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TheBRRR’s Thoughts 

GM. We’re feeling great about the world today and we’re covering why.

1. Sam Altman predicted unimaginable prosperity for all in the near future, thanks to breakthroughs in AI.
2. Argentina’s President Javier Milei rang the bell at the NYSE as the world celebrates his success turning around his country’s economy with drastic spending cuts.
2. Price inflation has dramatically slowed down, central banks are aggressively easing financial conditions, and crypto has been the fastest horse out of the gate. See the chart below for the action since the Fed’s interest rate cut last week:

The Nasdaq hasn’t moved much, but bitcoin has far outpaced it, top layer 1 protocols have far outpaced bitcoin, and top memecoins have far outpaced their respective layer 1s.

These trends accelerated last night, as China announced massive market interventions to stabilize its struggling economy - as we cover in today’s top story.

China Capitulates To Support Stock Market & Asset Prices

WHAT HAPPENED

• China’s economic struggles are deepening: Domestic demand is weak, retail sales missed expectations, and the ongoing property slump is crushing consumer and investor confidence. Without aggressive intervention, China risks missing its 5% growth target for 2024.

• In response to these mounting pressures, China’s Central Bank (PBOC) went all-in with a barrage of stimulus measures to stabilize its sinking economy and crashing stock market, cutting multiple rates and the reserve requirement ratio (RRR).

  • 7-day reverse repo rate cut by 20bps

  • Reserve requirement ratio cut by 0.5%, freeing up 1 trillion yuan ($142 billion) in liquidity.

  • 1-year MLF rate cut by 30bps

  • Lowered rates on existing mortgages and reduced the down payment for second homes to 15% from 25%.

• The PBOC also intervened directly in the stock market, setting up liquidity facilities to allow brokers, funds, and insurers to pledge assets for liquidity to buy stocks—an unprecedented move.

• Liu Shijin, a former government adviser, proposed a 10 trillion yuan (US$1.4 trillion) stimulus package to revive China’s economy, focusing on public services like housing, education, and healthcare.

WHY IT MATTERS

• Panic mode engaged: Beijing is scrambling to meet its 5% growth target and prop up a collapsing real estate market that has erased $18 trillion in household wealth. Despite previous piecemeal stimulus efforts, growth continues to slow, and investor confidence has evaporated.

• Biggest stimulus push yet, but will it work? Cutting rates and reserve ratios provides liquidity, but with weak borrowing demand, this might not translate into real economic recovery. The market’s response will likely be short-lived without more aggressive fiscal measures.

• Direct stock market intervention highlights Beijing’s desperation to stabilize market sentiment. Pumping liquidity into stock purchases via brokers and funds is an extraordinary attempt to prevent further market crashes, but it raises questions about sustainability.

• The Chinese stock index CSI300 finished the day up 4.3%, its largest single-day gain since the COVID era.

• More to come? Analysts predict additional cuts and possibly fiscal bazookas down the road. China may have to flood the economy with debt to spark any meaningful recovery—risking long-term inflation and debt overhang. The next steps will determine whether this “panic stimulus” is enough to turn things around or just a temporary market sugar high.

South China Morning Post, ZeroHedge

Milei Meets Musk, Rings Bell at NYSE

WHAT HAPPENED:

• Argentine President Javier Milei rang the opening bell at the New York Stock Exchange (NYSE) on September 23, 2024. The president also met with Elon Musk and Google's Karan Bhatia during his whirlwind NYC visit.

• He gave a speech emphasizing his government's commitment to fiscal balance, pledging not to compromise on this front.

• Exchange controls, a major issue for Argentina, will remain until inflation hits zero under Milei’s macroeconomic plan.

• Milei previously signed a sweeping economic reform package into law, initiating the privatization of dozens of state-run companies and deregulating various sectors, from energy to labor markets. This move is intended to streamline government operations and attract foreign investment.

• Milei celebrated his administration's progress in reducing inflation, boasting that wholesale inflation has dropped to 2.1% per month (down from 11%+ monthly).

WHY IT MATTERS:

• Fiscal austerity: Milei’s hardline stance on budget balance and reduced monetary issuance highlights his focus on controlling Argentina’s 230%+ inflation. Investors see this as a radical approach in a country plagued by economic mismanagement.

• His pro-market rhetoric at the NYSE signals an open invitation for foreign investment, as he pitches Argentina’s recovery to global financiers.

• Meeting with Elon Musk suggests potential tech/energy collaborations, signaling Argentina's interest in aligning with Western capital rather than the China-centric model.

• His upcoming UN speech will likely see Milei criticizing the UN’s globalist agenda and China, reflecting his libertarian, anarcho-capitalist leanings.

Buenos Aires Times

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll