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each month kathy wood gives her monthly update on everything going on in the markets right now this month the us had the historic 1 trillion infrastructure bill which biden deemed a once in a generation event this month the main theme that everything revolved around was inflation and the reason inflation is so important to investors is that certain investments do very well in times of inflation while others get crushed so in this video we'll be looking at cathy's crypto update which this month mainly focused around bitcoin the inflation debate what is the biggest threat right now is it inflation or deflation and then twitter founder jack dorsey recently stated that the us is on the brink of hyperinflation and we'll see what kathy wood thinks about that first up the crypto update from kathy this month mainly focused around bitcoin but there were some awesome developments going on with us mayors check this out bitcoin just some very interesting news three regulators got together and wrote a paper which uh basically saying this is how we'd like to regulate uh stable coins and um and the market took it very positively no surprises this had all been um articulated and expected in in some way as far as bitcoin uh specifically we thought some uh there were a couple of very good uh uh moments this week uh eric adams who just was elected mayor of new york city said he would accept pay in um in bitcoin and the miami mayor said he would accept much more than i can't remember the time frame uh in his salary in in bitcoin so we have some friendly competition uh they won't both want bitcoin uh in their states so bitcoin developers and the bitcoin ecosystem which is fantastic uh and then square jack dorsey when asked on uh the square earnings call today would you um consider uh supporting any other cryptocurrency and he said no just bitcoin bitcoin is the native currency of the internet and so we thought that was very interesting so this was awesome if you haven't heard there's now multiple us mayors all competing for which u.s state is now the most bitcoin friendly what a turn of events we had the mayors of jackson and temper saying that their next paychecks will be paid in bitcoin the mayor of miami has been a vocal bitcoin bull for a while claiming miami is the crypto state and then more recently great news for people living in new york up until recently new york has not been able to have full access to all the crypto products but the new mayor-elect just so happens to be a big bitcoin bull and has also said he will be taking his initial paychecks in bitcoin talk about excellent news for bitcoin and the entire crypto market okay next up the main theme around kathy's update this month was around inflation and the big debate going on right now is which is the biggest threat is it inflation or deflation kathy has clearly said that she is in the deflation camp however the markets could be giving different indicators check it out so what are the markets telling us about inflation the markets are um they're they're actually conflicting they're sending conflicting messages um let's start with the stock market the stock market itself is up uh so it's it's not worried per se but if you look at uh the sectors performing you've got energy and financials at the top for the year 54 and uh 35 respectively those two sectors are associated with strong uh strong economies very strong boom time economies with a yield curve steepening meaning long rates are rising faster than short rates are um well um so so that would be consistent with inflation but the other two top performing sectors are real estate and consumer discretionary and those two do not benefit from inflation they benefit from inflation coming down and lower interest rates so that's very interesting the stock market is confused about this topic and what about the bond market the bond market is clearly in the lower inflation uh if not deflation camp the dollar the dollar's going up uh that is an anti-inflationary force crypto crypto is in the inflation camp if you if you think about uh bitcoin as being a hedge against inflation if that's how you're thinking about it or nfts being a hedge collector collectible a hedge against inflation so that could be uh in the inflation camp as could uh housing so on the debates on whether we'll be getting inflation or deflation kathy wood believes deflation she believes because of technology these will be driving down prices however when it comes to the market there are conflicting indicators the stock market is a bit confused the bond market is in the deflation camp dollar going up is anti-inflationary and crypto and real estate is in the inflation camp now if you haven't checked in on the growth of the money supply recently here is how it looks right now this is m2 and as you can see it's beginning to go exponential we are now adding trillions of dollars to the money supply every single year so are we on the path to hyperinflation well jack dorsey of twitter recently said he believes hyperinflation is coming to the us and it's going to change everything and recently we had billionaire paul tudor jones also saying that the number one threat right now is inflation so with trillions being printed we should be getting runaway inflation right well the question is where is all this money going and kathy wood makes a very interesting point take a look could this mean therefore that uh velocity is going down the velocity of money what does that mean now this is a little esoteric so forgive me but i think it's really important if if consumers are spending their money on assets instead of goods and services then what's happening is all of the money printing that people think is going to cause permanent inflation in the price of goods and services that that is wrong that it's actually moving into assets so velocity involves gdp and money growth gdp is uh is the production of goods and services not assets so the velocity of money has been coming down because people have been saving and putting more money into assets is that what's going on here well in the gdp report this week i think it was or maybe it was last week real gdp growth was two percent a huge disappointment but what the headlines did not capture is if you looked into the guts of the gdp report what you would have found was the only reason gdp grew was inventories and everybody thinks we're terribly short of inventories real final sales so this is taking out uh inflation real final sales were slightly negative now could it be and and i'm seeing this behavior on the part of millennials could it be that they would prefer not to spend on goods and services but to invest especially in crypto and nfts and and that and stocks so the reason that inflation won't be going parabolic is because of where the money is going and if you didn't already know there's actually two main parts to inflation there is the money printing which we're all aware of but the other side of the coin is velocity and velocity is money being spent on goods and services for example if you take your paycheck and you go out for a meal and you tip the waiter money velocity one this waiter then takes that same cash and goes and gets a taxi home velocity two and then the taxi driver takes that money and at the end of his shift buys a takeaway money velocity three and you'll notice that it's the same cash being spent and so for there to be massive inflation the money has to be circulating so the question is what's happening with money velocity right now so this was money printing which we all know is going exponential however this is money velocity which has been falling with a huge drop in 2020 so cash is not circulating with goods and services now kathy is saying could this money be going into financial assets instead well what do you think here is the u.s stock market and this jump up at the end certainly seems to correlate quite well right and here is u.s house prices again with the same jump at the end now this is great for everyone who owns financial assets but unfortunately it's also growing the divide between the rich and the poor every month kathy wood gives her update on everything going on in the financial markets crypto this month was mainly focused around bitcoin there are now multiple us mayors all jumping on the crypto wagon trying to outdo each other with how much of their paycheck is going to be in bitcoin the us passed a historic trillion dollar infrastructure bill which biden called a once in a generation event and i personally think that this will now be a once in every president event the main theme for this month and the big debate going on right now is inflation and inflation is important to keep an eye on as certain investments do well in times of inflation and others will get crushed kathy wood is well known for being in the deflation camp however the market indicators are pointing to inflation she also believes inflation won't get out of control and this is because it's not being spent on goods and services but it's going into financial assets and this is great for people who own financial assets but not great for people who don't and unfortunately this leads to a larger divide between the rich and the poor so there you are guys hope you enjoyed tell me what do you think is the bigger threat right now inflation or deflation let me know to the channel click below and join us
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