Today’s double whammy is brought to you by the National Statistical Office and the Bank of England. Already sounds fun, doesn’t it?

If you don’t know what a lightning network is…or if you think it refers to a whole bunch of lightning flashing in the sky all at once so that it looks like a network…you’ll find out at the very end of this article. But don’t be like Harry and skip to the end. He’s just morbid.

October 12, 2022

Notable

• The Bank of England indicates that it will discontinue buying of gilts on Friday, as originally planned. Investors have three days to adjust their positions! (This was announced yesterday, the 11th.)
• PepsiCo’s average product price rose by 17% year over year (YOY).
• CPI, CPI, CPI!
• Office 365 comes to the Metaverse.
• Tap-to-pay bitcoin (BTC) lightning bolt cards are coming to El Salvador.

But why?

Yesterday, I discussed the BOE’s actions to increase its bond-buying to ease pressure on UK pension funds. (LDI! LDI! LDI!) Since then, BOE Governor Andrew Bailey has said that bond-buying will end on Friday as originally scheduled. (He said this within hours of the bank acting to buy, buy, buy. Gotta love the conviction.) To funds that are affected and need to make changes, he said, “You’ve got three days left now. You’ve got to get this done.”

That’s three days to take care of what have to be billions of pounds worth of derivatives (also known as leverage, gambling, or flipping a coin) that have gone bad and need to somehow be liquidated. Does this seem possible? My suspicion is no, so what’s going to happen on Friday? Will the BOE end its bond-buying? If so, will that cause a tsunami of destruction on gilts and the sterling (and therefore all markets)? Will the market start to sour and then will the BOE admit it was bluffing and start buying like a crack addict again? Then will we all hold hands and sing kumbaya as the market rises in parallel with our pocketbooks? Whatever happens, Friday will be momentous for the Brits…and, contagion-willing, the rest of the world.

I was going to link a video of Pookie from New Jack City to the words “crack addict” up above but damn, it was way too depressing. Even my brilliance can’t make that kind of tragedy entertaining. It’s a great movie though. Watch it sometime when you want to feel uplifted and filled with hope. Um.

PepsiCo announced that its average product price has gone up by 17% YOY. Wow! This just goes to show that…

The National Statistical Office will release the CPI (Consumer Price Index) report tomorrow, and it’s going to be HUGE. Inflation is the topic on everyone’s lips, and Pepsi’s 17% is simply a grim reminder that drinking a can of Pepsi costs as much as buying your house did last year. In Turkey. The anticipated rise in CPI is 8.1% and any big deviation from that could have a monumental impact on the market, positive or negative. If it’s a lot higher than 8.1%, will that be considered good or bad? Ask Jerome Powell.

Double whammy this week. CPI tomorrow and then the BOE’s ultimatum the day after — this could be a compounding effect. Momentous times, my friends.

On the brighter side, Microsoft and Meta are now buddies. MnM’s, baby! The green ones are my favorite! Or is it Eminem? Hmmm…tasty or scary, which do you prefer? Ironically, you could almost say the same of Office 365 as it comes to the metaverse. Improve corporate productivity! (tasty) Pull out what little hair I have left in frustration! (scary) Soon, instead of being a boring stick figure in a disappointing 3-D landscape, you can now be a boring stick figure screwing up spreadsheets in front of your boss in a disappointing 3-D landscape. Humanity is all about progress.

Last year, El Salvador made bitcoin legal tender. That means the country says hey, it’s money! Why did El Salvador do this? Because their own currency was looking great, right? In support of this transformation into a bitcoin nation, cards and card readers that can transfer bitcoin are coming to this progressive nation so people can use BTC to buy and sell things easily. A little bit of background on using BTC to pay for things…

Crypto proponents have lots of reasons they love bitcoin, but one of the biggest drawbacks is that the network itself is really sssllllooooooowwww. Processing a transaction can take minutes…enough time for that grande mocha you were buying to get cold, and who wants to drink a cold mocha? That would certainly be a deal breaker for me. To fix that, people have built something called the Lightning Network that piggy backs on the bitcoin blockchain. I’m not going to go into the technology even though I totally understand it like the back of my hand because I invented it right after I created the internet, but basically the Lightning network allows you to make fast bitcoin transactions. That way your mocha doesn’t turn into a frappuccino by the time you can finally drink it.

While the adoption of bitcoin as real, government-recognized tender has had its fair share of problems, El Salvador will be an interesting proof of concept for crypto as money. Then maybe I can get Starbucks to hold my dogecoin bags…