Amagi Adam

@DastDn @PincherMartin8 This says more about the value of strategy than it is a burn on Trump. Are you more likely to succeed by planning and gaming out all your contingencies or by using your feral intelligence to size up your opponent and gut him, then lather, rinse repeat? Real-time experiment.

There's no strategy. There's no 64d chess. Trump is a creature of instinct, impulse, and immediate gratification. It feels good to claim that the regime bent the knee on all counts, so he does.

@TMTLongShort The core issue is the state both directly and indirectly removed women's need for men. Directly via welfare etc., and indirectly via regulatory burdens that make bullshit jobs babysitting bureaucratic and regulatory complexity necessary (think HR, healthcare admin. etc.).

The solution is going to surprise most of you and piss off everybody but it’s a mix of: A) legalize prostitution B) open up the borders to Latinas and Eastern European women when an American is willing to sponsor them with no path to access welfare C) restructure no-fault divorce D) restructure elite college admission to pure IQ tests with no weight given to the private school/tutoring rat race E) restructure tax system to financially incentivize having > 3 kids F) change school hours to replace childcare G) fixing housing supply H) destroy fake email jobs with AI None of this will be done and the gender wars will continue. Luckily we’ll have robots. 🫡

@profplum99 ...To take advantage of that opportunity (to vol-equalize the low vol portfolio), you need to lever up the low vol, which is why low rates probably helped the low vol portfolio keep up in those periods.

@profplum99 The SPX / low vol didn't "outperform for 28 years". It had two spurts of outperformance -- the late '90s and recently -- both of which were high/rising real-rate environments. In the long stretches of sideways, a vol-weighted position in low-vol would have outperformed.

The S&P500 has outperformed the "Low Volatility" S&P500 for ~28 years. The ONLY period in which Low Vol "worked" was during the exact window from end of Dotcom (March 2000) to the end of GFC (March 2009). The key question is "which is the aberrant period?"

@profplum99 Without any deeper analysis, the first place my mind goes is rates. At very low rates, levering up low vol gets more attractive.

@profplum99 For most of the whole period, in those long flat stretches, low-vol outperformed when vol-adjusted. That does seem significant.

@NUCLRGOLF Riding isn't even golf. You're totally disconnected from the course and the landscape.

“Walking is so much more enjoyable than riding.” Do you agree? 🚶🛺

@JCNSeverino He is fantastic! If what he said bothers you, you're telling on yourself.

Must Watch: Justice Clarence Thomas explains the proper role of a judge and recalls sound advice the late Judge Larry Silberman gave him many years ago: “When I first became a judge, Judge Larry Silberman...said, ‘Ask yourself before each case: What is my role in this case as a judge?’ Notice how that limits you, not as a person, not as a Catholic, not as a policymaker, not as a husband, as a judge.”

@BobEUnlimited @thedailyshot Why does cutting back elsewhere cause prices to rise more broadly? Seems like the opposite would happen.

The initial knee jerk reaction to sharply higher gas prices is to dissave a bit on the hopes that the price rises are transitory. The longer gas prices are elevated, the more households must start to cut back elsewhere and prices rise more broadly. h/t @thedailyshot

@tleilax___ Europe’s greatest wish is to die peacefully without struggle. They are temperamentally unsuited to fight for resources you describe.

Trump is casually proposing one of the biggest strategic own-goals imaginable: NATO more or less done, and any country that wants Persian Gulf crude can go secure it for itself. That is a spectacularly reckless thing for an American president to say. It is a half-drunken invitation to roll the clock back toward the old colonial game, where every great power armed itself around resource access and shipping lanes. The whole reason the U.S.-led order worked is that Washington took the military question off the table for its allies. Europe and East Asia could think about trade, industry, growth, supply chains, and cheap energy. They did not need to wake up every morning thinking about convoy protection, choke points, naval escorts, forward bases, and who might try to cut their oil line. That was the deal, and for all its flaws it was an unbelievably powerful one. Put that burden back on every importing state and you do not get some elegant new realism. You get the old imperial logic creeping back in. The barrel is no longer just a barrel. It comes with freight risk, insurance risk, naval risk, basing risk, and eventually war risk. The whole achievement of the postwar order was that America suppressed a lot of that rivalry by sitting on top of the system and making the security decisions for the wider alliance. The Gulf is particularly ugly terrain for this kind of thinking. The infrastructure is concentrated, the sea lanes are narrow, and much of the population depends on fragile physical systems like desalination. Once states decide energy security is too important to leave to markets, they start looking at places like this in very hard terms. Somewhere in Paris, one of the old colonial ghosts is probably already unfolding a map of the Gulf and reminiscing about protectorates in embarrassingly enthusiastic detail. History is full of great powers making exactly this kind of mistake. The cleanest analogy is Germany after Bismarck. Bismarck built a diplomatic architecture that kept Germany secure and prevented hostile coalitions from forming. Kaiser Wilhelm II inherited that system, got impatient with its constraints, started freelancing, and slowly turned a position of strength into encirclement. He did not lose Germany in one move. He set in motion a process that made Germany less secure with every passing year. There is also an interwar British echo here. Britain remained enormously important, but it no longer wanted to fully bear the burden of policing the wider order it depended on. That did not produce a neat handoff. It produced opportunism, rearmament, and eventually a much nastier bill. And if you want the broadest analogy, it is the breakdown of the old European concert system: once the central restraining architecture weakens, states go back to fleets, blocs, balancing, and military planning around economic survival. What is so deranged about this is that it weakens the U.S. first. America’s edge was never just the size of the Navy. It was that nearly every major industrial power operated inside an American security architecture. Tear that up and over time you get fewer reliable bases, fewer aligned allies, larger independent militaries, more hedging against Washington, and much more room for China and every ambitious regional power. That is how dominant positions are squandered in history: not all at once, but by dismantling the very order that made you dominant in the first place.

@arctotherium42 Diversity of opinion is critical for more than just error prevention. The discourse is like an ecosystem of thought that reflects the ecosystem of diverse actors. The reality ecosystem will collapse from uniformity of actors in parallel to uniformity of thought.

Public debate really is a good thing because no group or individual or worldview is right about everything. LLMs effectively homogenize everything into a single worldview (by default), so even though they have solid epistemics everything getting routed through them is bad.

My view is that major LLM-systems have better epistemics than any individual person (in part because of a larger fact base, in part because of deliberate efforts at neutrality), *but* this is still a bad thing because they are quite similar and their errors are correlated.

@Valueman53997 @TotemMacro Most likely nominal yields don’t explode. Bond sold off in 08 even after Lehman. Breakeven went negative. Then bonds exploded higher (Price) when the forced selling stopped. Global financial plumbing requires holding USTs.

@TotemMacro @AmagiAdam Does the bond market actually survive though if yields explode? It would have to come with fiscal discipline which I doubt we will see..

They *really* need to not monetize this...

@californiapost Deport

LA mayoral candidate's shocking take on homeless encampments near schools trib.al/g3TUbx5

@FischerKing64 @AuronMacintyre I am very sympathetic to this position, but steelmanning Trump: is Iran the last distraction preventing America First? If a transactional (TR-like) president can turn Iran into Kazakhstan then we can spend the next 25 yrs fixing America.

If President Trump was going to tank the economy to achieve something big for the people - mass deportations was the option. The disruption to the economy would have been serious, but long run the people would benefit massively. Smashing Iran - doesn’t help a single American.

@TotemMacro I think deflation is a more likely outcome in a sudden stop, at least initially. Treasuries are the collateral and will be in short supply. Curve seems to be figuring that out.

They must not expand base money to deal with a dollar funding squeeze caused by a) collapsing trade; b) a recessionary credit impulse; c) fiscal austerity; and of course, 4) acute oil squeeze on both real economy spending and asset flows. To be clear, the oil squeeze is biblical, but all of the below would've happened exactly now regardless of war or no war. There was already enough brewing to cause this. These aligned forces are why the market is weak, yields are blowing out, vix and spreads are rising, yields are backing up in a bear flattener, the basis spread is blowing out, cross-currency swaps are moving, and the dollar is rising. They need to let this happen. They have lost the reserve currency luxury of being able to ease into recessions and bear markets. They have lost it because they have caused their biggest creditors to blow up financially (and now in many cases literally). They are now up against a global sudden stop in capital flows, prompted by a physical energy squeeze and a related collase in both global demand and global current account surpluses. This squeeze will cause accelerating selling of US assets by foreigners. They must not accomodate that dollar pressure by easing, or it will create a self-reinforcing spiral of currency weakness and inflation. They have put themselves in this position.

@TimmerFidelity Any idea why, despite a synchronized move in nominal 10y yields, the German move is in breakevens and the US move is in real yields? Maybe there's something technical in those markets I'm not aware of, but on their faces, they are telling very different stories.

It may be tempting to think that the rise in yields is the product of a US-centric dynamic (relating to OPEC recycling no/fewer petrodollars into Treasuries), but the next chart shows that yields are rising everywhere. This is global reset, not unlike 2022.

@DerivativesDon Again, I agree there are lots of signs of people dumping assets to raise cash (gold, front end, non-US equities, etc.), but it sure is tame and quirky. Nowhere near the synchronized stress in risk assets you'd expect in that world.

@DerivativesDon There are too many anomalies that can't be explained by "raising cash". Why is the German 10y selloff all in breakevens, but the US is all real yields? If people are just raising cash, don't they own a lot of equities too? Why are equities holding up better than bonds? 2/n

If people can’t sell their oil, they need to 1) Sell their USTs 2) Sell their gold 3) Don’t have any money to buy Bessent’s bonds (hence auction results) It’s not about inflation It’s also not about growth re-rating higher. ITS ABOUT LIQUIDITY Which is also why swap spreads have been such a large part of the rate move. And it’s also why the curve has not steepened. It’s also why this is not the end of the dollar - it is the insurance policy serving the exact purpose it is supposed to in an emergency. Right now is the time to file a claim. Soon enough they will be buying more insurance. You buy bonds if you are trying to minimize portfolio losses, you sell bonds when you need liquidity. Imagine if they needed to liquidate their private equity or credit investments instead.

@notabigdeal111 On it's face lower population means lower GDP. It means fixed assets have less demand pushing through them (see rents). So without huge stimulus, I'm afraid this "inflation" from crude will actually be deflationary. Breakevens curve makes sense directionally.

@notabigdeal111 Yeah. I don't know what's theoretically right, but you can buy the CPI prints by buying TIPS/Sell USTs. The residual might not be "real rates", but there is information here. IMHO, people underestimate the deflationary effect of immigration restriction....

If this is legit, rate gotta go much higher or gold gonna go higher. Pick your poison.