Loplop

@aRishisays Excellent framework, I think we have our answer!

Some thoughts on the US rates curve: Not thinking about bullish vs bearish - that’s data/war dependent, and the path of least resistance is bearish until June FOMC. The question is, if we do sell, should the curve bear flatten or steepen, and especially in the 2s5s or M7-M8 part of the curve? For 2s5s to bear steepen, two specific conditions have to be met: 1. Data (both inflation and unemployment) remains hot, removing any doubt that the Fed should be raising rates 2. The rhetoric from the Fed remains dovish relative to the data (perhaps driven by Warsh, or if Cook and Powell leave and are replaced by Miran and Kelton?) 1+2 would imply that the Fed is strictly behind the curve, and that policy response would be delayed, which means it would also have to be bigger, and this would be bearish for the belly. Otherwise, the curve should flatten in a bearish move because there’s a good chance that the inflation effect disappears after June 2027. So, based on this framework, one can determine what the market is thinking about data and the Fed's stance.

@profplum99 Got it. Many thanks.

Substack is the most complete. To be clear, I have been emphasizing that the recovery in cyclical sectors was occurring and expected. The rest of it, especially labor gains, will be revised away. "So the warning signs are there — credit and quality are flashing warning signs. Markets will remain resilient due to passive factors until they don’t."

"Learn a trade!" "Riveting?"

@JamesYo43532848 where can I read your stuff?

PCE goods is explained as the downstream consumer layer of the tradables system The system looks like this: OIL → PPIACO → IR → PCE goods PPIACO is the best single explanation of PCE goods inflation: R2≈0.81

@maxwiethe @MunchingMoez @MTSlive show a little energy guy on the right!

There are rumors that early SpaceX investors won't have a traditional 6-month lock up period. If that's true @MunchingMoez says the S-1 alone could cause a market sell off. @MTSlive

@TraderBillyAU which screen?

Watching the richness/cheapness along the UST curve

@imotw2 do it!!

Threw together a Wordle-style game for data transformations. You get a chart and guess what was done to the data (winsorize, z-score, gaussian rank, lag, etc). Reply if you want to try it and I'll probably put it out there.

@dampedspring Got it. Thank you as always! Fascinating stuff.

@real_checkmark That's as much as I'm willing. Think about all possible investors and all their demands to spend, wages, leverage, issue to finance spending, finance the fiscal deficit, manage their sovereign wealth etc.

My handle/business name was based on the model below Today The size of the market/economy M is extremely large K is super "springy" C is as dampening as I have ever seen in "normal" economic conditions X "bumps" are more impactful than normal as geopolitical and technological disruption AND distrust of data add more impactful surprises This system is as fragile and overdamped as I have ever seen since developing this idea 35 years ago

@rev_cap @MelMattison1 even lancaster where the amish are in PA is too expensive for only $1M

@maxwiethe @pernasresearch if they have a repeatable edge then why would they share it by selling research?

Unlike most independent researchers, @pernasresearch has an audited real money track record. Since inception they've annualized >30% pernasresearch.com/performance-ve… Monetary Matters listeners can get a 20% discount on their first year of Pernas Research at: pernasresearch.com/monetarymatters

📉 Is the SaaS era over? Software stocks have been in free fall, and @pernasresearch says the market is missing a massive, nuanced opportunity. Full episode out now👇 YouTube: bit.ly/4tXnTcY Spotify: bit.ly/4vFOOLS Apple: bit.ly/4cyRZwl

@takis2910 What source for global manufacturing output?

IMF cut 🌍 GDP f/cast by 20bps due to war. Recall last Apr WEO was 🔪by 50bps on tariffs but world output (🇨🇳 in particular) pushed on regardless. For all its failings #IMF must err on side of caution. Weirdly EM & G7 led downgrades yet "advanced others" got upgraded 0.6%. Who?🧩

Instead of building a forecast from scratch, which is an exercise in compounding guesses, you take the price the market is giving you and gradually work backward: what growth rate, margin, duration of competitive advantage does this price require to be justified? Then the only question is: is that plausible or insane? That's a dramatically easier cognitive task. You're not predicting the future. You're evaluating whether someone else's implied prediction is reasonable. Falsification rather than construction, Karl Popper would approve. And it naturally surfaces the best opportunities: cases where the market's implied assumptions are obviously wrong in one direction. You don't need to know what a company is worth to know that the market is pricing in something that can't possibly be true. @mjmauboussin has formalized this as "expectations investing" and it's probably the most intellectually honest valuation approach available. It admits what you can't do (forecast) and focuses on what you actually can (judge plausibility).

@jpmayall @SantiagoAuFund @dampedspring I feel like this needs the Andy special to be validated.

New paper: "The Paradox of Gold Reserves: How Foreign Central Banks' Gold Holdings Create Indirect Exposure to U.S. Treasuries" Foreign central banks are buying gold at the fastest pace in decades. The consensus view: de-dollarization. I argue the opposite. Gold accumulation doesn't reduce exposure to the dollar system. It restructures it. The paper identifies 7 channels of indirect structural exposure to U.S. Treasuries through gold: 1. Anchor effect: U.S. holds 8,133t, 23% of above-ground supply; 2. COMEX price discovery: 74% of global exchange volume; 3. Dollar denomination: >90% of transactions in USD 4. Fed custody: 6,331t at the NY Fed for 36 central banks; 5. Bretton Woods path dependency; 6. Gold–Treasury yield nexus (post-2022 structural break); 7. Stablecoin substitution: $190B+ in Treasuries replacing official sellers. I distinguish between operational exposure (pricing, trading, custody, settlement) and return-correlation exposure (sensitivity to Fed policy and fiscal conditions). The paper also examines what gold DOES successfully diversify (counterparty risk, sanctions, freezing) and what it doesn't. Central banks that sell Treasuries and buy gold haven't exited the dollar system. They've changed their position within it. 20 pages, 30+ sources including Fed IFDP No. 1420.

@PIIE Sorry, maybe I'm not so good at math, but isn't the 2026 deficit smaller than the 2025 deficit?

President Trump claims that tariffs can make an outsize fiscal contribution. This claim can be put in perspective by comparing actual tariff revenues with the size of the projected budget deficit 👇

the future is here, but distributed unevenly. Today, where is the future? China (tech/demographics), Ukraine (military), Deepmind (AI), ... ?

@archmi_us @Econ_Parker Damn you guys hired someone from the 300 movie? Badass.

New in HaMMR Digest: Will the rise in energy prices be the final blow to a consumer that was already tightening the discretionary purse strings? Catch up on the data with @Econ_Parker and Leonidas Mourelatos. spr.ly/6017B6rSbt

@bryanrbeal this guy is a famous artist named peter draws, not a consumer packaged goods product manager lol. checkout his art he is a beast

@takis2910 What is the source of this chart? I would very much like to recreate it. Thank you! @takis2910

Global #oil projected to drop by 8mb/d in March as Gulf constraint is partially offset by non #OPEC supply. Thankfully 🌍inventory hit highest level in 5yrs going into 🇺🇸 attack (not a coincidence). Dont be surprised if 🛢️demand outlook falls. Consequences (unintended) #oott