1/25 PRIVATE EQUITY ZOMBIES PART I:

THE BIG FAT REGULATORY ARBITRAGE BETWEEN BASEL II BASEL III

How the Boiler room of procyclical mark to model under Basel II in banks leading to the GFC was stopped in banks by Basel III but moved to NDFIs - private equity not subject Basel 2/25

It all started in 2000 with IFRS accounting. The EU endorsed those procyclical standards even though bankers and politicians in Germany and France were against it, as they fear that accounting procyclicality would promote “irrational bubbles...

1/20 PROVING THAT BITCOIN IS A LIQUIDITY DECOY WITH SIMPLE DIFF EQUATIONS.
“HODL” on to your socks. (a bit technical)

ALSO The Fed is semi-lying, in fact, about “We would lose control of interest rates without IOR.”

docs.google.com/document/d/1n1… 2/20 Well, the opposite is true (long term), in fact, when the portion of interest-receiving reserves converges to 1.
IOR is convenient in the short term but lethal long term.
(Patience)

1/25 Can a push in a new tech prevent a credit correction in bad credit areas?
Maybe, but there is a precedent in 1885 2/25 After the 1873 Franco-Prussian war, there was first a credit expansion. The beginning is the prosperous part but this credit extension as usual ends in degenerations in Minsky asset. The Funny thing is that people today even claim “degen” as an basis for investing!!

1/15 UST Bonds Stuffing & National Security
Moreland, in his presentation about Morgan Stanley, shows how much the bank has been stuffing into UST and explains how, typically, “banks,” for some odd reasons, have an ability to predict rate cuts.
Here? Fiscal dominance twist... 2/15 Morgan Stanley is not the only one to be stuffed with U.S. Treasuries,
BUT this has had ZERO impact in reducing the 10-year UST.

1/22 YIELD-PIGGING AND BUGS IN THE WINDSHIELD
Credit problems in history are almost ALWAYS due to yield pigging BTW.

(There is evidence of that when looking at investment-grade private credit versus CCC private.)
But let me explain first.
What is yield-pigging? 2/22
Say you are operating in a strategy like risk arbitrage, where you have to arbitrage merger-arbitrage spreads (the difference between the current price and the deal value).

1/25 The GraphCall Credit quality vs spread metric

Watching the consumer delinquencies rise is worrying but it is not per se at a very high record (although some adjustments in those calculations are coming and BNPL have data silo issues)....

Are the credit spreads reflecting that properly? 2/25
Those are the credit spreads

1/9 Shares buy-back are contrarian indicators for the most part.

Bloomberg and other twitter accounts are trying to tell you that share buy-backs are great news for the stock market with a record high level. 2/9 So as a share of U.S. GDP, S&P-500 buybacks were roughly 0.95% in 2009 and 2.0% in 2010 and about ~3.4% in 2025 (using the 12-month Mar-2025 buyback total).

1/8 This chart circulated around is relatively easy to interpret.
Shanghai Gold Exchange, assayed, audited, secure, physical gold warrants volume. 2/8 (quick reminnder context)
YOU CAN SKIP THIS ONE IF YOU ALREADY KNOW ABOUT IT

The FX as reserves had three iterations, the post 1922 system with both GBP and USD politically forced as reserves with a bogus price convertibility (not at all a Gold standard, becausee a Gold standard implies letting the Gold flow and forbids using FX as reserves)

The Bretton Woods system post WWII which is a copy cat of the 1922 arrangement with again a bogus price convertibility but no Gold flow or convertibility just by everyday person.

The Bretton Woods II which severed any link to Gold and politically coerced the G-7 not to dump their exess USD trade surplus into Gold but forced them to do vendor financing and recycle those into UST.

1/10 Not entirely sure Dario interpreted correctly the elements he showed in his post imho. In fact the elements Dario showed indicate that supply is getting less tight versus demand or said otherwise demand is less raging versus supply. let's show that.

https://twitter.com/DarioCpx/status/1961177270154117589

2/10 NVDA had a lot of deferred revenues versus recognition back in the end of 2023, in short every one is giving them their "money in advance" to reserve the chips. That's why you have the deferred revenues ("The reservation" like you would pay the restaurant before eating)

1/21 Preventing the Gold Flow to Enable FX as Reserves and the History of Monetary Central Planning Failures from 1873 Europe, 1898 India forced FX as reserves in 1922 to the Present Day.

The BIS is once again pleading to organize and centralize the Gold flow.

The Gold flow has always been the problem for adept monetary central planning, as the Gold flow is an enforced discipline against expansion of currency and trade deficit. 2/21 Monetary Central Planning started with the advent of the demonetization of Silver, argues Marc Flandreau in “The Glitter of Gold.”
Why the need to centralize what used to be impossible to control?

1/24 BULL TRAP
2000 STIMMIE vs 2025 REVERSE STIMMIE

FIRST LET’S MAKE EVERYONE IS ON THE RIGHT PAGE HERE

Stimmie is money coming from the Gov going to consumers directly.
Reverse stimmie is money coming from consumers and going to the Gov. 2/24 One would have to suppose that both conditions can not have the same consequences, but should be suspected to have opposite consequences.

1/5 Bloomberg is explaining what we explained before here
EVs are cheap in EMs and the cost of fuels is monstruous for EM households.
RESULT?
The switching is happening MUCH faster than forecasters (not this twitter account)

Policymakers are also likely to extend such incentives for purely macroeconomic reasons. In India and Pakistan, oil and gas account for as much as a third of the total import bill, compared to around 10% in the US and European Union.

We explained before that India had a notorious fiscal dominance problem because it had to subsidized the fuel. With the cost per mile 10X cheaper in India?
Demand for gasoline and diesel in India sustained?
😂

1/10th of Oil demand wiped off by 2030.... It will probably be larger.

archive.ph/Ycx9C#selectio…

bloomberg.com/opinion/articl…
@KingKong9888
2/5 But don't count on China to supress the cut throat cost plunge in Battery. It's not like Solar where everybody is losing money, BYD still makes money CATL is coming up with Sodium battery in mass production at 170 wh/ kilo with Nextra by year end. And 200 wh/ kolp in 2 years.

1/8 Werner AT 44 minutes:
According to Banking School, Werner is correct again.
But using "money" for banks is a misnomer. It is called "bank currency" by the Banking school, let's explain why...

https://twitter.com/TuckerCarlson/status/1949877681027166608

2/8 Bank currency is a liability of the bank. It is created either when you bring M0- money - to the bank (paper bills today, or coins in the past.

1/7 The view from Werner is interesting and does match the Banking School' view of Thornton (the third theory,
"Enquiry into the paper credit ..."
, which is classical economics BTW (practiced by the twitter account)
Now why have people erred since then? 🤷‍♂️
It is a mystery.

https://twitter.com/TuckerCarlson/status/1949877681027166608

2/7
Thornton does not call bank currency "money". It calls it "bank currency", money being strictly M0 of the time PM. Bank currency can be created either by depositing M0 (money) or against a discountable article.

1/12 In this post we will show that the Yield control started in 2010, that yield curve control IS NOT SMALL and increasing.
2/12 I am old enough to remember having a cup of coffee for well under 1 USD before going to trade risk arbitrage situations.

1/4 How the statistical US agencies are openly taking the bondholders for MORONS.

To calculate CPI inflation, BLS teams collect approximately 90,000 price quotes every month covering 200 different item categories, and there are several hundred field collectors active across 75 urban areas.

When data is not available, BLS staff typically develop estimates for approximately 10% of the cells in the CPI calculation. However, the share of data in the CPI that is estimated has increased significantly in recent months and is now above 30%, see chart above.

In other words, almost a third of the prices going into the CPI at the moment are guesses based on other data collections in the CPI." - Torsten Slok - Apollo 2/4 How we suspected it first and then pretty much KNEW it?
Sir Robert Giffen inferior goods substitution.
It is completely improbable that consumers shift to inferior goods if their real income is increasing.

https://x.com/GraphCall/status/1927366120895402297

1/17 PART 3
LONG THE ARISTOCRACY, SHORT THE PEASANTS

The Necker Parallels
REGRESSIVE TAXATIONS AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY” 2/17 Rémy Cointreau had been disclosed as a trade (to paying clients ONLY) back in the low-mid 40 EUR range.
Rémy Cointreau sells the very exclusive $2,500-a-bottle Louis XIII Cognac, each bottled in Baccarat crystal and with a unique number.

1/21
- PART 2
REGRESSIVE TAXATIONS AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY”

Going into the details of the regressive nature of tariffs. 2/21 But judging by the deficit, the carried interests and estate tax exemption, a more nefarious one is at hand.
Since the Foreigners are balking at UST, some one has to pay for the Pork.
Who? The Plebs via tariffs.

1/15 REGRESSIVE TAXATION AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY”
- PART 1
Kenneth Rogoff and Carmen Reinhart , in the book This Time is Different 👇 2/15 In their book Eight Centuries of Financial Folly (and gov debt defaults, repudiation and inflate away), the authors explain the problem of taxation.

1/ Fintech bros running with the cash register

So in this long post, we are going to divide it into five parts.

I) First, we show that real incomes are not growing, despite what official statistics suggest. We focus on dining out and the substitution to inferior goods. At the very least, this substitution is inconsistent with an increase in real income. It’s a topic we’ve discussed several times, so if you're already familiar with that, feel free to skip to Part II.

II) In Part II, we show that PNC, WFC, and USB are all on the back foot with consumer lending, reducing their exposure. USB is even outright selling portfolios, benefiting from reverse provisioning.

III) In Part III, we explain that PNC, WFC, and USB—by retrenching or selling—are effectively “selling high” because spreads are at record low levels. It’s smart: sell high, buy low. I AM NOT painting a disaster for the banks simply highlighting that those banks are COMPLETELY shunning more consumer lending.

IV) But who is buying high—meaning, buying with tight credit spreads? Well, personal loan growth has far outpaced income growth, and that is not sustainable. If you’re a bank that knows what it’s doing, then you don’t keep lending more.

V) But some entities are booking those loans or securitizing them at record-tight spreads. They are the “buy high” crowd—with the same mindset as the “buy high” crowd from 2005–2007. They’re probably just playing the music while running with the cash register. In the cash register part, we show insider selling by the people providing the unsustainable loans that the banks don’t want. 2/ CONSUMER BEHAVIOR INCONSISTENT WITH HIGHER REAL INCOME

This is the cohort of shoppers at Costco:

Costco Shoppers by Income Cohort

According to 2024 Numerator data, Costco consumer income distribution is:
~46% of members earn between $40,000 and $125,000 (middle income)
~36% earn over $125,000 (high income)

The remaining ~18% earn under $40,000 (low income)
Source: marketingscoop.com/consumer/costc…

So nearly half the customers fall in the middle-income range, with over one-third coming from higher-income households.

This is what is happening in consumer behavior at Costco, as related by the CFO of Costco:

Shift Toward Food-at-Home

This is what was happening in Q1 FY2025 (reported in November 2024):

In a December 2024 call, CFO Gary Millerchip noted shoppers are avoiding dining out and leaning on Costco for groceries instead. Sales of meat and produce are up, with increased purchases of lower-priced cuts like chicken, beef, and pork.

Sources:
finance.yahoo.com/news/costco-fl…

the-cfo.io/2025/03/31/cos…

“This was led by double-digit growth in meat, where we continue to see a shift toward lower-cost proteins such as ground beef and poultry,” he said.
In other words, even Costco’s more affluent customers are trading down.

What happened at Costco in the next quarter:

CFO Gary Millerchip highlighted that shoppers across income levels continue “tightening belts,” opting for lower-cost proteins like ground beef, poultry, and private-label items.

Sources: MarketWatch, The CFO, FinancialContent
Even Higher-Income Members Are Choosing Value

During the Q2 FY2025 call, Millerchip pointed out that not just budget-conscious but also higher-income members are seeking bargains.

There were strong gains in big-ticket items, but also double-digit growth in meat and poultry—specifically lower-cost proteins.

Source: businessinsider.com/costco-says-sh…

1/13 END OF DISSOCIATION OF CREDIT WITH GOLD FLOWS

Today we hear that the Gold Exchange of Shanghai is making it possible for trading partners with a surplus vs. China to get gold for their Yuan.

What is this move about?

https://x.com/BullionBrief/status/1938073273927143666

2/13
RUEFF explains

The gold-exchange standard of 1922 was in fact a copy of the Fuller Committee prohibition on India in 1898 to redeem their BoE notes for gold. It was the birth of FX as reserves using both USD and GBP on a worldwide basis. Here is how Jacques Rueff described it.