The Bond Mystery
Q2 earnings were strong, but outside AI, earnings growth is likely to slow in Q3 with the one-off tariff refunds behind us. Inside AI, token prices are falling faster than token volumes are growing. Fear may keep the AI capex boom going for now, but eventually the economics have to matter.
The Case for Selling the YEN
The weakness of the yen reflects increased term premium under Takaichi and loss of competitiveness. The intervention provides an opportunity to sell it until the next intervention becomes necessary.
The New Macro Regime
Forward guidance was appropriate when the Fed was constrained by the zero bound. However, it has encouraged excessive risk taking in recent years. By raising uncertainty, the new regime of no forward guidance may have burst the AI bubble.
The Oil Market Is Missing This
There is one major difference between the US strikes against Iran over the past 2 weeks and the campaign we saw in March. That difference is why I think the oil rally is not over.
The Bond Revolt Has Begun
Long-term bond yields are decoupling from inflation expectations. What are growing signs of strains in the bond market telling us? Why inflation readings this week reinforce my bullish 5s-30s steepener view.
Will Trump Blink Again?
Iran has tolerated shipping through the US route in expectation of receiving frozen funds. That expectation has changed. Trump cannot release the money now, with Iran hawks reasserting themselves, and his personal finances under scrutiny.
The Real Yield Conundrum
Real yields are approaching the highest level in this economic expansion despite the retreat of oil prices. What is the market missing? How will it end?
America’s Strategic Defeat: Investment Implications
The Iran deal is long-term bearish for the USD & US defensive stocks but short-term bullish for India & Canada. But I am not optimistic the deal with hold. Political backlash in the US only just started.
Iran Won’t Let Trump TACO
Oil is trading on the assumption that Trump is looking for an off-ramp. What the market is missing is that Iran will make him pay through his nose for it. I explain why Iran won’t go for an interim agreement.
What’s Driving Bonds: War or Tokenmaxxing?
In my view, tokenmaxxing has played a larger role than the oil shock in driving the repricing of real yields. Why steepeners are once again offering better risk-reward than outright shorts.
