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Before you get excited remember that $1 billion figure is PRE-tax
New York Post@nypost
Kalshi is offering $1 billion prize for a perfect March Madness bracket trib.al/0Lunf1S
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Mike L
19.7K posts
Mike L
@AdvisorMikeL
Newly promoted editor-in-chief of The Investment Skeptic
Southern California 가입일 Eylül 2016
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I disagree with Nick on the risk posed by Athene’s fixed-index annuity hedge portfolio.
I started to reply in X but I had too much to say about how index annuities work, how insurers hedge, counterparty risk, and where I think the real trouble lies.
open.substack.com/pub/investment…
Nick Nemeth (Mispriced Assets)@NickNemo17
Athene sells Fixed Indexed Annuities. The pitch to retirees: "You get some of the S&P 500's upside with none of the downside." To deliver that promise, Athene buys call options on the S&P 500 from investment banks. Market goes up, the option pays, Athene pays the retiree. The retiree thinks she owns a savings product. She owns the other side of a derivatives trade. The numbers: $8.1 billion in fair value derivative assets against $4.1 billion in capital. The derivative book alone is 2x the capital base. 78% is S&P 500 call options. 1-2 year maturities. The annuity liabilities they hedge last decades. Every year the hedges must roll — at whatever the market is charging. In a vol spike, option costs can triple. The cost of keeping the promise can exceed the profit earned on the entire investment portfolio. Two French banks — Societe Generale ($2.04B) and BNP Paribas ($1.69B) — hold $3.7B in fair value derivative exposure. Nearly the entire $4.1B capital surplus is concentrated in two counterparties. Citibank's potential exposure alone is $590 million — 15% of total capital from one name. $655 million in cash collateral posted. Hundreds of millions more in corporate bonds pledged as initial margin. In a liquidity crunch, that collateral is trapped. The NAIC's own "Potential Exposure" metric — what Athene could lose if counterparties default — is $2.1 billion. Half the capital. Estimated total notional: $120-160 billion against $4.1 billion in capital. 30-40x the capital in derivative exposure alone, stacked on top of 69:1 leverage on the invested asset portfolio. This extends beyond Athene. The dealers who sold these calls — SocGen, BNP, Barclays, BofA — delta-hedge by holding S&P 500 stocks and futures. If the economics of rolling break in a vol spike, the dealers unwind those hedges. That is a sell program the equity market does not see coming because it is embedded in the options market. Athene is one insurer. The entire FIA industry runs the same playbook through the same 8-10 dealers. The collateral is pro-cyclical — market stress reduces collateral values, triggers margin calls, forces liquidation, reinforces the decline. The derivative book is not a hedge that makes the company safer. It is a transmission mechanism connecting the S&P 500 options market, the European banking system, and American retirement savings into a single point of failure. Max pain is a simultaneous equity sell-off and vol spike — Q4 2008 conditions. Equities drop, so the call options Athene holds lose value. Vol spikes, so the cost of rolling triples. Credit widens at the same time, impairing the bond and mortgage portfolio. Collateral values fall, triggering margin calls from the same French banks. Margin calls force liquidation of illiquid private credit at distressed prices. Realized losses erode capital. Rating agencies downgrade leading to more capital calls. Headlines hit. Policyholders surrender. Surrenders require cash. More liquidation. More losses. Dealers unwind delta hedges. More equity selling. More vol. The loop feeds itself. The closest analog is AIG. AIG sold credit protection to banks. Athene buys equity protection from banks. The direction is reversed but the mechanic is the same — a massive concentrated derivative position with a handful of counterparties, on a balance sheet with insufficient capital to absorb a tail event, wrapped in an insurance company that the public trusts because the word "insurance" is in the name. AIG needed $182 billion from the Fed. Athene's balance sheet is comparable in size. This structure has never been stress-tested by a real crisis. It did not exist in 2008. This reads to me as lot like Leland O'Brien Rubinstein. Page 9,599 has the verification table. Pages 6,401 through 9,598 have every individual position. The filing is public. I am inviting every derivative structurer, risk manager, and counterparty credit analyst to open Schedule DB and tell me what I am missing. @jam_croissant The filing: athene.com investor relations, AAIA Q4 2025 Annual Statement.
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Mike L 리트윗함
@JeffMcCrimmon80 @fed_speak At this time all the TOSs I’ve reviewed say no, information does not directly crossover between users.
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@fed_speak If one guy uploads a paywalled article into an AI chatbot, would it reference it in later chats?
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@MikePolicarNGP @EconomPic Also similar rates when treasuries were at 1%, corporates were at 2.5% and junk was paying 4%. Getting 8-9% felt very too good to be true.
The other big thing for me was the PIK loans. Seems like an adverse selection issue and you pay tax on income you never received
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@AdvisorMikeL @EconomPic Candidly, the "you'll get 9-11% yields" just didn't sit well with me. I passed on it.
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This isn't something he should probably not have said out loud.
'Doug Ostrover, co-chief executive officer at Blue Owl Capital Inc., said distribution teams targeting retail and high-net-worth investors may not have explained clearly enough the liquidity restrictions inherent to private credit.'
kristen shaughnessy@kshaughnessy2
Opaque by Design. Private Credit Executives Admit They Didn’t Clearly Warn Investors About Liquidity Risks “Some of the highest-profile executives in private credit said the industry failed to clearly explain liquidity restrictions to investors now rushing for the exits….” “Certain distribution channels in certain parts of the globe,” may not have fully communicated the risks inherent to the asset class, Jim Zelter, president of Apollo Global Management LLC, said at the Asia Pacific Financial and Innovation Symposium in Melbourne on Thursday. “And so you have a mismatch right now in shorter term redemptions.” Echoing those remarks, Doug Ostrover, co-chief executive officer at Blue Owl Capital Inc., said distribution teams targeting retail and high-net-worth investors may not have explained clearly enough the liquidity restrictions inherent to private credit. The firm has itself been at the center of concerns, having halted redemptionson a retail-focused fund last month….” bloomberg.com/news/articles/…
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Yep, just upload your most sensitive financial documents to Claude and it will save you $49/yr
Michael R. Bock@michaelrbock
I've been working on tax software for the past 5 years. This is the last year anyone will have to pay for TurboTax. You can try it yourself today: - add the Aiwyn Tax connector inside of Claude (link below) - give it access to your tax documents (W-2s, etc.) - ask Claude to prepare your tax return ...and that's it!
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Look at these dorks squirm
Richard Blumenthal@SenBlumenthal
Pressed by my questions, Trump’s judicial nominees give identical, nonsensical canned responses—looking ridiculous & demonstrating an abject absence of independence & integrity. Lacking a backbone now, they won’t have one on the bench.
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Mike L 리트윗함
Nahal Toosi@nahaltoosi
NEW COLUMN: Did everyone forget that Marco Rubio is the White House national security adviser? That means that more than any American official except President Trump, he's responsible for how the Iran war is going. So why is his political star on the rise? politico.com/news/magazine/…
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I ask once again:
which wealth adviser is going to stick their neck out and recommend allocating new capital to an evergreen fund that’s already capping redemptions next quarter?
Financial Times@FT
Ares limits withdrawals from $10.7bn private credit fund ft.trib.al/AvG7S3d
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So anyway, what do you guys think I should do?
Douglas A. Boneparth@dougboneparth
Just got off a call with a guy who just got a $34M inheritance from his parents. I told him not to hire me but to go on social media and ask a bunch of strangers what he should do.
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@Officialplughb @unusual_whales Beep boop. Go home bot. Are there many Nigerians reflexively defending Trump?
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@unusual_whales You guys think Trump is the only bad guy?
Have you met Pelosii and other politicians?
Information is the greatest assets and everyone, even the miscreants in CS, will do the same if they got the information faster before the public knows about it
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BREAKING: Just five minutes before Trump's announcement to halt the attacks on Iran, massive trades reportedly hit the market.
In one move, $1.5 billion in S&P 500 (ES) futures was bought while $192 million in oil (CL) futures was sold.
These orders were 4–6x larger than anything else at the time.
The trader seemingly made huge gains.
Unusual.
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There are only 30 locations in the world that have IMAX 70mm screen. Unfair.
CineVow@cinevow
Project Hail Mary in IMAX 70mm 🎥 Taylor Umphenour | IG
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Mike L 리트윗함
Update from CENTCOM Commander on Operation Epic Fury:
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