Let's start from the back end. "Tell me why I am wrong."

OK. Fair. Here is why you are wrong. A 🧵:

Bill, your assumptions are, well, assumptions.

The first assumption is that this is a trade war between the US and China. That is wrong.

To my knowledge, Donald Trump has

https://twitter.com/BillAckman/status/1916088788557742186

broken EVERY SINGLE trade agreement which was in place between the US and other countries, before him or which he, himself, signed, including USMCA which was "maybe the greatest deal ever done."

Donald Trump has, for decades, been a fan of tariffs. He ran on it. He put tariffs

The proposed USTR schedules for port fees are out.

For Chinese/HK/Macau owner/operators (not necessarily of Chinese vessels) For foreign (non-US) owners of Chinese vessels:

with exceptions:

Just getting around to the USTR Section 301 hearings on the Proposed Action in Section 301 Investigation of China's Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance.

Like the USTR report released in Jan, it is something of a disaster. 500+ pgs of it. There are people who support (politicians, labour unions, ports, dockworkers, steel companies, etc).

They almost all use the same talking points from the USTR report which were... wrong. They were factually incorrect in the USTR report and they were the same, or worse in the

The problem with Miran’s argument is shown in his own quote.

If two non-US countries TRADE with a USD price, and they do not tariff each other, then it is frictionless. The US does not collect 10% via tariffs.

I’ve been through this before but a reserve currency is not so

https://twitter.com/stevehou0/status/1909344035418079455

because people trade using a dollar denominated price. It is based on where the end profit is allocated to as savings.

If a European company buys 1mm bbl of oil from Aramco, first EUCo uses Euro to buy USD. Gives to Aramco who gives it to Shipper (who EUCo has also paid USD)

@BlankBl23041510 @Citrini7 1) I don't think the market believes they will last as set.
2) There are many paths.
3) One path is simply a LOT lower consumption.
4) Over even a medium-term, if the system put in place has permanence of intention, it leads to capital controls (i.e. lower real yields) @BlankBl23041510 @Citrini7 but basically, if you have partial or full capital controls and lower real yields, that's simply financial repression by the state - financed by low returns on capital and less choice.

To get from A to B, there are a finite number of outlets and offsets.

@Citrini7 Ask yourself what you think a reserve currency is.

Is it the fact of a stock of financial assets in a currency?

Or is it a propensity to have a flow?

If the trade deficit (flow) immediately goes to zero, the stock remains unchanged.

Other flows shift. Americans net save. @Citrini7 Americans consume less (because they save more). They produce more to consume what they cut off from the outside world. Jobs which were related to consumption become jobs related to production. All fine. The savings finance the part of the govt deficit no longer financed by

@dampedspring @Crinklebine I agree. But I think not one of them actually understands how tariffs flow through the economy.

The Bessent/Friedman idea of inflation is that tariffs don't create inflation because when the price of one thing rises, but nominal income does not, then the prices of other things @dampedspring @Crinklebine have to fall. Simplistically, that means:

1) Tariffs cause imports to rise in price. Let's say 15% of GDP is imports. Add 20% to prices. Imports drop 20%, so the price of 12% of GDP rises 20%. That's 2.4% inflation.
2) 3% of GDP which used to be imports are now American, and

Not to worry. Scott Bessent - whom a lot of you thought smart - told us tariffs don't cause inflation because when prices on tariffed goods go up, prices on non-tariffed goods go down. So no inflation.

That must mean the prices of 100% made-in-America goods and services go down. And the nominee for the Chairman of the Council of Economic Advisors said, "Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects, consistent with the experience in 2018-2019."

I admire the heck out of @michaelxpettis here but he has some of this thread a bit wrong.

He starts by quoting the Chinese commerce ministry. I'll let you read that.

Next he says the context here is to "force households as consumers to subsidize production of ships at home."

https://twitter.com/michaelxpettis/status/1895310086194766332

That math doesn't math.

The new US policy is to charge a large amount of money per Chinese vessel operated by a Chinese shipping company, or a smaller/larger amount to a non-Chinese shipper with Chinese vessels in its fleet or with vessels on order from Chinese shipyards.

Kids, don't do this at home. Chart crime doesn't pay.

1) Don't do TotRtn of *yield* on 10yr vs other 10yr, calling it "related to cross-currency swap" when one yield is 8x the other at the start 🤷‍♂️
2) IF "JPY carry trade leverage" (i.e. "funding"?) is getting more expensive and you happen to be short JGB 10yr vs UST10, you are making not losing money. You couldn't possibly tell it from the 2yr chart above but assuming GC borrow, the now 8yr JGB you shorted 2yrs ago is ~92.5 and your now 8yr UST long is 96.50-ish. You've made 7.0-7.5% in carry, 4% on the

I'll admit I am not sure what @riteshmjn's (or Luke's) "second derivative" is here.

I will, however, point out that if the USG suddenly stops paying X% of GDP into the economy, it does not mean the US GDP is instantly and permanently downsized X%.

https://twitter.com/riteshmjn/status/1890799641622388953

We can look at it from a different perspective - one easier to think about.

The USG fires one person. USG spending goes down by the salary and other related payroll items of that one person. GDP goes down, ceteris paribus by the total reduction of spending of that person?

No.

The Wall of Shame: A 🧵

Scott Bessent: "The U.S. has a strong dollar policy, but because we have a strong dollar policy, it doesn't mean that other countries get to have a weak currency policy."

reuters.com/markets/us-loo… Hike input costs by $1trln, and consumption stays the same. Trump gets $1trln of tariff revenue.

And as Scott Bessent told us, there's no inflation because consumption/prices of other goods (the non-imported US-produced ones) go down.

An interesting thread by @Geo_papic . Worth reading.

I found the @Stevemiran piece odd. Weirdly judgmental. And at odds with its own arguments.

Some of the cognitive dissonance within is just Trump-following.

Trump wants a weaker dollar, and lower trade deficit, but also

https://twitter.com/Geo_papic/status/1875408338714042848

wants foreign countries (which will be "taxed" and "paying" tariffs) to maintain their pace of using the USD as a reserve ccy.

This doesn't make a lot of sense. One cannot have foreign countries "profiting less" but then reinvesting the same USD amount.

The Trump concept is

Some MORE comments about index construction.

1) Generically speaking, there are VERY few large US stocks which issue large amounts of new equity in order to buy something. It happens from time to time, but it is reasonably rare.

When a company like MSTR issues new shares to buy BTC, it gets a little complicated. The MSTR issuance was not a large block. It was an at-the-money offering which means the brokers doing the offering sell shares bit by bit in the market. At a certain point, the share count of newly issued shares will become 10% of TSO.

Some comments on index construction.

Whenever I discuss index construction, there are a few tautologies and a few misconceptions which arise.

When a stock like MSTR or SMCI or TSLA go into a big index, lots of people comment. It's worthwhile going through the mechanics. To start with NASDAQ said on Friday that PLTR, MSTR, and AXON will go into the NASDAQ 100 as of the open of Monday 23 Dec, replacing SMCI, MRNA, and ILMN.

That means there's buying and selling to do on 20 Dec at the close.

.nasdaq.com/articles/nasda…

Japan polls are closed.
The LDP has really shot itself in the foot. The election that didn't need to be.

Turnout appears lower than 2021, so the story is *probably* centre voters who tilted LDP last time now defecting to centre-left - the old DPJ.

https://x.com/AsiaElects/status/1850495385011208631

I don't think we can predict what the coalition will look like. Whatever it is, I bet it will not last a year.

If LDP+Komeito+2-3 others can create something, this will be market-neutral-ish but perhaps tilts yen weaker.

If CDP forms a coalition tilting slightly more centre,

Yowza. Looks like Japan's intervention was larger than I thought it was.

Am guessing ¥5.5-6.0trln based on the Forecast BOJ Current Account Changes "Financial Factors" change for May 1.

That's $35-38bn. I'd expect they'd be "comfortable" selling twice that again, without problem. If Korea and US joined in, one could expect another $50-100bn total selling as well.

As previously noted, this fiscal year (ending 31Mar25) is also the year of the quinquennial policy mix review.

A couple of points on USDJPY:

1) The MOF (officially, the Vice Minister of Finance for international Affairs) is the one who decides. The BOJ is the execution desk, not the decision-maker.

2) Gov Ueda can guide policy to react to market conditions if necessary, but will not be a/the deciding factor on yen intervention

3) The MOF is sitting on big gains from the intervention in the 2010-2012 period. What they sold in Sep 2022 and what they would be selling now would likely be (as far as the bureaucratic memory is concerned) "taking profits" rather

I've been trying to get my head around this shocker because it opens a couple of weird cans of worms.

First, US$78bn of inflated revenues was something like 53% of reported revenues in 2019-2020. If those were false, then 2018 has to be in question (2019 gain was only +2.4%yoy

https://twitter.com/markets/status/1771030943861440735

but 2018 was +49.9% vs previous year, and that is not in question?

The other part here is that PwC's onshore entity was the one auditing the books of the onshore Hengda entity. To screw up that amount of revenue across 1,000+ project companies meant that the audits of an

The CSRC admonition to companies to pay higher dividends and/or buy back stock became really visible in English when China Telecom and China Mobile listed A-Shares and in their prospectuses they had nearly identical sections and clauses about returning capital to

https://twitter.com/liqian_ren/status/1768809989181747492

shareholders and how their company, in different stages of its corporate lifecycle, would be expected to have a payout ratio of X, Y, or Z. That was academic for them because they were in Z meaning much higher div payout ratio to come, but key was that the language was identical

Reading that Memo which is "NOT the official Prospectus or OM and shouldn’t be relied upon as official material for the upcoming macro fund"...

30-40 trades a year, half making money, half losing money, 15% fund target return at 10-12% annualised vol because either the ex-ante trade distribution is truncated (there's a chart) because of great trade identification and top-notch portfolio construction OR ex-post because portfolio management and trading is top-notch.

Assuming each trade lasts 3-6mos = one has 7-20 trades on at any given time.