The Bessent short has gained popularity as the US and China descend into a trade war.

It's grounded in the famous Soros Fund Management short of the British pound.

But are there signs that this could be happening to the Yuan?

Let's explore the Bessent short 🧵: First let's explore the dynamics that Bessent exploited shorting the pound.

• UK joined ERM, a system design to stabilize European currency
• Britian was in a recession
• This conflicted with the principle of currency stabilization

But how was Bessent was key to the scheme?

Scott Bessent played a significant role in the famous 1992 trade against the British pound while working for George Soros at Soros Fund Management. This event, often referred to as "Black Wednesday," resulted in Soros’s fund earning over $1 billion and cemented his reputation as "the man who broke the Bank of England." Bessent, then a key member of Soros’s team, contributed to the strategy and execution of this audacious currency bet.

In 1992, the British pound was part of the European Exchange Rate Mechanism (ERM), a system designed to stabilize European currencies by pegging them to the German deutsche mark within a fixed band. Soros and his team, including Bessent, identified a vulnerability: they believed the pound was overvalued relative to economic conditions in the UK, such as high inflation, low interest rates, and a struggling economy. The British government was committed to maintaining the pound’s value within the ERM, which required intervention if it deviated too far from the agreed range. Soros’s fund saw an opportunity to exploit this mismatch.

Bessent, who was based in London and served as head of global research at Soros Fund Management during this period, provided critical insights into the UK economy. He observed signs of weakness, such as a troubled housing market burdened by floating-rate mortgages. These mortgages meant that rising interest rates—used by the Bank of England to defend the pound—would increase borrowing costs for homeowners, further straining the economy. This analysis reinforced the team’s view that the UK could not sustain the pound’s pegged value without causing significant domestic harm.

The strategy, spearheaded by Soros and his top deputy Stanley Druckenmiller, with Bessent’s input, involved amassing a massive short position against the pound. The fund borrowed billions of pounds and sold them in the foreign exchange market, converting them into stronger currencies like the German mark or U.S. dollar. This created immense selling pressure on the pound. Soros’s team reportedly built a position worth $10 billion—far exceeding the fund’s own capital of about $5 billion—using leverage through derivatives like options and futures to amplify their bet.

As the pound came under pressure in early September 1992, the Bank of England intervened by raising interest rates (from 10% to 12%, with a promise to go as high as 15%) and spending billions of its foreign reserves to buy pounds and prop up the currency. However, the market forces, driven by Soros’s fund and other speculators, overwhelmed these efforts. On September 16, 1992, the British government capitulated, withdrawing the pound from the ERM and allowing it to float freely. The pound promptly plummeted—dropping about 15% against the German mark and 25% against the dollar in a single day—handing Soros’s fund a profit estimated at over $1 billion.

Bessent’s specific contribution was not as the mastermind—Soros and Druckenmiller held those roles—but as a key strategist who helped identify the economic conditions that made the trade viable. His on-the-ground analysis in London, including his understanding of the housing market’s vulnerability, supported the decision to go all-in on the short. The trade’s success hinged on the team’s ability to spot an unsustainable policy and their willingness to bet big against a central bank, a move that shifted perceptions of the power balance between markets and governments.

This episode remains a defining moment in financial history, showcasing how Bessent, under Soros’s mentorship, helped execute one of the most profitable and infamous currency trades ever. Yes, the implementation of tariffs and the current market crash could indeed put significant pressure on China’s central bank, the People’s Bank of China (PBOC). Here’s how these factors might interact and challenge China’s monetary authorities based on economic dynamics and recent developments:

Tariffs, especially those imposed by the United States, directly impact China’s export-driven economy. Historically, China has relied heavily on exports as a key growth engine. For instance, during Donald Trump’s presidency, tariffs on Chinese goods—such as the 20% increase noted in early 2025—have disrupted trade flows. These measures raise the cost of Chinese exports, reducing demand from major markets like the U.S. and potentially shrinking China’s trade surplus. A notable example is the escalation in April 2025, where China faced additional punitive tariffs, prompting retaliatory measures like a 34% tariff on U.S. goods. This tit-for-tat trade war squeezes export revenues, a critical source of foreign exchange and economic stability for China.

The current market crash—evidenced by global stock market declines, with the S&P 500 dropping nearly 6% in a single week in April 2025 and the Nasdaq entering bear market territory—amplifies this pressure. Financial market turmoil often signals declining investor confidence, which can lead to capital outflows from China. As foreign investors pull back, the yuan faces downward pressure, a trend already observed with its weakening by nearly 1.8% since November 2024. The PBOC must then decide whether to intervene in currency markets to stabilize the yuan, which could deplete foreign exchange reserves, or allow a controlled depreciation to boost export competitiveness—a delicate balancing act given the risk of inflation and capital flight.

China’s domestic economic challenges compound these external shocks. Tax revenues have fallen, as reported in early 2025, limiting fiscal firepower to support exporters or stimulate consumption. The housing market crash and local government debt issues further constrain Beijing’s options, leaving the PBOC as a primary responder. Deflationary pressures persist, with weak consumer demand and industrial overcapacity—retail sales grew only 4% in early 2025, barely outpacing December’s 3.7%. Tariffs exacerbate this by reducing external demand, potentially forcing the PBOC to ease monetary policy, such as cutting the 1-year loan prime rate (steady at 3.1% since October 2024) or the 7-day policy rate (1.5%).

However, easing isn’t straightforward. Lowering rates could weaken the yuan further, risking a sharper depreciation that spooks markets—something the PBOC has resisted, as Governor Pan Gongsheng emphasized maintaining currency stability. Posts on X in April 2025 suggest Beijing might consider a “massive devaluation” to counter tariff effects, but this remains speculative and unconfirmed. Alternatively, the PBOC could ramp up liquidity injections or relax reserve requirements, though thin bank margins (already under pressure) limit the scope of such moves.

The market crash also raises global recession fears—JP Morgan pegged the odds at 60% by year-end 2025—potentially reducing demand for Chinese goods beyond just tariff-affected markets. This could force the PBOC to act preemptively, aligning with analysts’ predictions of monetary easing if economic conditions deteriorate further. Yet, the Fed’s cautious stance—holding rates steady in March 2025 with only modest cuts projected—limits China’s room to maneuver, as a wider interest rate differential could accelerate capital outflows.

In short, tariffs shrink China’s export earnings, while the market crash signals broader economic unease, pressuring the PBOC to either defend the yuan at the cost of reserves or ease policy to spur growth, risking currency instability. With fiscal tools constrained and deflation looming, the central bank faces a high-stakes dilemma, likely nudging it toward cautious easing

Let’s discuss Vietnam as an example of how some of the negotiations to reduce reciprocal tariffs may go.

1/

x.com/i/grok/share/V… x.com/jules31415/sta… The US is Vietnam’s number 1 export market.

This is true for many countries on that list Trump published yesterday.

They exported $136.6 billion to the US in 2024, representing nearly 30% of their total exports.

They obviously can’t survive a 46% tariff.

2/

1/ If this was a true “mistake” and not done intentionally as an info op then given what is already publicly known about how it happened and the details of how Signal works when setting up a group chat, this was likely accomplished via a social engineering attack where someone in the lead up to this event gained temporary access to Waltz’s phone and changed the number for an existing contact known to be a established member of the top level working group. 2/ This would explain Waltz made a mistake, is a good guy, it may have been a staffer and concerns about how Signal may have failed in keeping conversations private.

If this is true there could be a ongoing investigation to figure out who gained physical access to Waltz’s phone.

I invite everyone to go read this article by Mark Paoletta, Daniel Shapiro and Brandon Stras.

“The History of Impoundments Before the Impoundment Control Act of 1974”

Linked at the end of this thread.

Let’s review key passages in this 🧵.

@elonmusk @DOGE @DataRepublican “Until the Presidency of Richard Nixon, it was overwhelmingly understood that the power of the purse restricted only the President’s ability to spend more than an appropriation”

Meaning Presidents can’t spend unappropriated funds but aren’t required to spend ALL appropriations.

Now that I’ve watched this, I understand why they put this out.

It’s something I pointed out on @davidchapman141 show regarding the way the states will report their vote totals.

~80% of GA and NC have already voted and are expected to announce those totals by 8 & 8:30.

1/4

https://twitter.com/ericldaugh/status/1853221108238987528

This is a big problem for the Harris campaign especially if GA and NC are called quickly.

They will have voters still voting in states that will need people to turn out through the night in WI, MI, AZ and NV.

This could collapse late turn out and affect Senate races.

2/4

1/ 🚨 “Nearly all Gallup measures that have shown some relationship to past presidential election outcomes or that speak to current perceptions of the two major parties favor the Republican Party over the Democratic Party.”

news.gallup.com/poll/651092/20… 2/ “Chief among these are Republican advantages in U.S. adults’ party identification and leanings, the belief that the GOP rather than the Democratic Party is better able to handle the most important problem facing the country, Americans’ dissatisfaction with the state of the nation, and negative evaluations of the economy with a Democratic administration in office.”

1/ I want to piggy back off of this to explain a fundamental dynamic that has changed since 2020.

Reels.

These are the mini snippet videos that people consume on platform like Tik Tok, Instagram, Facebook and even on X.

Although this existed in 2020 they are now ubiquitous.

https://twitter.com/ericldaugh/status/1834235869940658676

2/ These mini videos consumed over and over throughout the day, day after day alters the impact and value analysis of events particularly video based events like a debate.

In the past snap polls had more significance because it was likely the only time the majority of people would consume the debate video content.

1/ Let’s talk about what we know about the entire career of Joseph Robinette Biden Jr. and how that informs this moment that he finds himself in. 2/ Joe Biden has spent a career leveraging his office to bring in money to his family.

He’s corrupt.

But he’s corrupt in a very particular way.

He sends his son and his brother out into the world to negotiate “business” deals.

Listen, it’s been fun mocking Biden.

And yes he’s old and decrepit.

But the media is lazy.

They want to pin where the race is on the debate and Biden’s mental decline.

Even if you accept the story about a progression that started 6 months ago, Trump was already ahead then. So the debate is not the why.

Trump is ahead for other reasons.

Like immigration.

Like economic issues like inflation, energy and interest rates.

Like foreign policy.

Trump is ahead because the electorate wants a return to a Trumpian reality.

And Biden is decrepit.

It is possible that a tape exists that makes clear that Biden was fully aware of what Hunter was doing and reveals that at a minimum Joe was aligned with him.

In that scenario, it is possible that the powers behind the scenes are effectively already conceding the Presidency.

https://twitter.com/collinrugg/status/1702316764565266727

If that tape truly exists, it is my speculation that Trump knew it existed way back in 2020. But at that time, after the impeachment and in the middle of Covid, there wasn’t any real way to effectively prosecute the case. At that time, it would have been perceived as Trump abusing his power to hurt Joe. Now it’s not a story about Trump abusing power because Trump isn’t at the helm. Instead it is properly received and understood as a story about Biden’s corruption.

🧵

Let’s discuss what each candidate needs to get done at the debate tonight.

For each person the expectations and goals is mostly a function of their current position and their short term and long term goals. /1 Given the amount of media consumed with Trump coverage, this may be their only chance to get their message out to a broader audience.

Only a few, like Tim Scott and DeSantis, have the means to put up ads in volume.

Tonight is crucial if they hope to break out from the pack. /2

The “unite the country” theme is exactly wrong for this moment in time.

Both tactically and politically.

You don’t unite with people who support the corrupt abuse of power to destroy you.

This is a political war. We’re in the midst of battle.

You unite when the war is done

https://twitter.com/aaronlarnavarro/status/1691637632411779407

Does anyone believe that as you tear down the administrative state and reform the FBI/DOJ with the media pitching a daily fit that the 50% of the country that supports Democrats are going to seek to unite with you?

We need to fight.

We need a fighter.

Since Bill Barr has been in the media so much lately, I think this is a good time for me to write my wrap up on my Spygate speculation.

I’ll say this right up front, I stand by everything I wrote.

Not just the predictions but also the analysis.

Let’s go through it. /1 Early on, after Trump fired Comey and when everyone was screaming how Mueller would destroy Trump, I speculated that Trump actually was hoping to receive what I termed a “clean bill of health”. Meaning he saw value in a person like Mueller proclaiming there was no collusion. /2

I found this article from @NYMag titled “Trump Could Win Another Lesser-of-Two-Evils Election”. I think it’s important to understand the dynamics driving the current tight race that can and I believe will result in a clear electoral Trump victory. /1

nymag.com/intelligencer/… The reality is that Trump overperformed amongst the crowd who “hate ‘em both” not just in 2016 but also in 2020, winning them by 17%. The problem? Their share of the electorate dropped from 18% to 3%. In 2020 voters mostly just hated Trump. /2

The reality was that courts refused to actually hear cases for technical reasons based on standing and timing. None of them assessed the actual merits.

Trump’s desire to send the question back to the legislatures FOR THEM TO DETERMINE, was both reasonable and legally possible./1

https://twitter.com/dlorieh/status/1686750212583198721

The Special Counsel is attempting to turn a President’s right to lobby Congress into a crime.

Trump never forced Pence or any Congressperson or Senator to do anything.

He lobbied them. A completely legal endeavor. /2

It has long been my theory that the real reason Garland was convinced to raid Mar-a-Lago is that someone tipped them off that there were documents stored in Trump’s safe that in some manner connected him to the January 6 riots.

But when they got to the safe, it was empty…

1/ That kind of documentary evidence of Trump personally involved in the riot would have severely damaged Trump. But it wasn’t actually there. So Garland was, at the end of that day, left to confront that he had no evidence to end Trump politically.

2/

From day one DeSantis lied to the public’s face about something so basic and transparently true that it set the stage for everything else.

“I”m not running” “I’m on a book tour.”

The consultants told him
that the misrepresentations would help build momentum. 1/

https://twitter.com/mrsmcgee15/status/1680958993290674178

Instead the primary base nationwide quickly soured. Why? If he will be this insincere about this what else will he misrepresent?

Well, sadly he’s misrepresenting a lot.

He would have fired Fauci. ❌

Trump only built 40 miles of wall. ❌

Ukrain is a territorial dispute. ❌

2/

The three-act structure: Act 2: (Sound familiar?)

Fact 1: Trump was a total outsider in 2016 and was forced by the nature of our government structure to work with and hire people that were part of and therefore acceptable to the entrenched politicians. Fact 2: Seven years after he was initially elected and after many elections have passed more politicians are aligned with Trump but the leadership particularly on the Senate side is vehemently opposed to Trump and his policies.

🧵

Our system is built on the idea of the secret ballot.

It’s an important principle.

For it to function, it requires that we trust the officials in charge of the electioneering process.

Unfortunately the extreme tribalness of modern politics makes trusting very difficult…

https://twitter.com/b26rick/status/1631298669314973699

In the past when most of the laws and case law were created, we did not have the technology to verify election outcomes. Now we do.

But there is an ingrained hesitation to pierce the vail out of a fear that individual’s voting records will become public.