It’s Christmas! I had promised that I would pop my ugly head once in a while. So on Christmas I wanted to share some thoughts about the meaning of Christmas and now that I will no longer be posting here, an advise to those who followed me for years about how to discern talent
1/4 Christmas is essentially a parabole of extreme generosity. The supreme being, God, offered humanity his own son, predestined to sacrifice. Cut it which ever way you want, there is no higher degree generosity. What can it teach you, about life and about who to trust?
2/4

So I guess it’s time to expand a little on my decision to stop engaging on my public account.

Before I go into it, I want to wholeheartedly thank everyone who followed me and particularly those who were early hours readers. It was a pleasure to interact with you all.

1/10 To address the negatives first. My decision was not taken in protest of anything, has nothing to do with X, has no political dimension, is not a protestation and is not a burst of emotional fit.

It’s a personal decision that was in the making for a long time now.

2/10

There is a theme out there about likely upcoming acceleration in the labor market.

The issue with this is that beyond headline, underlying trends have been deteriorating for a while and lots of key variables are at negative feedback-back loop thresholds.

1/4 Healthcare (and government) jobs have been holding it all together recently. Excluding Healthcare, jobs have been contracting significantly in the recent months.

This trend can’t continue, and as a matter of fact JOLTS have shown a pronounced slowdown in Healthcare.

2/4

I will respond to this gross misunderstanding of monetary policy once and for all, and only because it’s been vulgarised by Bessent which made it ubiquitous, while being totally wrong and unfounded.
1/5

https://twitter.com/jjmuhle/status/1956373264336585199

Last year, Fed faced a totally different set of uncertainties:
- UR had moved up by 70 bp from its cycle lows and that was historically a good indication of forward accelerated rises in Unemployment
- mid-term market inflation measures were falling
- real rates were rising
2/5

Here is why firing the BLS Commissioner is a 3rd world move by Hairdogan.

First of yes BLS data quality sucks but it sucks because it is extremely hard to estimate with high frequency something as complex as the US labor market.

1/7 We have all aired our grievances with the polling, the response rate, the B/D model adjustments, the seasonal adjustments… etc… yes data quality is debatable and yes there has been a topside bias in these preliminary estimates with repeated massive downward revisions.

2/7

What’s troubling in the raging racist cabal against Madmani, whatever one thinks of his ideology, is that it largely misses the larger point of what’s unfolding in global politics.

Focusing on racist slander is an opportune denial strategy, but hardly a winning one.

1/6 There are obvious lessons in his rise that people are failing to draw, while too busy getting obfuscated by his pro-Palestinian stance, socialists policies, racial origins or lack of fine dining etiquette.

The old political establishment is fracturing. Everywhere.

2/6

I would like to come back to US Employment in the wake of the abysmal UK number this morning.

A lot of the journalistic coverage of last week’s NFP was along the lines of « strong headlines hides weakness ».

This is total nonsense.

1/5 Net of previous 2 months revisions, the seasonally adjusted NFP was + 44 K which is very weak.

This also raises a data quality issue. It’s a pattern now. Numbers come out ok and they invariably get revised down massively.

Saying it doesn’t matter because UR, is dumb.

2/5

This is a good framing of the bill, unfortunately it is incomplete and somehow misleading.

Stephen makes good points to clear some of the confusion out there.

But he also leaves out the elephant in the room: the deficit post passage of the bill : it stays at c. 6% GDP

1/12

https://twitter.com/stephenm/status/1926715409807397204

The problem is that this admin has been sowing confusion on many fronts, so it’s not surprising that everyone is confused.

Main venue of confusion is the belief that Trump tax cuts were going to expire. That was an idiotic take, but then again Bessent touted 3% deficit

2/12

Time to take the Casio out to debunk all the false deficit narratives from the usual Cumlords.

First things first, the release of the tax provisions by the House Ways and Means Committee came BELOW expectations. Expectations were for $ 4 trillion and it came at $ 3.7

1/8 Second, the Ways and Means is only ONE portion. Healthcare changes have not yet been released and they will come later part of the Energy and Commerce Committee release.

Now to the most important part, these numbers imply a REDUCTION in 2026 deficit.

2/8

On this same tariffs point, the real issue is that nobody is pricing a worst case outcome, yet we are 1 month ish away from various finished and intermediate goods inventories depletion and not a single tariffs deal got announced. Not one. This is not saying there won’t be.
1/6 It’s likely that a couple of low hanging fruits like ISR, Australia and/or UK get announced soon. But even in these cases, likely frameworks that allow for further extensions. But there are bigger issues with the more important counterparts like China, Japan, India and EU.
2/6

Today was peak cumlorde day for all the bad GDP takes. And they were across the board. Can’t really single out one group. For Trump fans it had nothing to do with him coz his trade war started later. For Trump detractors it was all down to his trade disruption.
1/8

Before I elaborate, I need to clarify why GDP is actually a fucked up measure. Root cause is that ages ago, for ease of computation, it was decided that tracking GDP was easier through computation of spending than output. Remember that what is measured is domestic production
2/8

There is another totally false claim that many renowned economists, famed commentators snd other prognosticators have been doing of late which is establishing an ex-post causality between Trump’s JPOW rants and the rise in long UST rates / drop in $

1/4 The bogus claim is that this is creating uncertainty and a fear of debasing and hence investors are requesting higher risk premia.

I really don’t know where to start but let’s start with the fact that market inflation pricing has actually went down not up with these rants.

2/4

This Trump/JPOW feud is complex and while the blame is actually shared, the blame of politicising it loudly on social media lies squarely with Trump. To start off it’s a totally useless war that Trump is waging because the market has already priced these cuts. See chart.
1/4 To move on to why the blame is shared: this is not the 1st time JPOW shows autistic latency. He did it in 18 during the 1st tariffs episode. He did with the infamous transitory post COVID. And he is doing it again as recession settles in. He was wrong in both cases
2/4

The more it goes, the clear it becomes that this administration is totally unprepared and they are literally making it up as they go.

Those who follow know that I have been very open minded about both the approach and the goals.

But now MAGA is starting to look like MAFA

1/5 Make America Fail Again.

The combination of excessively aggressive negotiating starting point with unilateral and sudden concessions that seem to be the product of a both market pressures and CEOs revolting, is a terrible negotiation toxic mix.

2/5

Tariffs announcement did not lead to a rise in long-term inflation, quite the contrary actually, 5 to 10 breakevens tanked. Oil tanked. Commodities tanked. Yes there was a spike in short inflation expectations, but breakevens curve went into backwardation

1/4 The spike in the long end was driven by TP and led to a steep increase in real rates. That clearly threatened a collapse in spending and investment. In the middle of these major moves FFR was on hold while neutral rates were clearly heading down while credit spreads blasted

2/4

I keep reading a ton of hyperboles about the tariffs. What’s happening is pretty obvious though.

Trump chose a pretty aggressive negotiation approach. But it was obvious from minute 1 that whatever these tariffs rates were, they were meant as a starting point.

1/5 There is clearly a 10% universal line in the sand in his mind. Yes that’s a consumption tax. But the US needs to raise consumption taxes if it is to lower taxes on investment and savings. All those going up in arms are oblivious to this critical switch.

2/5

Most of what I am reading about tariffs is misguided. Here is a quick primer on how I understand what’s happening. Using the Casio.

1- I am convinced the calculus backed-up from a desired outcome both on an aggregate level and at country level in the case of China / EZ

1/10 Trump wanted to achieve $ 500 b in revenues and this current architecture achieves exactly this. It’s worse than any worst case + the formula looks wanky but that’s because they solved for a given revenue target. In Trump’s mind, it’s all about the starting $$ point

2/10

As expected this tweet launches the last and final round of admittance into Kittysquiddy, my locked account. I am writing this to explain what exactly is the purpose of the account and what we are looking for. Lezzzzgooooo
1/6 Beyond the obvious fact that kitty is where I share direct and timely insights into my own analysis, views and positioning, it is first and foremost a collective, a social system with it’s own balance and dynamic and my first priority is not to introduce anything alien to it
2/6

Time for a take-down. Believe many have paid attention to this hysterical tweet. Let’s break it down and see if DB is actually as sick as our friend here is claiming it to be.
1/4 1- DB is profitable and has over a third of it’s deposits insured. CS had 15% insured deposits and was pissing money
2- DB’s RoTBV is in line with Citi and better than SG
3- DB has no issues with mtm of it’s AFS and HTM portfolios as % of CET1
2/4

You’ve all seen this low lifer chime in with his usual indecency begging for a handout. Am sure everyone is interested in understanding his lowly motives. Here they are.
1/4 Ugly truth is that allocators, not banks, are the guys who will be getting deluged with capital calls now as liquidity dries up (VCs trying to triage their portfolios!)... on top of that a lot of Shit Valley loans were collateralized with their crap private stock...
2/4

Getting a ton of panicked DMs about risk of contagions given large drops in banks yesterday. Here are some thoughts. Every hiking cycle ends-up creating some banking stress. This one is no exception. Silvergate and SVB are the weakest links by the virtue of their asset base
1/4 But issues facing them are now common issues for the sector. After a long period of having too much deposits to the point of pushing them away, competition for deposits came all too quickly just as asset quality risks are surging and lending standards are being tightened.
2/4