Is Secretary Bessent “the house” or a mere player at the casino?

Happy Wednesday out there, Team 42. It's your skipper here, Darius Dell, to present our Macro Minute for Wednesday, September 9th, 2026. As always, we'll start with the executive summary from today's lead-off morning note, so let's dive right in. Today's key macro question is, is Secretary Besset the House or a mere player at the casino? The short answer is Treasury Secretary Scott Besset continued to threaten market participants with inside information, inviting traders to position against his yen-strengthening result. Quote, I am the House now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do, and you can bet against me if you want. End quote. Besset is, in a sense, bluffing in the highest-of-all-stakes poker game with the bond market. It's unclear whether he realizes that he's not the House dealing blackjack or spinning the roulette wheel. Recall that the House holds 13% to 19% of that rate, respectively. But he's rather a mere player, at the poker table, where the House rake is a mere fraction of a fraction of the total sum wager. The less he realizes he's a mere player at the poker table, the more money investors will make on their stocks, gold, and Bitcoin holdings, because investors will capitalize on Besset's hubris and sell every Treasury bond to him until the TGA runs dangerously low on funds, especially if the Dems take the House, and the Fed is forced into yield curve control, again, to defend an arbitrarily appropriate level of interest rates that, for the most part, fails to adequately process market forces. I collaborated with Secretary Besset for years during his key square days, and I can confirm that the level of hubris embedded in his commentary is not consistent with the cordial, thoughtful, and charming fellow Yaley that I once knew. In his 2012 book titled "The Winner Effect of the Neuroscience of Success and Failure," Dr. Ian Robinson presented research confirming that status victories raise testosterone and sensitize dopamine genetic reward circuit -- circuitry, apologies for that, I'm not a science guy, I'm a math guy, which in turn elevates risk appetite and confidence, i.e., you can bet against me if you want. The resulting effect is similar to a traumatic frontal lobe injury, increased impulsivity, and reduced perspective absorption leading to social disinhibition. So in short, when you rise to power, this reduces the cost of ignoring other views, and the brain economizes accordingly, so you have less action. You have less effortful processing of other people's states and more reliance on stereotypes and heuristics, such as Besson saying he's doing these buybacks to quote unquote "break the fever" that was building, rather than just acknowledging that there are other sides of the trade. And so he's exhibiting all the classic patterns of someone who's rising to power and prominence, and essentially their brain is being rewired in a way that downplays the viewpoints of others in the market and increases their own perception of what is accurate, what is true, and ultimately what the right path of policy should be. So this could get very interesting. I mean, the treasury bond market is a lot more powerful than Besson, especially when you layer on interest rate derivatives and foreign currency derivatives. You're talking, you know, in the quadrillions of dollars. So, you know, he obviously doesn't have that kind of firepower at the TGA. He doesn't have the legislative authority to cut the deficit, paradigm B. He doesn't have the legislative authority to keep paradigm C going, which is running the economy hot. And so ultimately, the highest probability path, if he maintains this level of hubris, is, you know -- is paradigm D, which is at default via debasement. So wrapping up, as always, the question from our community. This one says, "Seems like the bond market is calling Besson's bluff with the spike in the 10-year to 4.85 percent after the announcement of tripling long-end U.S. Treasury buybacks today. Is it me, or do things seem to be accelerating? Is the administration panicking about the midterms?" I don't think they're panicking about the midterms, because, I mean, at the end of the day, like, it's pretty -- it's almost you can set your clock to it. I mean, they're going to lose the house. Every -- they always lose the house. Whatever party's in power loses the house. That's normal in midterm elections. I guess they might be concerned about the Senate. But the math on the Senate is very unfavorable for Democrats in this particular election. So it's unlikely that the Democrats take the Senate. So I don't know if they're panicking on the midterms. I just think Besson has a view that the Treasury bond prices are too low, Treasury bond yields are too high. And he's going to try to express that view, obviously, by tripling buybacks today to $6 billion, which, again, is a drop in the bucket in the context of the hundreds of trillions of dollars that are being transacted. Actually, no, I think the interest rate derivatives are like $10 trillion a day. No, currency derivatives are $10 trillion a day. Interest rate derivatives are about $8 trillion a day. So, you know, this $6 billion in buybacks is -- I mean, you're talking -- this is peanuts, not even peanuts. It's like molecules on a cell, on an organism. So, like, you know, this is -- is the administration panicking? No. But it does seem that, you know, Besson has a view of what the appropriate price of the 10-year should be, appropriate price of the 30-year, and the appropriate price of the mortgage rates should be. And he's going to express that view. He's entitled to his view. He's a very accomplished, smart, you know, man. He's obviously done a lot of great things for our country already. This might not be one of them, though. So, Scott, if you're watching or listening still, you know, I wish you all the best as an American citizen. But, you know, it's the history -- the history of successful market intervention and market manipulation is -- is not a long history. So we'll wrap it up there. Darius Do here presenting our macro minute for Wednesday, September 9th, 2026. Best of luck out there today. We'll catch you back here tomorrow. Cheers. If you enjoyed this content, please remember to like and subscribe. Thank you. This content is for informational purposes only and does not constitute an offer or a solicitation. Reliance upon the information in this material is at the sole discretion of the viewer or listener. Investing involves risks. 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