Treasury-Led Financial Repression Is Ushering In A Debasement Regime | Weekly Roundup

Nothing said on Ford guidance is a recommendation to buy or sell any investment score products. All right, what's going on everybody? Welcome back to another roundup edition of Forward Guidance and the first one without our, without our men, without our Ponzi men. He, he would be laughing. If you could get away from compliance right now, you just know the type of shit he'd be saying to you. So we're, we're recording on Wednesday. We just had the best in the announcement. We're going to talk a lot about it. But man, like, I miss that guy, he would Tyler would be all over this right now. The Ponzi, the Ponzi just got kicked into high gear. I mean, we, we saw glimpses of it for every week, basically, for the last since the start of August. And this is just the next like, because in practice, we'll talk about it. But um, you know, if this is, this is a small announcement compared to probably the stuff they're going to be doing, but it sends a big signal. Yeah, yeah, 100%. Okay. Um, yeah, first off, obviously it's just us to for now this week. Um, but we're definitely looking at starting to get a few rotating regulars onto the show to join us once in a while. So if anybody has any suggestions or people they think they'd love to see on here for the next little bit while we start to get some, so you know, we'll still do the, the duos. And then we'll, we'll shop around and have a few folks come in once in a while. Um, as we start to decide on, on who we want to be a third guest like, you know, for sure, the roundup is that it's best when there's three of us. You know, we can all just like ban turn bounce off each other's ideas. So definitely going to lean into that. But yeah, I just want to open up that if anybody has any suggestions or ideas on people as we start to bet and plan for the fall, um, definitely. Yeah, listen, listen comments. Let us know. Okay. Other piece of admin, digital assets, summits are kicking into high gear this fall. So for those that don't know, digital asset summit is the digital asset, institutional conferences that we put on, we do three every year. There's the the bread and butter one in New York that we do every spring. We've been doing one on London for a few years now too. And then for the first time in October, we're going to Asia. We're going to Singapore right around the weekend of token 2049. So the whole industry is going to be there. It's, it's going to be a lot of fun. I haven't been to Singapore before. So I'm excited. It's, uh, I've heard a lot of good things. Um, it's going to be great. We have some great speakers. We have the CEO of hyper liquid Jeff speaking, which is sick. I'm definitely the most excited for that. But, uh, yeah, we'll be there. We'll be doing some macro panels as well. Quinn's coming. Um, yeah, looking forward to it, dude. She can be sick. All right, I booked my fights ready to go. That'll be a nice little, uh, little getaway after, after, you know, coming back in the swinging things in the grind in in September. The locking grind of the fall is there's nothing like it. Like after Labor Day hits, so you're just like, let's go. And it's just like, I'm ready to try, I'm ready to get after it. It's good. Yeah, it's, it feels good. Yeah, totally. All right, get your tickets. Um, yeah, prices will be going up pretty regularly. So, you know, don't need to last second. All right, let's talk about the elephant in the room. This news that just came out this morning of what Secretary Besson is doing. So last episode, obviously, we, we had a whole, most of the episode is friend around this idea that marginal macro policy is moving to the treasury, more so than the Fed and Scott Besson and treasury is making sure that the long end does not get on really. And, you know, nothing really hit. Obviously, we've had these small little sample, you know, a little appetizers like we had the QRA where they changed from, you know, potential increases in coupon issuance to a change, which opens the door for potential like lowering of coupon issuance. So already signal there, there's the end intervention stuff. And now we got this today, which is that they're announcing an increased size of nominal long end treasury buybacks. So this is definitely pretty meaningful. And the, the language is really aggressive. Like, this is ready here. The US Department of the Treasury is increasing by at least double the size of liquidity support buyback operations for long dated nominal coupon securities, the 10 year to 20 year sector and the 20 to 30 year sector. The current maximum size of the two billion per operation will be at least $4 billion per operation. So, okay, what does this actually look like is that these are, these are buybacks. So they're not just, you know, the first thing you have to think about is, okay, what's funding the buybacks? And so the first slide, what are they buying? They're buying off the run long end bounds. They're super liquid. Obviously, we've been talking about how the 30 year in the long end has been, you know, at least decade highs and yields. So, so it's getting pretty unruly. So they're coming in, they're buying the author on bonds, which are the most liquid. And what are they funding it with? They're funding it with treasury bills. And so you net that out. If you're issuing treasury bills in no duration and they're buying duration, you're taking duration out of the market. If that sounds like a different variation of QE, it's because it is. And yeah, so obviously, this is like hilarious because, you know, Besson before he got confirmed, he was ragging on Yellen for all these things. And now he's just take, he's just like put in the pedal to the metal here. At least four billion. So, you know, this is obviously a pretty huge moment in terms of this debate from a narrative. Yeah, I want to pause there. I couldn't get you read on, yeah, I know you had a few tweets talking about how things are going to get pretty tough for Besson over the next few weeks as the 30 year was going higher. And I don't know, he lasted about a couple days before he he capitulated here. So curious your thoughts. Yeah, I mean, there's a lot of unresolved issues facing this market. And I think people, you know, it's easy to look at prices and say, it's it's fine, right? Because at the end of the day, that's what people tend to use is the barometer of like economic health or treasury market health, whatever is like stocks, right? Okay, stocks are high, everything's fine. But what isn't being taken into account is that's a nominal number and you can you can play with that number by, you know, all the things crypto bulls for many, many years have been in gold bulls for many, many years have been talking about, which is debatement. And so starting in August, we had the dollar debatement via yen intervention. Then we had the coming out about the repo facility. And like you said, the QRA and now this coming after the QRA, which is a very unusual thing because clearly they met, you know, outside of the normal, quarterly decision making process here. And it's, you know, just so happens that there's a midterm election two and a half months away. So I think that reading the tea leaves for the last number of weeks, it's been clear that they are choosing the inflation and debatement path to support markets. But that is very different than things being okay, because there's, you know, for example, straight up or moves still closed, there's absolutely zero signs of a deal, commodity flows. If you look at the price of oil, I've been long, I think it literally is just ticks up every single day without anyone really talking about it anymore. So all of the inflation and things that make bond markets unruly are there and currency problems of volatility. It's just that they're printing money and artificially devaluating, you know, inorganically, not artificially, it's absolutely officially, you know, what it is, but inorganically devaluating and intervening. So I think it's interesting because it sets up, you know, the midterm elections are a big, big date in two and a half months. We're still two and a half months away. And this is happening on a weekly basis. So, you know, one, how big are the problems that they're doing yield curve control when the S&P 500 is at all time highs? This is crazy. In 2023, I just tweeted some of the stuff I was writing back then because sniffing that out led to an extremely profitable period. But that was after a huge correction, bond yields were well over five. Stocks were down 12% I think at the lows and they came in and kind of fixed this. Here, there's volatility already stifled. Dollar, you know, was already weakened. Stocks already at highs. So it's, it's pretty unprecedented, really. I mean, this is Japan stuff. And if you want to know how this ends, go price, gold, oil, and anything else that's a hard asset in Yen. Because this is the playbook, they've been doing yield curve control and all these things for years and years and years without more obvious problems, which is what the standard used to be. So, for me, you know, inflation and debatement are the name of the game. They have been for a number of weeks now and this takes it into overdrive. And, you know, Bessent also knows all this. And he knows what this is going to do. And he knows that the outcomes in the side effects this produces. I mean this guy is very intelligent and knows it. exactly what's happening, but there's political incentives that he asked to play for. So, you know, row with the stream, and I would imagine he doesn't want a six, seven, eight percent inflation problem in 2027. Uh, so I'd imagine he will take the air out of this via, yeah, but there's a ton of run right now for them to really goose it. But exactly. We're two and a half months away, and this is what's happening. So I'm just, you know, we've been getting long and long and long for the last few weeks inflation protection. And, um, I guess, weekly now, there's an announcement that keeps it coming. Yeah. Yeah. It's, it's crazy. I think, yeah, for me, the signal was, look, back in, I don't know, imagine, we were, we were in the dark. We didn't know what the plan was. We didn't know what the playbook was going to be. There's a lot of question marks around washed. There's a lot of question marks around. Bessent, I mean, just literally like a week before that Q or A, there's talk of, oh, are they going to, are they going to signal hawkish that they might actually start to normalize the amount of issuance on, on the long end. So, you know, there's a lot of question marks and it's become extremely clear what the plan is. And the plan is to manage the long end because look, this is just a, it's a repeat of everything we talked about in the last round of two weeks ago. Like, the AI build out is now being funded on the marginal basis by debt issuance because operating cash flow has been tapped out. So they're going to the corporate bond market. The corporate bond market is anger to the long end. We've been seeing this, you know, they are hand and glove here and making sure that those yields don't get in really because we need to build that, the AI build that because we're in a rate, it's a geopolitical game against China. So they need to make sure that this happens. You know, wars just talked about AI a lot. He's on top of it, Bessent's on top of it. So that's, that's the one big leg that they're trying to focus on. And then in the same vein, there's this, this idea of emerging fiscal dominance where marginal policy moves treasury. It started with with yelling and here we are now. It's, it's big. One thing I want to tell you, so a couple of years ago, 2024 student ran in Nureel Verbeni, wrote a paper called activist treasury issuance. And it was really just piecing apart everything that yelling was doing back then and putting a name to it. And it really provided people with the vocabulary to understand that this is just, you know, if QE is on the taking duration outside of the market, all this stuff is the, we're just not putting it in at the onset. Or we could even make, I mean, you can make the case with these buybacks even that it is also taking duration now. So, so they wrote a paper back then. So this morning, I pulled it up because I wanted to go just, you know, reflect on what's in there compared to this announcement today. And it's just, it's illuminating. So this paragraph was about buybacks within that paper. And the most interesting part. So the best way to contextualize is like, what does this really mean? Is it QE? Is it not? It's the best way to look at it is just this, this, this uh, this section here. Basically, it's fiscal operation twist. So whereby the Fed lengthened, so when the Fed did it, they lengthened their duration of its balance sheet in 2011 by selling short duration securities. So T bills and buying the long end. If treasury decides to ramp up the bi-gram and does so by issuing bills, it will have a stimulative effect on the market as the Fed's twist program did 13 years ago. Removing duration held by the public and replacing it with more money-like instruments bills will be stimulative. This will particularly, this will be particularly the case as treasury increases, the size of the program while adhering to its Ford guidance to not increase coupon options. So they're adhering to their Ford guidance. They're actually making the Ford guidance even more dovish. They're increasing the buyback significantly. Like we, this is the playbook, obviously. Like, it's, we're ramping into midterms. They're gonna goose it. The Basin trades back, man. Yeah, it is, um, it is notable, I think, too, that they all have laid this out. And, and that's why I think it, it's, you see a lot of stuff on Twitter that kind of sends people for a loop and tailspin if you're, you know, depending on your, you're playing this, because like, this is nom, this is debatement. And so if you're just outright short, like, that's going to be tough. And so you have to, you know, I, I, I can make a case to short NASDAQ or other parts attack here. But I continue to believe that that needs to be paired with the inflation protection on the long side, because if, you know, nominal number goes up, you, you don't really make money on the short side. And so, um, but, but you'll see people kind of pretend that these guys don't know what is going on here. And the other thing I would say is they know full well. The other thing I'd say is from an economic perspective, just to play devil's advocate, looking at the housing data, coming in of late construction job growth, uh, things like this, more good rates, you know, back to cycle highs into a, you know, negative real wage growth type of environment as inflation has come back. There's some, like, you can make an economic case for the consumer in main street why this makes sense to do because the, the forward indicators when real rates get as high as they are, they are creates problems, definite problems. And so this is effectively front running that before the problems show up, the construction job layoffs, the housing market coming to a complete stop and having to, um, you know, to, to really stimulate much harder in a bigger event. So, I'm sympathetic to the, the camp that's like, wow, they are running this so hot they're going to have to slam on the brakes at some point. I'm sympathetic and think there is an element of that. But on the other hand, the people at the helm are literally writing the playbooks years ago as to what is going on. And they are doing it as they wrote the playbooks. They obviously know the ramifications and are making a concerted, like, a decision based on all the information at hand that that is the path they want to choose. Which, so, so you have to play that and, and say, okay, they know that this is going to run a hot. Are they going to end up slamming on the brakes at some point? Maybe, but you will have to see a meaningful change in, in their behavior. And in many regards, as we've been talking about the, the hawkish balance sheet policy of the rhetoric of the fed that has lifted the long end and real rates with it is breaks on parts of the economy, like housing, asset markets, that now they are trying to sort of offset, you know, in a more covert way. So it's not looking like overtaking a fed independence and these sorts of things. So there's a lot going on. It's a, to me, it just exemplifies the sort of problem that kicking the can on on deficit spending for years and years and years culminates in where even the most vocal critics have to succumb to, to the remedies because of how bad the situation is. And again, like, there's another video investment, I believe, from, from a little while back, which was like you sort of have to let the bond market, like lay the law, or Congress will never change the behavior of the spending. And obviously, they're not going to do that two and a half months before the election. That is all Republican control at the time. But, you know, keep this in the back of your mind. It's very likely the Democrats are going to at least win the House. They might also win the Senate. Trump's approvals are like some of the worst of any presidents ever seen at this juncture. And what better way to say stick it to the Dems, you know, in their first kind of split count, Congress, you know, session early next year, then to, to let the bond market go and say fix this and cut your spending. Because those didn't work. Yeah. All of the other things didn't, terrorists didn't work. All of these other things didn't work. It has to come from real legislative changes. And you kind of need a crisis or event to put that through. And that is, you know, obviously, they're not going to do that pre-election. But at some point after that is something to be think about in my opinion. But again, there's winners and losers of this because look at housing stocks. They're a big today. Look at the NASDAQ. It's like teetering between almost being down for the day. So yeah, yeah, it's interesting to me because like, if you take that approach, like think about it with that anger, you're like, man, what does get the NASDAQ? If they, if debatement and like it doesn't, what gets it up? Yeah. The cross asset price action today in light of this is actually really, really interesting. So yeah, to your point, let's just go through it. The queues are down today, 10 bips. SPY's up 30 bips. The dollar's down 75 bips. The long end is, you know, down as you'd expect on yields. You have gold that is up three and a half to four percent today and breaking out almost 40, almost 4500. You have Bitcoin that is that, you know, just saw one of the actually biggest short liquidations. $1.27 billion of shorts got liquidated on Bitcoin. Sorry. We talked two weeks ago. Like, don't short this market. Are you insane? Like, the pain has already-- you don't want to be shorting something. Don't short a dull market, right? Like, it was just chopping it anyway. So Bitcoin's up, gold's up, dollar down. Equities are kind of flat in this reaction. And I do think that's really interesting. Josephine put out a tweet this morning about how-- he has this framing of dollar wheat, so much of the flows into the US equities is from foreign investors. Actually, I have a chart here to show. You look at, especially lately, the rolling six-month net foreign purchases of US equities is just absolutely ripping. So when you see dollar weakness, that actually is a potential headwind for US equity allocation from foreigners. Because of the effects, hedging-related aspects of it and opportunity costs. So it's really interesting. And it really just shines a light on during these moments. Back in 2021, it was obvious. Everything goes up, QE infinity. Ever since then, Macra has been a lot more nuanced, where you have to understand these levers that they're pulling and the potential impacts. Because as we talked about, OK, with this approach of treasury manipulation or suppression of the long end, you want to be more directly exposed to these debasement rates. So precious metals, gold, Bitcoin, et cetera. Short dollar, maybe. And it's really interesting to see how well those are doing while the cues are down on the day on such a clearly macro-positive event. Yeah, the dispersion, you can see that in correlations and everything is huge. And I also just think back to this, if you just zoom out and you're like, if stocks are already at all-time highs and you're doing this to base the currency, at some point, you'd imagine too much of a good thing in the sense it sends a message to global investors. They're like, hey, you hold all these US assets that are already at peak valuations. And we're going to just crush the dollar. So do you want to sit in these while they tread water and the dollar debases? Or do you want to probably make moves and send that capital elsewhere? And obviously, there's a huge rotation of capital flows from these assets. Because if you look at the NASDAQ and US stocks, less the currency impact, they're all down. The NASDAQs then down huge, right? Because the dollars-- so if you're a foreign holder of US assets here and you're in the NASDAQ, you're down-- what, you know, like minus 0.5 to 1%. So I think that's something that might get lost here a little bit is, yes, this is a market support and intervention mechanism. But if it sends a message to the market that's too inflationary and too loose and says, you're going to lose control of the inflationary ramifications of this, then it can backfire. Because the market will say, we'll screw you. I'm taking my ball, I'm going home. Because you're about to do some-- you're going to really dent your currency in purchasing power and inflation. So it's a wonky one, man. I guess we've been talking about this dispersion for a while and saying, the indices are what they are. But the opportunity is in the rotation of their hood. And it's just fascinating to look back at huge blow-off in metals to start the year. Huge correction over the last bunch of months while semis ripped, semis blow-off, metals bottom. It's like the baton just passing back and forth. And I don't know why you would fade this, I guess, given the runway the next few months. Yeah, so that runway, to me, feels like it's game on until February. Obviously, you need to see what the actual results of the midterms are. But high confidence interval from here until November, it's just fucking goose it. November to January depends on how things pan out in terms of the outcome. But after elections, it takes a bit of time for Congress to get set up and everything and everybody's sworn in and all that stuff. So nothing really happens until February. Then February, assuming that we continue to be reckless with financial conditions like we are, I imagine inflation is going to begin to accelerate higher here. Suddenly, you get some nasty prints in Q1, 2020, 7. And yeah, to your point, it's like, OK, now we got to get the reins on here. And oh, look, we can't get in control of fiscal spending because we have a deadlock Congress. Yeah. That makes sense to me. Yeah. If you recall back to the other similarity of 2023, obviously, besides the intervention here, is the we had a big sort of inflation scare in the middle of that year that led to the Fed staying hawkish into Q3, kind of caused this correction. The equity assets took a dive. Oil was, what commodities were ripping. Oil was up big. I think we had, well, I think, yeah, the first kind of Israel, like the Gaza stuff was, I think, in 2023. So you had this inflationary impulse. And then they-- that leads to the correction. They do this. And then in 2024, again, you had another inflationary impulse. So I think what you're saying is spot on that people should bookmark, which is-- it best and also knows this, right? So like, the real rate rise over the last few months that was digested very well by the market then dampens the growth coming in the next three to six months later. And then that pushes the inflation readings down there. But then you're still in this hawkish period. You get the stimulus. You get the support. And then they do this. And that's inflation. So it's just this constant game of kicking the can. But the Fed is just-- there's really nothing the Fed can do here. If you think about, like, what I would forecast for inflation for the rest of the years, kind of just bouncing between around three and a half. And so it was really no-- even if you look today at Silver Futures, when I checked this morning, they were down, meaning market priced in an incrementally more hawkish view of the Fed, which makes sense because if they're stimulating in other means, it means there's less likely that the Fed needs to or can stimulate. And so that makes complete sense to me. But you're just going to have this continued hawkish, hawkish, and no act, which-- Yeah, the two-year yield is up today, which is interesting. I mean, I'm really curious what Worse is going to say next week, man, because in my view, the inflation pressures are just smoking you in the face. Agricultural commodities are ripping. Oil's ripping, diesel's ripping, gasoline's ripping. Metals are now ripping. Screaming, screaming inflation in a forward looking manner. And what is Worse going to say? In my view, he's kind of extinguished his ability to maintain credibility. Or it's getting along in the tooth to maintain credibility of this hawkish stance with no action. He's trying to talk yields up and primarily through the balance sheet and being hawkish there. But if he doesn't come out and actually do anything, which in my view here would be talking about the changes they're going to make to the balance sheet, meaning reducing duration and typing. Because they're not going to cut. So if he doesn't do anything or commit to anything from a balance sheet perspective-- or they're not going to hike, excuse me. They're not going to hike. Yeah, yeah, yeah. So if he doesn't commit to anything hawkish from a balance sheet perspective over the next, let's say the Jackson Hole speech and then into September FOMC, yeah, forget about it. I mean, there's zero reason to offload. You need to just hold on tight to your inflation protection. Yeah, the short rate thing is very interesting, because it feels like a lot of it I read Harry in many ways. I mean, so much of the talk was on this hysteria for a potential hike in July. And I don't know, maybe the same thing will happen again in September where there's this hysteria on the short rate. But yeah, it feels like he's just going to keep dragging his feet as much as he can and stop his committee from being divided and advocating for hikes. Like, yeah, they're obviously not going to cut pretty high confidence. They're not going to hike either. They're going to try and keep it neutral while pretending to talk hawkish as much as possible. Maybe use some of those task forces to try to talk tough and see like he's trying to take things seriously. But in reality, in the background is what Besson's doing. And we all know Besson and Worsh are very close and Besson advocated for Worsh to be that the Fed chair and that was, you know, and they'll talk with Trump. Like they're all talking, this is a concerted policy. And the concerted policy is to, you know, have the Fed look like they're talking tough while avoiding doing anything. Meanwhile, in the background, the essence is easy. Yeah, exactly. And it's working now because it's not the main street public, right? It doesn't doesn't see the inner workings of the debt issuance. And yeah, all the efficacy of the tools decline as they become used in hit mainstream and, you know, just get priced into the markets. And that's what you're seeing with metals today. But my message to people listening is like, you know, I think I talked about this a few months ago is over the next multiple years, inflation is coming back. They're going to suppress the cost of capital, things like housing. Like we talk about the affordability crisis and high cost of capital, these things. But it actually can get worse. And it actually will get worse because there's still two years at a minimum, two and a half, two years of this before, you know, maybe AOC or someone comes in and kind of takes a more burn it down approach. But even then, it's going to be inflationary, placement costs are going to rise, et cetera. And housing is the only asset you really can get 30 year fixed rate debt at 5X leverage or more in the US and not really have liquidation risk as to me, you know, don't get over your skis. So you need inflation protection. I mean, you just really need inflation protection. Like this, this is, this is ining one. And I do think, like we say, best in those what they're doing and knows the problem this will recreate with inflation. And we'll do things to try to press, press downward cyclically after this run at hot period of for the midterms. But even then, they will not cause a recession. They, we know there's no appetite to phenomenal job losses or GDP declines or anything of the like. And, yeah, it's, it's pretty, it's just crazy, man. I don't think, I don't think, like even us, we're talking about this and pretty astounded. I don't know if we fully grasp how my tweet said it's, it's, it's, it's, completely unheard of for developed nations, particularly the empire and the global hegemony to be manipulating currencies and bond markets to this extent with no, no visible problems. Yeah, stocks at all time highs. And, and so given that expect things on the other side that are also not normal for global hegemones and superpowers in developed nations, which is this inflation problem. And yeah, of course, they're going to fire the BLS guy and there's going to be changes to the inflation metrics and worse is going to switch to trim mean when it gets out of hand and all these things. But we are staring down the barrel of a very interesting situation. And this is also not saying go max short markets for the reasons I talked about earlier because the nominal numbers going to go up. But yeah, it should be the opposite. I think, I think people mix up the sequence of events of inflation protection assets quite a bit. Because like, look, over the last six months or so, I would say that one of the biggest drivers of markets has been inflation fear and worse being hawkish and gold hasn't done very well. It's actually been down. Bitcoin has been not doing very well. But it's, it's not about, it's almost like implied valve versus realized valve. Like when you have realized inflation is actually not really good for, for these inflation assets, which sounds paradoxical. But it's more so the implied expectation of inflation and the lack of commitment to fixing it. So right now is like the perfect time because we had this idea of max hawkish that we've been talking about at a time where there's expectations of them hiking in July didn't formulate. So you had the market all in on that one direction. And then you have the sequence of events of them loosening and loosening and loosening. And that's the time where inflation hasn't, you know, yes or above 2% obviously there's inflation. But the inflation that I potentially expect if they continue to be this reckless with things could be a lot larger in 2027. So you want to ride the ramp in that implied expectation and then sell when it gets realized. So you know, like if you're, if you're trading options, right, like you're not, you're not buying the call option when implied valves in the top tempers, like in the 90th percentile, you buy it at 30 and you sell it at 90 when realized valve is elevated. That's, I think, I think that's a really important way to keep in mind that the sequence of events for these things. You're still on man. I mean, the simplest way to say is the markets are forward looking much more than the economic data and the Fed. But it's exactly why we've had the Fed pivot hawkish at, you know, in opportune times in the last bunch of years. And then, and then also pivot dovish at in opportune times because they end up, you know, in 2024 when Powell made the big cut in September and bond yields started to rip and, you know, everyone said it was a policy mistake, you know, whatever politics, et cetera. And the other thing of that is is people who like, you know, kind of perma Bitcoin bears will always say, oh, so much for the inflation protection asset, it's falling when, you know, the inflation comes. Because it ran 400%. And then when they cut the year before, yeah. Yeah. When they height rates to stop inflation, then you're reducing money supply. And exactly what it hedged is now doing the reverse. And this is one of the times where I mean, just take a look at the bond market before today, the yield curve was steepening consistently. And no matter what happened on the economic side, we got two months of soft inflation, two months of soft jobs, soft retail sales, shitty housing data, like every reason for bond yields to fall, they just kept going. And everything about that was saying, one, there's a structural supply issue, probably a structural demand issue, and a structural, you know, inflation issue, some combination or two hot of nominal growth, which is inflation plus real growth, some combo of that. And also keep that in mind, then when they do this action to intervene in the bond market. Because at the end of the day, what they're doing here is not that crazy. It's, they're buying back long end. They still need to issue more debt to make up for those purchases, but that debt is then going to be more skewed towards the front end and bills, which we know, you know, there's demand for via the Fed and front end. So yeah, yeah, it can get so much crazier. Yeah, yeah, yeah. Like, like, you know, the extrapolation of where this goes is like this. It's, all right, Treasury is issuing 20, I don't know, 10, $20 billion a month of bills to buy back off their own long end bonds. But then at the same time, the Fed is buying 10 to 20, like, it's matching that T bills with buys. Like, when you get those two happening, what that's literally debt monetization. Like, that is, dude, this is, that's the, that's the Pandora's Box situation where literally it's, I mean, this happened a little bit in 2020, like late 2020. The Fed was buying, buying bonds, buying debt from the primary market, from the Treasury, not from the secondary market. It was literally hand and glove debt monetization. That's the next leg here is that, okay, the Treasury is taking out long end duration. They're funding it with bills, but then it's really being funded by the, by the Fed. Like, that's where we can go. And we're not, we're not there yet. So this, so yeah, just like, keep in mind that to your point, this is ending one. If, if we need to get there, we can get there. Yeah. And, and gold in the 70s, which if you want to use that as the last time we had real ramp at kind of secular, secular inflation, gold did like a 20X or something plus, I think. And, you know, we were like, what, a 3X off the lows or something here. So that just, not saying that's going to repeat, but it gives context as to how long policy makers will kick the can down the road in the face of what seems so obvious of ramifications and side effects. So we're sitting here and finished it and it's bubble is saying, holy cow, I can't believe they're doing this. This is so inflationary. But if you go talk to people and, and, and ask them about this, they'll have no idea what this means. When you tell people this means, you know, three and a half to four to maybe five percent of players. is almost a guarantee over the coming years, they think you're crazy first and then you look back in a history and look at these times where you have to quote unquote grow your way out of the debt, run a hot, which don't happen that often, but when they do, they happen very seriously, like the 70s, then you see that these things run for a very, very long time. In the same way that the stock market ran, you know, unfettered basically from 2008 to now, essentially, without very, many drawdowns or big drawdowns or long drawdowns, that's probably the equivalent of what you're looking at from an inflation cycle in terms of commodities and all of these unloved, under-abested assets, because if you're continuing to spend six plus percent deficit to GDP, you're going to get nominal growth around there, which is inflation plus real, and that's the spending side and then you're monetizing on and debasing on, you know, the monetary side. So it's just a, it's a crazy cocktail for, for debasement of currency. Yeah, we, we've hit this point hard. I mean, there's probably even, you know, we can talk for a long time, but I think it's been stagnant to the other stuff. I don't know. Yeah, I don't think anybody's unclear on our position here at this point. I mean, it's, yeah, like to me else, it's not a whole lot else going on. I don't know, unless you have anything big else, but okay, so I mean, I mean, we talk a little bit more about asset allocation. I mean, we talked about obviously, gold's a beneficiary, Bitcoin's beneficiary, dollar shorts, probably a good one. Anything else in your mind that you see here? Yeah, obviously, yeah, Bitcoin is a commodity in my view, and I think that today's move started to make sense over the last few weeks. It's traded, traded quite well, and you have everything else ripping. Every time these intervention tactics happen, it tends to move. I do, however, continue to like the commodity, the other hard asset complex better, just across metals, beta metals, oil, just given where we sit to politically and the sort of tensions and things that are coming down the pipe that I think will be in further demand, and also supply demand. I mean, if you look at the oil situation, I think it's much more dire than, you know, we've been desensitized to the headlines of the straight-ahort moves for many months, right? You just get tired and you want to move on from the topic, but I actually think it's getting like, you know, watch me say this, this will air tomorrow and we'll have some fake Trump taco thing. But the facts are, in my opinion, the US is not leaving this straight with Iranian control, you know, handing over, and that means this is going to last. And you have global reserves being drained to very low levels, you know, they've been being drained for six months now, and you've had a demand side factor of China reducing, you know, the largest import of oil in the world, reducing by extremely drastic amount. That can't continue in perpetuity. And if you look across the commodity complex of assets that don't have the strategic buffers that crude does, gasoline, the finished products, the heating oils, the sulfuric acid, etc., they're all sort of, in my opinion, sending a signal of what's to come once those emergency measures run out for crude. And that's the big inflation bug that like, you need the oil crisis to really ensure there's a true inflation issue. And I do think that is coming at some point, barring, on the path we're on, that is coming. So it's either the straight gets resolved in the next three months, or that's coming. I'll just do what, do what, you know, respond to the news, but the nice thing is you get paid away that the positive role you'll create to carry that helps long investors and all features to the tune of 20 plus percent year-to-date, like almost 30. So yeah, yeah. It's a really interesting setup. And you're going to have to deal, you have to size it appropriately, because you're going to have to deal with these tape bombs from the Trump ad men, with, you know, all just all the, you know, the headline jockeying that's coming. But as far as assets that like obviously seem very obvious, but I'm very constructive. Look at XLE, it just absolutely tore out to new eyes. Last time that happened, it front ran a big, big move in oil, the commodity itself. Wouldn't be so surprised if that's happening again. We've seen the same behavior in gold miners front running the moving gold. Yeah, I really like. Wow, yeah, XLE broke out from the highs in the end of March, that's wild. And you look at these other things, again, that you can't suppress, right? Yeah. You're not like the treasury is going to go and sell short eggs on mobile, right? And try and suppress the price of oil equities. They're going to do that in in oil futures, you know, they're going to drain the SPR reserve and, and sacrifice the future resiliency of our, of our, you know, crude reserves, et cetera. But if you look at some of these indicators that kind of I think are leading the way of what's to come, barring, you know, don't say, oh, you did, they just reopened, you know, okay, this changes if that happens, but I don't think it's going to happen. It might. Yeah, MOU type of bullshit in front of midterms. But that's probably the other thing I'm thinking about. And I still don't like tech. I think semis are probably putting in a right shoulder, if I were to guess like we have the anthropic IPO coming up in October, which if you remember back to the SpaceX IPO, it was sort of throw the kitchen sink at this market to keep it elevated to get this extremely important trillion dollar IPO off. And then we did and that marked the top. So, I mean, it doesn't play out the same way usually, but could it? Yeah, it did very well could. I don't know. What are you, what are you looking at? Yeah, um, I'd probably agree on, so look at the tax side of things like the sectors there. Like the model providers. I'm probably definitely not like, yeah, I'd probably wouldn't be buying a therapist these pre IPO levels or whatever it's at right now. Um, the memory side of things and all of that, like, I think there's actually some some fairly fundamental shifts happening, but the technical market structure side of things is just like there's so much burnt money there right now that it's like, you just have to work through that. It's going to like, like we said, like, you know, the, I think the bottom was probably put in, but it's not on like memory, but I don't think it's, yeah, it's just going to chop around, I think. Um, honestly, what I find the, the Neo clouds actually really interesting right now, like I think, I think there is, we're going to this next level of compute shortage in some ways. Um, like you have, so you had this news this week of open AI talking about how they're pausing model pre training because of AI safety related concerns and like, you know, that's typically something andthropic does open AI is kind of just like a acceleration this more so. And it was just, it's quite interesting to see them start to talk like that. Like yes, of course, maybe they saw something that was like, oh my god, we got to stop training or are they just out of compute? Um, and then like right now, you have, like, there's been some interesting shifts in terms of agenteic workflows of like, like, like Rockbot came out recently, which I've been playing around with, which is like really powerful, where suddenly you're just getting like multi agent orchestration. And like, the, the compute demands for that are another leg of nonlinearity. If you think about like, initially it was this like singular chat use, then it was agenteic work. And now it's like, you know, multi agent orchestration. Um, I don't know, I think, I think there's a few different things that, that get me somewhat constructive there. Especially at the same time, if they're tamping down on the long end of the yield curve and the associated credit spreads with the hyperscalers and that sort of thing. Yeah, I like that. Um, I think like the health, the health care innovation sector is also like, I don't know if you saw what happened with this Moderna trial to, it's not like 150% today, because they basically fucking cured cancer. And like, you got Eli Lilly and what they're up to, like this, I think it's, it's a really powerful expression of AI adoption is looking at some of the stuff some of these, these companies are coming through with. It's like, one, it's incredible. Like if everybody has a family member who suffers from health disease, like we, we all have been hurt from that. Um, it would be an incredible thing if, if we start to see some of that get, get some more. So I mean, that's yeah, like I'm not top-lasting Moderna after it went up 150 percent today, but it's like really cool to see. I think that these things are happening. That's true, man. Like we know how America, how much Americans love their, their pharmaceutical and, yeah, we'll, we'll take take any sort of, rather than take the hard medicine of exercising and cutting stuff. We'll triple down on the spending money to fix the problem. I think I'm not as deep on all the AI stuff as you have been. But that stuff makes a hell of a lot more sense to me than still chasing semis up here. We've already seen the 80 percent margin prints on some of these AI CapEx bottlenecks. We're seeing, in my opinion, peak spending, whether it's this quarter or next quarter, whatever. Once the frontier labs stop juicing their numbers when they're all public, there's going to be some come to Jesus moments for either cost is going to have to rise to make up for it or growth is going to come somewhere. And the biggest beneficiaries have seemed to me like Halifes is a big one. Maybe some somewhere in financial service and agentic payments, but the health one just seems like a huge, huge, especially while you still have like RFK and Trump. So I get that. I'm not as deep. It's also a defensive sector generally, which I think is making it attractive. Like, yeah, health care and these things outperform in a like down-tack type environment, which when we're talking about rotations, probably prudent to be in. But I like that, man. I mean, it's definitely tough. You have to be finding the areas that that you want to be long in this market into midterms and staying away from, I think, the areas that took the cake for the last six months. We were saying this at a different time, whether it was in January or some other time, or it's like, find the unloved things and spend time there. And it's probably going to end again. Yeah. Sweet, man. I think we live there. Yeah. Obviously, you know, if people need it, head on their head, obviously a pretty big regime shift happening. Like, you know, I see it as durable, at least until the end of the year. Yeah. Yeah, definitely. I mean, what put it this way, why are they going to intervene week over week over week over week, like four straight times in August, and then let things fall to shit in September and October and November. Right. Not saying they have other complete control. Not saying that's the case. Yeah. But they are, why would they stop trying to prop things up a month or two before the election? And so that's saying, maybe it doesn't work. And AI stuff cracks up here, whatever, but long the stuff that benefits from their attempts to make it 100%. So you did. Well, good stuff, man. That's a good one. Yeah. Have a good rest of the week and see you for the next one. Sounds good, brother. Take care. Nothing said on Ford guidance is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show or solely their opinions, not financial advice or necessarily the views of block works. Our hosts, guests, and the block works team may hold positions in the company's funds or projects discussed. As always, investments and blockchain technology involve risk, terms, and conditions apply. Do your own research.