David Daglio

@SantiagoAuFund @LawrenceLepard @Sorenthek Really gold has out performed the markets since 1999, seems like a pretty take that it mattered.

@LawrenceLepard @Sorenthek Deficits have not mattered for either of our entire lifetimes. What changed and why is it different this time?

Sunday Book review

@robin_j_brooks @paulkrugman That's because it isn't a blockade, seems a bit disingenuous to take a victory lap here.

Here's my discussion with @paulkrugman from March 19 where I argued oil prices won't go to $150 or $200 and recommended the US blockade Iran. It's as relevant to global oil markets today as it was back then. The blockade is working and Iran is in trouble. substack.com/home/post/p-19…

@DaglioDavid The yield curve read is probably right. But clumsy bond management and Gulf actors extracting institutional elevation aren't mutually exclusive; one side stumbles into it, the other capitalizes deliberately.

@michaelxpettis Yes. Yes. Thanks for this.

It may be easier to measure currency intervention and reserve accumulation as something that only occurs through central banks, but it is increasingly unhelpful to do so. In many countries it is not just the central bank that executes exchange rate policy. Sovereign wealth funds, state banks, and other state-controlled financial institutions can be even more interventionist.

Struggling company who couldn't get a life line from any other company or capital markets turns to government. Not surprising it went up, but this is not your grandmothers capitalism or what made the US capital markets the envy of the world. The US would have been better off if their assets were sold to better operators.

The US government, on paper, made $27 billion on its 9.9% Intel stake since last August. Once again, economic text book teaching of reflexive negative take on state capitalism is turned on its head.

@SanderTordoir Desperate times call for desperate actions. thanks for highlighting.

A lot of commentary on Chinese investmeint in the EU miss the most importat observation. Chinese FDI in the EU is tiny, a fraction of what it was 10 years ago. But EU's trade deficit with China is ballooning, up another 30% this year. The implications should be obvious. 1/

Weeks after blowing up your neighbors and then your friends threatening to leave you randomly announce "swap lines" eg working capital lines to your "friends". This is not "normal course of business" and it's a function of the loss of confidence in dollar dominance and military supremacy. Also this does not stabilize dollar markets it makes them more vulnerable.

Discussions with countries, including our Gulf and Asian allies, about U.S. dollar swap lines are part of ongoing, routine conversations that @USTreasury has been having with our partners over a number of years. They are a testament to the U.S. dollar’s primacy and the strength of America’s economic shield. Additional swap lines can benefit our nation by reinforcing dollar usage and liquidity internationally, maintaining smooth functioning in dollar funding markets, promoting trade and investment with the United States, and, in hypothetical stress scenarios, preventing disorderly sales of U.S. assets as well as disruptions to U.S. markets, businesses, and households. Many of these countries have pristine sovereign balance sheets and large dollar holdings – larger than many major economies with whom we maintain permanent swap facilities. I applaud our allies’ foresight and watchful risk management by exploring additional financial buffers during periods of market quiescence. Extending permanent swap lines can be a major first step in creating new U.S. dollar funding centers in the Gulf and Asia. Dollar dominance and reserve currency status are strengthened by constant long-term initiatives, including countering the growth of problematic, alternative payment systems. Under @POTUS, this is American Economic Leadership at work.

@SantiagoAuFund They are loans at treasury rates, which means the UAE is effectively borrowing at our rates. A great deal for them. Even better deal in places like India where inflation is higher. We will see.

For those new to swap lines due to recent headlines, swap lines are not USD “gifts”, they are USD “loans”. The difference? Loans need to be paid back. And as such create dollar demand. Swap lines dollarize the world…they don’t dedollarize the world.

@izakaminska Years ago the dollar was used as a reserve currency, just because it was the reserve. Now "allies" get it for being in the club. It effectively lessens the dollar's as an "independent" currency. Maybe it was always a dream, but hard to say things haven't changed.

🧵Some other important swap line factoids: 1/ Robert McCauley has been warning about the potential weaponisation of dollar swap lines for quite a while. In this view, the US is likely to apply statecrafty terms and conditions on dollar liquidity access as and when tensions escalate. cepr.org/voxeu/columns/…

@kashyap286 That's it. Thanks for the more.

Goodbye, dollar milkshake theory. In the movie Minority Report, Tom Cruise is part of a team which prevents crime before it can happen. Fed swap lines being expanded to cover all US allies (non-allied countries have already de-dollarized their economies) prevents funding stresses before they become funding stresses. Ergo, there will never be any "sucking" of liquidity from the global financial system into the US dollar even in a severe crisis, which means the dollar will lose its safe haven bid in times of stress. If the world is short dollars, and the Fed supplies them, there is no consequence to being short dollars. You are actually encouraged to use dollars for carry trades, much like Abenomics did to the Japanese Yen. The eventual outcome is the dollar becoming more of a transactional currency and less of a store of value. This is great news for Asians. It means the end of permanent currency depreciation, making local equities more attractive relative to US assets. Pair high growth rates and favorable demographics with currency stability, and you have the perfect setup for an EM resurgence. The Treasury Secretary does not understand the long-term implications of this Empire ending move.

@Bulagan1996 @Noneotherthanwe @barnes_law Dollar is loosing its grip too.

@DaglioDavid @Noneotherthanwe @barnes_law Everybody's a player, sometimes the player wins more than they lose and sometimes they lose more than they win I think it would be a better way of thinking about the global economy as a giant casino where the dealer is the United States

💵 Dollar Milkshake Theory update: Step 1: USD slurps the world like a giant milkshake. Step 2: China & friends collapse, crawl to Uncle Sam begging for dollars. Step 3: Profit. Reality: America's loyal vassals now threaten to dump US Treasuries & equities… so US hands them *unlimited permanent swap lines* to keep them happy. "We’re not sucking *them*. They’re sucking *us*. " Not the 5D chess you ordered. 😂

@EvanderKnoxley Agree, but if it was a quid pro quo, why not get actual investment not the plan of investment.

@DaglioDavid The question worth sitting with is whether the Fed grants it because doing so sets a precedent for who qualifies as systemically relevant, and that list has historically been very short and very deliberate. 3/3

A swap line request signals something specific; the UAE is hedging against a liquidity scenario where dollar access through normal channels becomes uncertain, which implies their risk models are pricing in a disruption serious enough to warrant direct Fed backstop capacity.

@EvanderKnoxley I think you are giving politicians too much credit, more likely this is another form of yield curve control, albeit clumsy but it appears long dated bonds hanging on by a thread.

@Bulagan1996 @Noneotherthanwe @barnes_law Yes but the Saudis and UAE now get more for playing the game.

@Noneotherthanwe @barnes_law This isn't entirely wrong but it is an extreme distortion, all the players in this game have a vested stake in it continuing They're all playing the same game even the ones that say they went off the train are still playing

@ThePenguinBTC UAE and Saudis have considerable leverage at this juncture. Not a surprise they are using it.

ABD birkaç saat önce doların gelecek 50 yılını belirleyecek bir hamle yaptı. Dikkatli okuyun. Birkaç saat önce ABD Hazine Bakanı Scott Bessent bir paylaşım yaptı. Çoğu insan başlığını bile okumadı. Ama o paylaşımda 1974'te kurulan ve 50 yıldır dünyayı dolara bağlayan sistemin geleceği yazıyor. Anlatıyorum... Petrodolar nedir? 1974'te ABD, Suudi Arabistan ile bir anlaşmaya vardı. - Suudi Arabistan petrolünü dolarla satacak. - Karşılığında ABD bölgesel güvenlik şemsiyesi sunacak. Bu düzen petrodolar olarak adlandırıldı. Dolar dünya rezerv parası oldu çünkü petrol dolarla satıldı. Dünya petrol almak için dolar bulmak zorundaydı. ABD dolar bastı, dünya mecburen talep etti. Sistemin ana çerçevesi 50 yıl bu oldu. Japonya ikinci ayaktı. 1985 Plaza Anlaşması'ndan sonra Japonya faizi neredeyse sıfıra indirdi. Japon tasarrufları yıllar boyunca ABD tahviline aktı. Japonya 1 trilyon doların üzerinde ABD tahvili biriktirdi. Japon Merkez Bankası 2013'ten beri Fed'in kalıcı swap ortaklarından biri. 50 yıl boyunca dolar sistemi bu iki ayakla ayakta durdu. Son yıllarda birinci ayakta çatlaklar belirdi. Çin petrol ithalatının bir kısmını yuan ile ödüyor. Suudi Arabistan yuan işlemlerini test etti. Rusya yaptırımlar sonrası dolar sisteminden büyük ölçüde çıktı. İran petrolünü yuan ile satıyor. BRICS ülkeleri alternatif bir ödeme altyapısı üzerinde çalışıyor. Çin'in SWIFT alternatifi CIPS genişledi. Suudi Arabistan ve BAE BRICS yapısına dahil oldu. Petrodoların tam merkezindeki ülkeler rakip bir bloğun masasına oturdu. 50 yıllık birinci ayak eskisi gibi sağlam değil. Birkaç saat önce Scott Bessent şu açıklamayı yaptı. "Körfez ve Asyalı müttefiklerimizle dolar swap hatları üzerine konuşuyoruz." Swap hattı nedir? İki ülkenin merkez bankaları arasında karşılıklı para değişim anlaşması. Kriz anında ülke dolar bulmak için piyasada satış yapmak yerine önceden anlaşılmış kanaldan geçiyor. Açıklamasının çerçevesi şu. - Körfez ülkeleriyle kalıcı swap hatları kurulacak. - Bu ülkelerde dolar temelli finans merkezleri büyütülecek. - Alternatif ödeme sistemlerinin büyümesi sınırlanacak. "Alternatif ödeme sistemleri" doğrudan BRICS ve CIPS'e yönelik bir hamle. Özetle ABD, petrodoların gevşeyen Suudi bağını yeniden sıkılaştırmak istiyor. Bu sefer daha kurumsal bir çerçevede. Neden şimdi? ABD'nin borç yükü rekor seviyede. Trilyonlarca dolar tahvil önümüzdeki yıllarda yenilenecek. Son on yılda Çin ABD tahvili alımını yavaşlattı. Japonya bazı dönemlerde net satıcı oldu. Avrupa kendi iç sorunlarıyla meşgul. Boşluğu dolduracak tek kaynak kimler? Körfez. Trilyonlarca dolarlık döviz rezervi. Yıllık petrol gelirleri. Düşük borç yapıları. Bessent bu rezervleri ABD finans sistemine kurumsal olarak bağlamaya çalışıyor. Körfez ülkeleri şu an iki masada oturuyor. Bir tarafta ABD var. Güvenlik şemsiyesi. Dolar likiditesi. Batı finans piyasaları. Diğer tarafta Çin var. Büyüyen petrol alıcısı. BRICS ortaklığı. Yuan işlemleri. Bessent açıklaması Körfez'in ABD tarafına ağırlık vermesi için kurumsal bir teşvik. Körfez kabul ederse dolar sistemi Körfez üzerinden yeni bir döneme girer. Körfez kalıcı swap hattını reddederse ve BRICS'e kayarsa dolar sistemi daha hızlı erozyona uğrar. Bu tercih önümüzdeki on yılın en kritik jeopolitik kararlarından biri olabilir. Son nokta. Scott Bessent'in birkaç saat önceki paylaşımı yüzeyde teknik bir bankacılık mesajı. Altında 1974'te Suudi Arabistan ile kurulan petrodolar sisteminin yeniden inşası yatıyor. Japonya sistemin içinde kalmaya devam ediyor. Körfez şu an masaya çağrılıyor. Bu benim şahsi analizim. Önümüzdeki dönem kritik, sizi bilgilendireceğim.

@LukeGromen UAE has leverage. Why not use it to get the best borrow terms on earth.

So…will the USD swap lines Bessent is going to give UAE going to finance the UAE’s newly-signed investments in China? Or are the USD swap lines so UAE doesn’t have to sell USTs to make these investments in China? Or do the USD swap lines preclude this? April 15, 2026:

@EricLDaugh Come on. You don't think the Iranians haven't planned this since the Ukraine war or maybe longer.

🚨 HOLY SMOKES. Treasury Sec. Scott Bessent just FROZE $344 MILLION in Iranian cryptocurrency linked to regime officials This comes after Bessent got the Gulf nations to OPEN UP regime bank accounts as they surge assets out of Tehran in desperation Bessent is an economic ASSASSIN 🔥 BESSENT: "Treasury’s Office of Foreign Assets Control is sanctioning multiple wallets tied to Iran — resulting in the freeze of $344 million in cryptocurrency." "We will follow the money that Tehran is desperately attempting to move outside of the country and target all financial lifelines tied to the regime." Bessent said this recently at the White House: "What may prove to be FATAL mistakes the Iranians made was bombing their [Gulf] NEIGHBORS." "Who are now willing to be much more transparent in terms of the funds, or do a deeper dive in investigating the funds that are held within their banking systems."

@jsblokland Well written. What we don't know yet is whether the "savers" will fund fiscal dominance forever.

My investment thesis is pretty straightforward. First, we have to acknowledge that we live in a debt-driven economic system, which means that debt sustainability, not inflation, not GDP growth, but debt sustainability, is the crucial objective. Once you understand that, you also understand why central banks have acted the way they did. Debt sustainability requires structurally low interest rates and higher inflation. Believing that governments in aging societies will meaningfully reduce budget deficits and bring debt levels down is simply naive. Low interest rates and higher inflation are the death of pensions, savings, bonds, and the traditional 60/40 portfolio, which has become hopelessly outdated. How do you fix that? It is actually quite simple. When inflation, money, and debt are abundant, you want to store value in things that are scarce. Classic Ferraris, Van Gogh paintings, fine wine, you name it. Even better, scarce financial assets such as gold and bitcoin. Will the debt-driven system collapse? Not necessarily. What if the real adjustment is different? What if the value of gold and bitcoin rises exponentially relative to the "value" of money and debt? For thousands of years, societies functioned with money backed by gold and silver, backed by real value. How will this Great Rebalancing happen? Just look at the total lack of protection against fiscal dominance, low interest rates, and higher inflation, in virtually every investment portfolio on the planet. Endowments, family offices, financial advisors, insurers, pension funds, and sovereign wealth funds still overwhelmingly hold stocks and bonds. And yes, private equity and private debt are still equity and debt too, and frankly, often the less attractive versions today. I presented at a great event yesterday, and people understand this surprisingly quickly. Once you show them the hard, objective data, there is no denying that we are living in a regime of fiscal dominance. Yet most investors still refuse to act on it. That is exactly why I launched the Blokland Smart Multi-Asset Fund. No cash, no bonds, just scarce assets.

@origoinvest You could be right. But in a highly competitive financial industry with no barriers assuming a 20 percent ROE is a flawed assumption (unless they are cheating on leverage).

$APO Unlike many other Alt GPs facing headwinds / market saturation I believe Apollo can continue compounding at >20% for the foreseeable future Since Athene drives the majority of incremental flows ($82B of inflows in FY25), Apollo is primarily indexed to the demand for retirement products rather than the institutional or retail LP market With a 40% increase in >65 year olds expected over the next 25 years I don't anticipate any slowdown in Athene's ability to originate long-duration liabilities In turn, the flywheel between Athene and its asset management arm enables it to deploy associated equity capital at >20% ROE. I estimate every equity $1 deployed to translate into ~22c of combined FRE & SRE income worth >$3 in market cap increase. This is despite spreads being at all-time tight levels Even if we were to assume regulatory regime changes in Bermuda, Athene should be able to generate mid high-teens ROE – and one could argue that this would result in reduced competition / spread widening benefiting $APO longer term on incremental capital deployment Contrast this model to $OWL which I view as being at best a mean reversion play - interesting if you can buy at close to run-off implied valuations but ultimately capped since its LP flows are cyclical and tend to be inversely correlated to the investment opportunity set

@DowdEdward Really sad and uneven. Maybe Martha Stewart was right :)

When you are not in the club arrests happen fast. Funny huh? 🤔