor receives their profit after repaying the USD loan.

This triangular FX arbitrage will align the global/USD BTC price with the elevated EUR, JPY, CNY, and GBP prices.

Even if the Fed continues QT, which I doubt they can do past early 2023, small stores of value like gold and Bitcoin may rise as non-Fed central banks get serious about printing money.

“Arthur, this is just more copium,” you might retort.

Patience. This takes time. Economic and political forcing functions take time. The BOE example shows that bond markets will reject politicians' policies to appease voters. Decades of bad energy policy have no immediate fix. Money printing is the only politically viable option. Bond yields will rise as bond markets see more stimulative budgets, and the over-leveraged fiat debt-based financial system will collapse quickly, followed by a monetary bailout.

America has enough food, fuel, and people. China, Europe, Japan, and the UK suffer. America can be autonomous. Thus, the Fed can prioritize domestic political inflation concerns over supplying the world (and most of its allies) with dollars. A steady flow of dollars allows other nations to print their currencies and buy energy in USD. If the strongest player wins, everyone else loses.

I'm making a GDP-weighted index of these five central banks' money printing. When ready, I'll share its rate of change. This will show when the 80%'s money printing exceeds the Fed's tightening.

Everyone wants a scalable startup.

Innovation helps launch a startup. The secret to a scalable business is growth trials (from 1 to 100).

Growth marketing combines marketing and product development for long-term growth.

Today, I'll explain growth hacking strategies popular startups used to scale.

1/ A Facebook user's social value is proportional to their friends.

Facebook built its user base using content marketing and paid ads. Mark and his investors feared in 2007 when Facebook's growth stalled at 90 million users.

Chamath Palihapitiya was brought in by Mark.

The team tested SEO keywords and MAU chasing. The growth team introduced “people you may know”

This feature reunited long-lost friends and family. Casual users became power users as the retention curve flattened.

Growth Hack Insights: With social network effect the value of your product or platform increases exponentially if you have users you know or can relate with.

2/ Airbnb - Focus on your value propositions

Airbnb nearly failed in 2009. The company's weekly revenue was $200 and they had less than 2 months of runway.

Enter Paul Graham. The team noticed a pattern in 40 listings. Their website's property photos sucked.

Why?

Because these photos were taken with regular smartphones. Users didn't like the first impression.

Graham suggested traveling to New York to rent a camera, meet with property owners, and replace amateur photos with high-resolution ones.

A week later, the team's weekly revenue doubled to $400, indicating they were on track.

Growth Hack Insights: When selling an “online experience” ensure that your value proposition is aesthetic enough for users to enjoy being associated with them.

3/ Zomato - A company's smartphone push ensured growth.

Zomato delivers food. User retention was a challenge for the founders. Indian food customers are notorious for switching brands at the drop of a hat.

Zomato wanted users to order food online and repeat orders throughout the week.

Zomato created an attractive website with “near me” keywords for SEO indexing.

Zomato gambled to increase repeat orders. They only allowed mobile app food orders.

Zomato thought mobile apps were stickier. Product innovations in search/discovery/ordering or marketing campaigns like discounts/in-app notifications/nudges can improve user experience.

Zomato went public in 2021 after users kept ordering food online.

Growth Hack Insights: To improve user retention try to build platforms that build user stickiness. Your product and marketing team will do the rest for them.

4/ Hotmail - Signaling helps build premium users.

Ever sent or received an email or tweet with a sign — sent from iPhone?

Hotmail did it first! One investor suggested Hotmail add a signature to every email.

Overnight, thousands joined the company. Six months later, the company had 1 million users.

When serving an existing customer, improve their social standing. Signaling keeps the top 1%.

5/ Dropbox - Respect loyal customers

Dropbox is a company that puts people over profits. The company prioritized existing users.

Dropbox rewarded loyal users by offering 250 MB of free storage to anyone who referred a friend. The referral hack helped Dropbox get millions of downloads in its first few months.

Growth Hack Insights: Think of ways to improve the social positioning of your end-user when you are serving an existing customer. Signaling goes a long way in attracting the top 1% to stay.

These experiments weren’t hacks. Hundreds of failed experiments and user research drove these experiments. Scaling up experiments is difficult.

Contact me if you want to grow your startup's user base.

Product game mindsets? How do these vary from Project mindset?

1950s spawned the Iron Triangle. Project people everywhere know and live by it. In stakeholder meetings, it is used to stretch the timeframe, request additional money, or reduce scope.

Quality was added to this triangle as things matured.

Quality was intended to be transformative, but none of these principles addressed why we conduct projects.

Value and benefits are key.

Product value is quantified by ROI, revenue, profit, savings, or other metrics. For me, every project or product delivery is about value.

Most project managers, especially those schooled 5-10 years or more ago (thousands working in huge corporations worldwide), understand the world in terms of the iron triangle. What does that imply? They worry about:

a) enough time to get the thing done.

b) have enough resources (budget) to get the thing done.

c) have enough scope to fit within (a) and (b) >> note, they never have too little scope, not that I have ever seen! although, theoretically, this could happen.

Boom—iron triangle.

To make the triangle function, project managers will utilize formal governance (Steering) to move those things. Increase money, scope, or both if time is short. Lacking funds? Increase time, scope, or both.

In current product development, shifting each item considerably may not yield value/benefit.

Even terrible. This approach will fail because it deprioritizes Value/Benefit by focusing the major stakeholders (Steering participants) and delivery team(s) on Time, Scope, and Budget restrictions.

Pre-agile, this problem was terrible. IT projects failed wildly. History is here.

Value, or benefit, is central to the product method. Product managers spend most of their time planning value-delivery paths.

Product people consider risk, schedules, scope, and budget, but value comes first. Let me illustrate.

Imagine managing internal products in an enterprise. Your core customer team needs a rapid text record of a chat to fix a problem. The consumer wants a feature/features added to a product you're producing because they think it's the greatest spot.

Project-minded, I may say;

Ok, I have budget as this is an existing project, due to run for a year. This is a new requirement to add to the features we’re already building. I think I can keep the deadline, and include this scope, as it sounds related to the feature set we’re building to give the desired result”.

This attitude repeats Scope, Time, and Budget.

Since it meets those standards, a project manager will likely approve it. If they have a backlog, they may add it and start specking it out assuming it will be built.

Instead, think like a product;

What problem does this feature idea solve? Is that problem relevant to the product I am building? Can that problem be solved quicker/better via another route ? Is it the most valuable problem to solve now? Is the problem space aligned to our current or future strategy? or do I need to alter/update the strategy?

A product mindset allows you to focus on timing, resource/cost, feasibility, feature detail, and so on after answering the aforementioned questions.

The above oversimplifies because

Leadership in discovery

Project managers are facilitators of ideas. This is as far as they normally go in the ‘idea’ space.

Business Requirements collection in classic project delivery requires extensive upfront documentation.

Agile project delivery analyzes requirements iteratively.

However, the project manager is a facilitator/planner first and foremost, therefore topic knowledge is not expected.

I mean business domain, not technical domain (to confuse matters, it is true that in some instances, it can be both technical and business domains that are important for a single individual to master).

Product managers are domain experts. They will become one if they are training/new.

They lead discovery.

Product Manager-led discovery is much more than requirements gathering.

Requirements gathering involves a Business Analyst interviewing people and documenting their requests.

The project manager calculates what fits and what doesn't using their Iron Triangle (presumably in their head) and reports back to Steering.

If this requirements-gathering exercise failed to identify requirements, what would a project manager do? or bewildered by project requirements and scope?

They would tell Steering they need a Business SME or Business Lead assigning or more of their time.

Product discovery requires the Product Manager's subject knowledge and a new mindset.

How should a Product Manager handle confusing requirements?

Product Managers handle these challenges with their talents and tools. They use their own knowledge to fill in ambiguity, but they have the discipline to validate those assumptions.

To define the problem, they may perform qualitative or quantitative primary research.

They might discuss with UX and Engineering on a whiteboard and test assumptions or hypotheses.

Do Product Managers escalate confusing requirements to Steering/Senior leaders? They would fix that themselves.

Product managers raise unclear strategy and outcomes to senior stakeholders. Open talks, soft skills, and data help them do this. They rarely raise requirements since they have their own means of handling them without top stakeholder participation.

Discovery is greenfield, exploratory, research-based, and needs higher-order stakeholder management, user research, and UX expertise.

Product Managers also aid discovery. They lead discovery. They will not leave customer/user engagement to a Business Analyst. Administratively, a business analyst could aid. In fact, many product organizations discourage business analysts (rely on PM, UX, and engineer involvement with end-users instead).

The Product Manager must drive user interaction, research, ideation, and problem analysis, therefore a Product professional must be skilled and confident.

Creating vs. receiving and having an entrepreneurial attitude

Product novices and project managers focus on details rather than the big picture. Project managers prefer spreadsheets to strategy whiteboards and vision statements.

These folks ask their manager or senior stakeholders, "What should we do?"

They then elaborate (in Jira, in XLS, in Confluence or whatever).

They want that plan populated fast because it reduces uncertainty about what's going on and who's supposed to do what.

Skilled Product Managers don't only ask folks Should we?

They're suggesting this, or worse, Senior stakeholders, here are some options. After asking and researching, they determine what value this product adds, what problems it solves, and what behavior it changes.

Therefore, to move into Product, you need to broaden your view and have courage in your ability to discover ideas, find insightful pieces of information, and collate them to form a valuable plan of action. You are constantly defining RoI and building Business Cases, so much so that you no longer create documents called Business Cases, it is simply ingrained in your work through metrics, intelligence, and insights.

Product Management is not a free lunch.

Plateless.

Plates and food must be prepared.

In conclusion, Product Managers must make at least three mentality shifts:

1. You put value first in all things. Time, money, and scope are not as important as knowing what is valuable.

2. You have faith in the field and have the ability to direct the search. YYou facilitate, but you don’t just facilitate. You wouldn't want to limit your domain expertise in that manner.

3. You develop concepts, strategies, and vision. You are not a waiter or an inbox where other people can post suggestions; you don't merely ask folks for opinion and record it. However, you excel at giving things that aren't clearly spoken or written down physical form.

Monkey jpegs and shitcoins have tarnished Web3's reputation. Let’s move on.

Web3 was called "the internet's future."

Well, 'crypto bros' shouted about it loudly.

As quickly as it arrived to be the next internet, it appears to be dead. It's had scandals, turbulence, and crashes galore:

• Web 3.0's cryptocurrencies have crashed. Bitcoin's all-time high was $66,935. This month, Ethereum fell from $2130 to $1117. Six months ago, the cryptocurrency market peaked at $3 trillion. Worst is likely ahead.

• Gas fees make even the simplest Web3 blockchain transactions unsustainable.

• Terra, Luna, and other dollar pegs collapsed, hurting crypto markets. Celsius, a crypto lender backed by VCs and Canada's second-largest pension fund, and Binance, a crypto marketplace, have withheld money and coins. They're near collapse.

• NFT sales are falling rapidly and losing public interest.

Web3 has few real-world uses, like most crypto/blockchain technologies. Web3's image has been tarnished by monkey profile pictures and shitcoins while failing to become decentralized (the whole concept is controlled by VCs).

The damage seems irreparable, leaving Web3 in the gutter.

Step forward our new saviour — Web5

Fear not though, as hero awaits to drag us out of the Web3 hellscape. Jack Dorsey revealed his plan to save the internet quickly.

Dorsey has long criticized Web3, believing that VC capital and silicon valley insiders have created a centralized platform. In a tweet that upset believers and VCs (he was promptly blocked by Marc Andreessen), Dorsey argued, "You don't own "Web3." VCs and LPs do. Their incentives prevent it. It's a centralized organization with a new name.

Dorsey announced Web5 on June 10 in a very Elon-like manner. Block's TBD unit will work on the project (formerly Square).

Web5's pitch is that users will control their own data and identity. Bitcoin-based. Sound familiar? The presentation pack's official definition emphasizes decentralization. Web5 is a decentralized web platform that enables developers to write decentralized web apps using decentralized identifiers, verifiable credentials, and decentralized web nodes, returning ownership and control over identity and data to individuals.

Web5 would be permission-less, open, and token-less. What that means for Earth is anyone's guess. Identity. Ownership. Blockchains. Bitcoin. Different.

Web4 appears to have been skipped, forever destined to wish it could have shown the world what it could have been. (It was probably crap.) As this iteration combines Web2 and Web3, simple math and common sense add up to 5. Or something.

Dorsey and his team have had this idea simmering for a while. Daniel Buchner, a member of Block's Decentralized Identity team, said, "We're finishing up Web5's technical components."

Web5 could be the project that decentralizes the internet. It must be useful to users and convince everyone to drop the countless Web3 projects, products, services, coins, blockchains, and websites being developed as I write this.

Web5 may be too late for Dorsey and the incoming flood of creators.

Web6 is planned!

The next months and years will be hectic and less stable than the transition from Web 1.0 to Web 2.0. 

• Web1 was around 1991-2004.

• Web2 ran from 2004 to 2021. (though the Web3 term was first used in 2014, it only really gained traction years later.)

• Web3 lasted a year.

• Web4 is dead.

Silicon Valley billionaires are turning it into a startup-style race, each disrupting the next iteration until they crack it. Or destroy it completely.

Web5 won't last either.