ZERO EQUILIBRIUM

By Chinedu Okoye  Summary: - The US stablecoins being contemplated as a way to stabilize the dollar and the ECB is looking to join the party wary of a dollar dependency and financial instability.  - USD-backed digital tokens are still beholden to U.S. monetary policy, so, a widespread adoption of such tokens could reinforce USD hegemony. - As a result emerging and frontier market countries might find themselves further subordinated unless they create smarter, diversified backing mechanisms. - The prospects for a wide adaptation is low given the impacts and implications for financial institutions, and the regulatory gaps and divergence within the crypto space. - Unsitting USD-backed digital assets would be an arduos task given the greenback's position in world trade, international transactions global reserves and the role it plays in the global financial architecture. The Quest for Fiat Redemption: In order to redeem stability, and battle the emergence of ...

By Chinedu Okoye  Summary: - Crude continues to hold at above $60 for both benchmarks, even as trade uncertaities persiste.  - This is line with our call in the  H2 Outlook  with both fundamentals and technicals favoring a stronger oil going forward in the year. - The China Industrial weakness and ‘sanctioned’ and discounted Russian Oil, coupled with a De-Dollarized transaction settlement, is offset by low US production with OPEC having a neutral effect as some members struggle with meeting production quotas. - Though fundamentals support a strong oil going forward, technicals show a.mixed singla with the moving averages for WTI and BRENT signalling a weak oil. Oil Stays withing Range: Crude oil continues to hold above $60 for both BRENT and WTI despite a brief period of decline to believe he $60 benchmark. This price was predicted in our paper where we posted that  oil will most likely hold at the $60 level but an upward trend is not ruled...

By Chinedu Okoye  The stock market has gained over 130% in the last two years rewarding investors with handsome gains, and one has to think if at this point we could see a mean reversion, or perhaps a market correction. This concern is particularly strong when you add to the fact that the rally hasn't been followed by an exponential economic growth. We give four reasons below why we think the stock market could hold at these levels, with no major correction in sight.   Banking Recapitalisation: With the CBN mandate to recapitlaize banks to strengthen the financial sector means banks are attracting long-term investors as well as shorterm holders. Recapitalisation forces banks to issue new shares or retain earnings, both of which increase transparency and investor confidence. Giving that the Cash Reserve Ratio (CRR) is still at the 50% level for commercial banks, the risks levels are relatively mild, and so these stocks seem not overpriced...

- By Chinedu Okoye  Persistent Market Uncertainty; The ninety day pause on newly implemented tariffs is almost up with days to go no significant deals has been reached. As "country-specific tariffs are set to resume, the White House appears poised to fall short of the sweeping global trade reforms it promised to achieve during the three months they were on hold."¹ In order words the markets are still as uncertain as they were nearly 3 months ago and the Trump administration yet to deliver on a core political promise —reducing tarrifs through comprehensive trade deals. Bloomberg reports that: "the pacts likely won’t be fulsome deals that resolve core issues, but instead will address a limited set of topics and leave many specifics to be negotiated later."   An extended Pause might be on the Cards: However, it is "still unclear whether the administration would hold firm on the deadline or extend it to allow more time for talks."¹ The ...

- By Chinedu Okoye                                ABSTRACT: This paper reviews the performance of key financial markets and select asset classes in H1 2025, building on prior outlooks published in our Zero Equilibrium series. We assess how equities, fixed income (sovereigns), commodities, and crypto fared relative to our expectations, noting where outcomes aligned or diverged (especially in light of unpriced geopolitical tensions and trade policy uncertainty). Equities proved more volatile than anticipated, with sharp swings tied to tariff news, but ultimately recovered on the announcement or a pause, while gold and silver hit our targets on safe-haven flows and central bank reserve shifts. Oil struggled under weak Chinese demand, though it hit our expected range. EM sovereigns delivered on their risk-reward potential, and crypto (led by Bitcoin) performed in line with expectations, showing both...

By Chinedu Okoye  1.0 Back to the Gold Standard? Gold prices have seen a meteoric rise in price over the past year hitting all time highs to settle at $3240..? The rise can attributed to safe haven demand and/or appeal by the private and public sector.  The rise is not surprising, given the rate at which major central banks have been stacking up Gold as a hedge to their currency valuation, and the level at which the People's Bank of China (PBOC) is offloading USD assets (currency and U.S. Sovereign debt), in favor of the metal, one has to wonder if we are on a return to a gold — or metallic standard— or if this is just a hedge for a De-Dollarizarion campaign through gold.  Though the PBOC is the biggest player, purchasing some 300 tonnes in 2022, other countries have also been involved in the purchase of the yellow metal in the last four years. They include;  - Central Bank of the Republic of Turkey purchasing about 100 tonnes of the yellow metal in 2...

By Chinedu Okoye  Money as a Price Index: In typical Austrian fashion, Mises argues that Money isn't a measure of price or value because the valuation is subjective and so cannot be measured. So objective exchange-value is impossible. However, objective value is indeed measurable as prices is a function of costs and mark-ups on the part of the seller or producer and a function of income, and preference scaling on the part of the consumer. When both meet they bargain based on their respective subjective valuations and meet at a price, but there is a level below which the producer wouldn't go. The base price (agreed price) sets a precedence and highlights what other consumers might be willing to pay and overtime the various series of bargaining based on subjective valuations sets a price level. And because this price is quoted in terms of money, money becomes a measure of price and value, derived from bargaining at indirect exchanges. To say that prices are dependent...