Colossus Capital🗽

Ten years ago, being a conspiracy theorist was prudent risk management. Today it’s just simple pattern recognition

Psychedelics are weak and gay There are no hacks to wisdom, no shortcuts to serenity, no stairways to heaven

Equities are always the last to figure it out

Equity bears are at the brink of insanity given resilience in the indices, but odds of a breakdown are increasing now. Equities top slowly as passive flows and rotational dynamics can hold up indices for a long time. There are many structural forces rigged to push them higher, and thus it takes a lot to make them go down. Over the course of an equity bull market, buy-the-dip behavior continually gets reinforced, and the majority of capital will be controlled by adherents to this mantra. In theory, the longer prices remain coiled, the larger the move once they exit the range. This nuke in gold suggests there are liquidity issues brewing under the surface. It feels like a preview of what is going to happen to crowded trades. My theory is the Middle East is selling gold to shore up capital, as they have lost their revenue, and have many expenses around defence. They will also need to rebuild lost energy infra, and eventually, new pipelines to reroute around Hormuz. The buyback window is starting to close, and the sugar rush of higher-than-usual tax refunds is starting to fade. Retail has been a key marginal buyer of equities in these past weeks, and the fading of the tax refund tailwind is critical. The market is gradually coming to terms with the fact that this conflict may last for a long time. On a conventional level, the US and Israel have completely dominated Iran, but Iran has an asymmetric edge when it comes to controlling world oil prices through Hormuz. Trump can still end it, but the issue is that the US cannot simply leave, a ceasefire with Iran must be struck in order to guarantee that Hormuz is reopened. In order to strike a ceasefire, Iran wants to see a guarantee that the US and Israel won't attack them again (at a bare minimum), and it will be difficult for the US to get Israel to agree to that. Trump is used to being able to quickly maneuver according to his whims, as he did with tariffs, but the complex interlocking physical realities of war are different. Oil shocks often contribute to the end of bull markets, since they constrain consumer spending, hit manufacturing, and lower the ability of central banks to offer support. Indeed, the Fed came out slightly hawkish yesterday, and Powell also hinted that he may stay in his Governor seat post his role as Chair ending, which would constrain Trump's plans to unleash liquidity. We have a stronger dollar and long duration bond yields are going up over the world, which tightens liquidity. The Middle East is tight on money now and they were the marginal bidder in many assets. In particular, they were a key funder for AI capex through their investments in the frontier labs. They've been 40-50% of recent big rounds. Remember other deep pockets like Softbank are close to being tapped out. Any dollar that goes into these rounds will have to come out of something else, like liquid stocks (look at my pinned post for this broader thesis). And if we have any signs of risk to AI capex expectations, this will be a major shift that the market needs to contemplate. I've said this before, but puts are a difficult way to express bearish equity views because timing is so uncertain. Equities can hold on for a long time, because they are structurally rigged to go higher. Easier expressions are simply being in cash, or gradually shorting cash stocks over time, which helps avoid getting chopped. This is a very difficult market, stay safe out there.

@Rory_Johnston @conorsen And if the other two parties don’t let him?

I still think Trump will TACO—because he *has* to TACO. Oil loss it too big, too politically untenable. While the damage is already extensive and recovery will already be a months-long ordeal, it can get so, so much worse and this is fundamentally a crisis of lost time. People will push back and say it isn't up to Trump anymore. But while there are two other major parties in this war, Trump remains the 1) most important, and 2) most movable by external pressures (like, say, oil prices), so it's gotta be him.

Taco exists in a world of verbal jousting where ripostes are reversible. Once projectiles and explosions get involved, your chances dramatically improve that the only way out is through.

@BowTiedLobster @negativef1ow @Wild_Randomness @gammichan Hawk Powell now too

@negativef1ow @Wild_Randomness @gammichan My thanks to @colossus_cap

Nice level to trade here. Good place for the local uptrend to continue and good place to flip short if it fails (like last time)

$1,200 per taxpayer

It’s insane how often Trump drops his classic “about two weeks” line, and Elon promises “by next year”… and half you idiots still believe them.

@mikeharrisNY Reserve sales over… in months???? I think it’d be worse than $150

If no end to this war by the time these reserve sales are over, fasten your seatbelts, we are talking $150 easily. Then, as economies start to go in depression mode (recession is not a scenario here), we will see prices going down. Massive damage coming. #CL_F

I was told we won the war, the Strait was open, and Iran ran out of munitions

Thousands of additional TACOs

@BowTiedLobster THANK YOU FOR ATTENTION TO THIS MATTER

Our BEAUTIFUL stock market was doing SO well because of my BRILLIANT leadership until TOO LATE POWELL decided to DESTROY it out of spite. Pay NO attention to the Straits of Hormuz behind the curtain! Coming to a headline near you when the S&P is much cheaper than today.

@BowTiedLobster I think that is currently underway

@colossus_cap You’d think so but what actually causes the step function is people who believe in taco despairing over Hawk Trump.

TACO bros in shambles Still waiting for my apologies

@BowTiedLobster Yeah to be clear there are other ways to get there (my iceberg meme) but think those are probably slower-moving / less-immediate than the Iran situation

@colossus_cap I don’t think that’s necessary x.com/BowTiedLobster…

@BowTiedLobster Think only if strait closed for another ~1-2 months / major infrastructure damage

@colossus_cap 4000 beckons

@btaubz Nope I’ve never heard of him — will check it out, thank you

@colossus_cap Have you been listening to any Robert Pape interviews? I recommend if you haven’t

It now seems abundantly clear that there is NO TACO coming. Rather, we are climbing the escalation ladder

@Zadditude Yes! But I didn’t coin it, def heard it from someone else

@colossus_cap Was it you who said it takes two to TACO? That's been one of my favorite sayings the last two weeks.