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Paulo Macro Profile picture
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Feb 15 • 5 tweets • 1 min read
So a few things bugging me — call them glitches in the matrix that have my eyelid twitching.

1/
Everything right here - fundamental, technical, macro - suggests a move higher in precious metals (reflationary overheating/late cycle cyclical value) but the context of market action is decidedly bearish. Bugs me.

2/
I have been struck by just how resilient copper pricing is as notable contango reemerges. I get that it will take another few months for the metal to really start to move and the credit amd liquidity impulse underway in the Far East needs time. Still bugs me.

3/
The HKD bumping up against 7.85 for several days now. Is the Kyle Bass trade finally gunning it at a time when people least expect? DK, DC (normally)…but why is capital fleeing now when China is busting loose? It bugs me.

4/
I am not complaining, up on the year, but very uncomfortable like the market is itching to take me to school, send me the tuition bill, and make it a big one.

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More from @PauloMacro

Paulo Macro Profile picture
Feb 16
So I have been griping about copper leaking into contango in the front months. What a difference a day makes. Can anyone explain to me WTF is happening in Comex over the past two days?
1/
I mean, I get the nonsense that can happen with front months that aren’t actives (see Feb-Mar)… fwiw when this happened with Feb2021 Henry Hub on last day of trading, two months later HH had doubled - just saying these glitches in the matrix *may* augur something bigger…
2/ Image
And now March-May (next active) has blown out… are we supposed to think that China is really going for it once the cold is done and the metal will *MOVE*?
3/ Image
Read 5 tweets
Paulo Macro Profile picture
Feb 11
This narrative attempt at “job replacement is coming” will fail bro. Heard that about automation for 15yrs, now it’s AI.

True story about my day yesterday:

Kid #3 gets ear infection, needs to be taken out of school to doc. Conclusion: ear tubes required. Sigh.

1/4
On way out nurse hands me papers and says “pick one of these surgery dates. We are really understaffed so pls bear with us.” Exact quote. So I look and dates begin in mid March. That is the soonest available. Kid will just be mostly deaf for six weeks, whatever right, no big. 2/
On way home I figure lets swing by Chipotle cuz daddy hasn’t eaten. Door locked. Staff inside taking online orders only, usually ~10 people working, I see four from the street. I ask the girl who unlocks the door, she says “sorry a bunch of people didn’t show for work today.”
3/
Read 4 tweets
Paulo Macro Profile picture
Feb 4
This is great Sam. Just a minor difference in view from my end (talking my book here, so a big grain of salt to go with my 2 cents):
1/22
Markets are in a weird schizophrenic moment, with a burst of euphoria in equities on the one hand (where speculators are flooding back into what worked in the bubble just as momentum factor in L/S blows up), and disinflationary collapse pricing into US rates on the other hand.
2/
As @donnelly_brent mentioned earlier, the -50bps in late 2023 rates isn’t the beginning of a gradual cut cycle, but a probabilistic reflection of, say, a 25% chance of an aggressive -200bps response in a short period of time to a recessionary collapse.
3/
Read 22 tweets
Paulo Macro Profile picture
Feb 2
Let me walk you through what the nature of this quant quake really was. HFs have been grossing up but keeping nets low. The gross leverage is a function of the decline in both rate vol and eqty realized vol (as well as implieds, lower vix - (for portfolio margin haircuts).
1/10
But given the lack of conviction in the bounce, net exposures have been low.

The Fed greenlighted “more cowbell.” So net needs to go up fast, or you get left behind on Feb 1st and suffer career risk.
2/
There are two ways to take nets up - buy more longs (which takes up gross), or cut shorts (which takes gross down). The latter was the problem today but on two fronts that were highly correlated.
3/
Read 10 tweets
Paulo Macro Profile picture
Feb 2
I find it ironic that many fintwitters thought the Bolsonaro November protests in Brazil were going to result in some coup rather than just a silly clownshow attempt at Jan 6th. Ask the vast majority of Brazilians and they all would tell you then: “nothingburger.” 1/
It takes stones to dismiss some sht like that out of hand while people are pissed and breaking glass, but you have to know a place, its context, its history. This was an easy easy call to make here -

And here -
2/
What’s the irony? I must be the only cloudbear on here who sees the riots in Peru as a HUGE ISSUE and NOBODY cares. I think it’s a testament to the Year of the Tails that we just went through - now in 2023 it is cool to shrug one’s shoulders in the face of real risk.
3/
Read 24 tweets
Paulo Macro Profile picture
Jan 28
If anyone remembers Cigar Lake FM - just remember U was in surplus back then and that flooding kick off a panic. KAP is telling you they are gonna miss 3% of GLOBAL production. It would be the equivalent of the Saudis telling you they can only do 7mmbpd this year instead of 10.
This is an *enormous* number in the context of a DEFICIT market where enrichment has already skyrocketed and the underfeeding to overfeeding swing impact is still in front of us.

Supposedly miners were buying physical this week too.
Guys, literally everyone in uranium is a buyer - miners with overcommitments, enrichers who forward sold underfeeding tails, utilities, Sput - this thing is nothing less than a topside accident in the making.
Read 4 tweets

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