Forward Guidance: The Bond Market Is Trapping The Fed | Weekly Roundup

Sourced by podcast-ingest on 2026-09-14. Auto-transcribed via AssemblyAI (universal-2, en). Speakers identified by AssemblyAI Speaker Identification using the per-podcast host/regulars hints; the resulting label→name mapping is in the frontmatter. Duration: 45m. Episode page: (not provided). Audio: https://traffic.megaphone.fm/BWG2316510194.mp3.

Show notes (from RSS)

Bond investors are testing whether policymakers can suppress yields without reigniting the inflation they claim to fear.

This week, we unpack the political incentives, stubborn prices, and Fed’s looming credibility test currently testing markets.

We explore the massive increase to Treasury buybacks, a possible one-and-done hike, slowing AI-led growth, if debasement trades are due for a pause, and the growing bipartisan opposition toward AI . Enjoy!

TIMESTAMPS:

00:00 Intro

02:07 Can Bessent Beat The Bond Market?

06:56 Should The 10-Year Yield Be 5.8%?

11:01 The Inflation-Growth Trap

18:29 Ads (TOKEN2049, Avalanche)

20:05 Will The Fed Hike?

26:08 Is One Credibility Hike Enough?

30:29 Is Economic Growth Peaking?

33:04 Can Debasement Trades Keep Running?

37:42 Is The AI Trade Breaking?

43:22 Final Thoughts

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DISCLAIMER

Nothing said on Forward Guidance is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only. Any views expressed are opinions, not financial advice. Hosts and guests may hold positions in the companies, funds, or projects discussed.

Transcript

Jack Farley: Nothing said on for guidance is a recommendation to buy or sell any investments or products. All right, what's going on, everybody? Welcome back to another roundup edition. Forward guidance. We are finally on the other side of Labor Day. We're into September. It's time to lock in. No more nonsense, no more traveling. Quint, it's lock in season. What's up? How are you?

Weekly Roundup: I'm back, I'm back. Yeah, got came a little under the weather on some travel back, but we're here and ready for whatever the market's throwing at us.

Jack Farley: Hell yeah. I love it.

Weekly Roundup: How are you doing? You up in New York?

Jack Farley: Yeah, in New York at the old block works HQ this week. Yeah, man, it's good to be here, good to be. Nice way to start off, you know, post Labor Day. Just really focusing on in getting a lot of work done out here. So it's been good. Things are ripping, man.

Weekly Roundup: Nice. Yeah. Surely in the markets too.

Jack Farley: Yeah. We got lots to talk about before we do. Just want to do a quick shout out to our upcoming conferences. Digital Asset Summit Asia coming up real quick here in October 7th off the back, we're. We're in the same venue, same partnership. We're working with token 2049. So if you're there in Singapore for token 2049, we're also going to be hosting a partnership with them, this Digital Asset Summit in the Same video on October 7th. We have a pretty stacked lineup. Some really great people there. Quinn and I are going to both be there on a couple panels. Should be a ton of fun. We also announced the Digital Asset Summit London speaker list. That's starting to rip out through too. And that's happening in November, so big couple months. Don't slack on. On getting your ticket. Get it early. We'll have a, we'll have a link in the, in the, in the bio here in the description. And yeah, we're going to be both at, at the London one as well, so it should be a lot of fun. It's going to be a. It's gonna be a sick couple months. So come out and. Yeah, listen to us and hang out in person. It'll be a good time.

Weekly Roundup: Can't wait, man. Time's fine. I. I can't believe we're. I gotta board a plane again in a couple weeks.

Jack Farley: Yeah, I know, I know. So not only it's like fall hits, I'm just like traveling all over the place and it's just like showtime. All right, so obviously we got plenty to talk about recording here Thursday So day before cpi, but we did get the PPI print today. Market's reacting pretty aggressively. But before that, let's talk a bit about what's going on with, you know, what, what Bassin is starting to call himself now, which is he's, he's, you know, proclaiming that he's the House. Now I have a pretty good insight into what the Japanese, what the bank of Japan is going to do and you can bet against me if you want. So, yeah, obviously we had the announcement of the buybacks actually occur a couple days ago and initially, you know, he was talking about so, so traditionally the long end buybacks have been 2 billion. He said it'd be at a $4 billion minimum of buybacks and he came out and announced that it would actually be $6 billion. So that was above his initial guidance of 4 billion. But even regardless of that, we still saw the long end sell off further and yields go higher. So, you know, seems like market is saying we need more. If you're really going to try and fight us, if you're going to try and fight the bond market, you got to use a lot more ammo, man. If you want to say that you're the House, you got to act like it. That's kind of seems like what the bond market's saying. What's your read, Glenn?

Weekly Roundup: Yeah, I think when these events occur, they display the political incentives that drive behaviors of politicians and policymakers once they're in charge. So there's obviously everyone's aware of the kind of hot, hot takes and criticisms that Besson and probably many on his team have had about how previous administrations have operated at these roles in the treasury and also at the Fed. And it's easy to say when you're on the outside. And Besant, if you were to move him from his current role, 1000% would be reacting in a similar way as that Druck letter if it were someone else and he was on the outside looking in. So it's just interesting to me because he obviously knows, like he's very, very intelligent guy. Like he knows these things and what they cause and the ramifications. But again, the political incentives are so strong that they make people do things that they know probably shouldn't be done. And so that's crazy to me because obviously we have midterms coming up and he's well aware of what ultimately, when you suppress yields and manipulate currencies lower, those are inflationary and it's kind of one fighting the other. So it's brewing the storm that he's trying to balance competing goals of keeping inflation in check, not allowing financial conditions to tighten, to try and boost markets into midterms, but then also trying to avoid a problem on the other side. So it's a very fine line and I think if you asked him five years ago about this situation, he would probably be criticizing it. But when you're in the role, what can you say? What is he supposed to say? Our bond market's fucked and you should not buy it? Inflation spiraling out of control and we're short oil? No, he's not going to say that. He's going to say everything's fine and you know, I can bully this. And so it's, it's kind of what you would expect. And I think the important thing for market participants is to just not get caught up in the, the dialogue and, and hysteria either way. Right. It's like he's not the devil and he's not the Lord. Like he's, he's just another, you know, politician and policymaker trying to keep the ball afloat, doing whatever humanly possible to, to do so and achieve his political incentives. But he's still human and the markets are the markets. So I think there's, you know, there's still a month and a half to midterms. So obviously their incentives don't fall away just yet. But it's clearly getting harder and harder to, to keep the wheels on.

Jack Farley: Yeah, I mean, it's just crazy. Like, you know, he made a name for himself when he was with Soros, you know, going against breaking the bank of England. And literally, you know, he was on the other side of the house that he's saying that he is now. So obviously, you know, like you said, he's a smart guy, he knows what's going on, but he's also still a human and he's in a political seat and you know, so here he is trying to, trying to get it done and you know, we'll see, we'll see what happens. I actually did a kind of cool analysis here just looking at like, obviously, you know, the bond market wants, the yields want to go higher. You know, the economy's ripping, nominal GDP is hot and they're trying to keep a lid on it. That's really what's at play here. And this is just kind of cool, looking at the regression of the 10 year to nominal GDP and trying to think through a fair value there. And you can kind of see just on this is that look, if the game at hand here is, you could say through just looking at this regression of nominal GDP that the fair value of the 10 year is somewhere around 5.8% right now, roughly speaking, assuming that the 6.6% nominal GDP continues. But I tend to think so they're trying to keep 100 bip spread there at a minimum. And the question is, does he have enough ammo to do that? And it seems like right now the market's calling his bluff pretty aggressively. At least in the bond market the yen has worked out honestly, which is, I feel like it's kind of gone understated. They started doing this formal intervention in the 160s and we're at 153 right now. So that side of things, it's been a bit quieter, but it has worked out. Obviously it's helped that the BOJ has been a bit more hawkish there. But obviously the market's saying that look, $6 billion of buybacks is not enough. If you're trying to fight us, you got to at least double that thing, buddy.

Weekly Roundup: Yeah, I mean I think it works for a short term move in the markets, but if fundamentally nothing is changing. In fact it's kind of worsening when you manipulate markets like that. It's the same thing with oil, right? The cure for high prices is high prices and that brings on more production and you solve the supply shortage. And so when they suppressed prices for many months post war, that's why we're back to highs. And then similarly, if you continue to stoke asset prices and all these inflationary impulses, then you're going to get inflationary responses. So he knows this very well. This like that's one of the things that I just, I think is very important to stay even keeled and not get too emotional because oh my God, best since you know, what a joker. Like, okay, yeah, politics, there's plenty to disagree on or agree on, you know, that's its own thing. But when it comes to the markets like the behaviors are fairly rational. If what your goals are is to try and boost markets into, into an important midterm election and then we'll see what happens. But you know, he, that's why I think it's, it's, it's interesting because he knows what this creates, which is inflation. And he also does not want to see four handles being printed on cpi. So at some point the error will have to be strategically let out and maybe we're getting a little bit of that now, you know, letting volume expand a bit. And you know, you could, you could argue one strategy would be to, to let markets puke into, into the fomc, to, to take, you know, pressure off, you know, make the market look a little wobblier into, into that decision and try and, you know, remove a rate hike that way. Otherwise you're kind of looking closer to like a Q4 2018 scenario, potentially where you actually had a real growth scare hit because the Fed was kind of turning hawkish as the data was kind of peaking out and that was a pretty nasty couple months for the market. So it's precarious either way you slice it. The midterms being a month and a half away definitely adds some variance along the path, I'm sure.

Jack Farley: Yeah, 100%. Yeah, we're definitely in this air pocket right now as we wait for the fomc, especially in light of this new regime of marginal guidance. Not, not entirely no guidance, but pretty much no guidance. So the market has to just kind of take what it can get and run with it, which really feels like what's happening today with this, this PPI print. So we, we had it come in a little hot on headline. So core month over month actually came in at 0.2%, slightly below consensus of 0.3%. So core was actually decent. But the headline PPI was fairly hot there and the market's really just taking this and running with it. Obviously parts of it get imputed into pce, which is what the Fed looks at. Some people are trying to extrapolate this hot PPI print into a hot CPI print. I thought this take was pretty good from Guy Labas. He always has some really nuanced analysis of these big economic data points. So this is what he's saying, which is that, you know, of course PPI doesn't actually measure producer input costs like many people think it does. It obviously goes into pce. But a couple of things that he noted here is one August all items PPI 0.4% month over month in line with expectations. PPI services were on the low side, safe for transport warehousing, which is probably an energy story. There's a whiff of gas price pass through in the numbers. That's probably what has the market going the wrong way here. You just have to look at wholesale diesel right now is breaking out and that's a pretty clear one to one relationship into input costs. But then three says the stuff that falls through to the PCE was actually pretty benign with Portfolio Services negative 1.6% being the most obvious. So overall a neutral reading with a hint of energy price pass through and an easy push into PCE. Now it's on to the one to the 30 year auction that's happening today. So I just thought that was a pretty reasonable take. But again, it just feels like the market is just trying to grasp at anything it can grab on right now and just kind of run with it. So even though, you know, it wasn't like a scorching hot ppi. Yes, it's accelerating. And you know, this was, this was from a. I think it was about mid August is the timeline here. So you know, obviously, you know, oil is hitting a hundred bucks here, so there's going to be even further inflation on that side of things and maybe that's really spooking the market. Um, you actually put out a, a good meme here that I want, I want to hear your take on about the, the basically the fork in the path here of, of which direction to take. So like, yeah, what's your, what's your read here in terms of just what we got today and how that's leaning in here?

Weekly Roundup: Yeah, go back to that, that tweet just for a second. I just kind of want to push back on, on. One of the things is like, you know, sometimes it's easy in the, in the thick of things to get caught up into did it come in line or did it come, you know, around expectations? But when expectations.04% month over month and you're printing, you know, with the four handle into the almost fives year over year, like it's still super problematic. So I think that's important here for people to remember like, okay. And then the other thing is like, you know, okay, the stuff that flows through to PCE were benign portfolio services. And it's like, all right, well you know, know we know that the top like 1% on all the assets and portfolio services are not even a thing that most people would be in their, their inflation baskets. I just think it's funny like nothing against what Guy's saying because it's all accurate. It's more of just like zooming out and sort of chuckling at the situation of that we find ourselves in, in terms of markets and policymakers where they're like, it's constant, you know, finding these little ways to thread the needle of

Jack Farley: like, oh, we beat expectations. But then you look at the long term chart and like we are re accelerating. Yeah, it's a great point.

Weekly Roundup: And it's like, oh, don't worry, like you didn't have inflation this, this month because portfolio services were minus 1.6. It's like, dude, 80% of the people don't own any portfolio. Don't have portfolios. It's like you guys have ran the bottom half of the cane the ground. But anyways, on that other, on my tweet, yeah, the fork in the road with two bad paths. It's like there's many, many, many historical instances of central banks hiking into a, into a energy supply shock and they don't end well. They get reversed usually within 12 months. And this has happened all across Europe. It's happened to some extent in the US in, in different instances. And so the obvious like or most simplistic way to explain that is like central bank hikes don't create more oil. And so yeah know, in, in some ways they restrict the production because they make financing costs even more, you know, more, you know, restrictive. So that's just a bad situation. And, and typically when that happens, you sew the seeds of, of a recession. In many cases, maybe it's not nominal in this case because fiscal spending so high and it could be real. But I'm not calling for recession here because I don't think they, I think, I think this was part of the plan, frankly. Like Vesson has talked about it. Everybody's like the policymakers on the US side in particular have talked about this. They say you don't hike into an energy shack, which is pretty much true because yeah, at some point I said

Jack Farley: that even a week ago.

Weekly Roundup: Yeah, it becomes much more of a demand hit. Like if oil's clock in 100% gain year over year, that's much more of a reduction in demand than it is, you know, sustainable durable price feed through. So that's one half of it. But the other half is like, yeah, inflation is here and it's a problem. So like what do you do? You also, you also don't do what they're doing right now, which is weakening the dollar and stimulating commodities even further and suppressing bond yields and intervening the bond market to support asset prices even further create an even more positive wealth effect, drive even more demand into a supply shock. So the other thing, you don't do that or you shouldn't because it often produces adverse results is, is stimulate into this because you don't, you kind of have to just sit back and, and let the, you know, let it digest. Like the war has to get sorted out. The straight has to get sorted out. Like you don't want to be stimulating demand into a supply shock, otherwise you get Covid crazy levels of inflation and you don't want to hike and you know, send, send the economy into a depression either. So you have to just kind of sit there. But right now, thus far, they've totally chosen the right path via all the intervention. The fact that a hike is even on the table at this stage is a direct result of all their intervention, whether it be with the spr, whether it be with the bond market, the currency market, the tariff refunds, like the list goes on of things they've done this year to stimulate. And frankly, like I've been talking for a long time, I think hiking on the front end is not really the right thing they should be doing. They should be. They should be letting the long end find a fair value. But again, political incentives, the housing market's absolutely dead. It's completely ground to a halt. Financing conditions are becoming very restrictive, particularly for the longer tail small businesses and consumers. So yeah, I mean ultimately they will pick inflation. But again, these paths on the way there get, get really dicey because neither are very good.

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Jack Farley: Yeah, I mean it. I agree. Like, it feels like the f. Like there's some sort of tightening that this market is screaming that it wants. And I guess the question is Is it on the short end or the long end? And right now it's, it's been predominantly on, on the long end. One, one question though is on, on that point of like, what do, what do markets really want going into the Fed meeting next week? Like, let me just pull up the, the current Fed odds right now, but you can see like off the back of this hot PPI print today, or you know, slightly hot, we're down to about a 30% odds of a pause and, and about 70% odds of a hike just a week ago. You know, that was a bit more even 50, 50. I personally feel like it's, it should be at around 50, 50 going into this. Obviously, you know, tomorrow's CPI print is going to be the deciding factor for how this nets out, especially because of Waller's new dogmatic style of monetary policy guidance where he just decides that one single print is, is going to be everything he's going to lay his cards on. So, you know, he kind of puts it out there like he did this a couple months ago. We were criticizing him, kind of criticizing him again, which is just that look like his, yeah, his, his reaction function. It just feels really dogmatic and, and it's like, okay, look, if, if CPI frame comes in a bit hot above economic consensus, I'm going to vote for hike. If it doesn't, I'm going to go for five. I mean, at least it's good to know what, how he's going to react. But I don't know, I, I feel like it's still, it's, it's a bit much. You know, maybe he's a little salty about not getting the, the chair position. I don't know. But I guess my, my question to you is going into next week, like say we got a, say we get a hot CPI print and say rate odds for a hike get to 80% tomorrow after it. What do you, going into the meeting, what do you think, like the market wants the most? What do you think would settle things down the most? Do you think a hike at this point, like a one, a hike with this hint at like one and done. Do you think that would actually like tame the long end a little bit? Do you think if they pause the long end would sell off further or like. Yeah. What do you, what do you think There's.

Weekly Roundup: I do, yeah. It's very nuanced because. Exactly the things you alluded to. I think like, first of all my bias is that inflation is coming in on the firm side. It could, if anything it's I would guess in line or surprise to the upside. And I think even looking further out that there really isn't going to be much disinflation. If anything we could get a total revamp in, in inflation over the coming months given what oil's doing. So it's, it's not good. Like it's going to be very difficult for them to not hike. I think over the coming meetings the political pressure is just getting too great. And, and remember you do have a bunch of, you have both the Trump appointees like Waller who's clearly disagreeing with Waran a lot with all, all the speeches, who's salty about not getting the chair pick and then you also have all the, you know, the anti Trumpers who would love to, to slam a rate hike into the election. So I actually think that matters here and I think they, they my base case was not a hike and but I think it's getting stronger and stronger and ultimately like part of that has to do with Warsh for all of his speeches. For months has been talking about wanting to, you know, wanting to empower the bond market and the financial markets to send a signal, you know what we don't want to interfere with forward guidance, blah blah, blah. So tell us, you know, kind of what we need to do and all that. So the bond market's sending a very clear signal that they should start to restrict. I just have so much beef with the, the mechanism through which they restrict on the front end and then over here manipulating on the currency and bond side. It just, it's so kind of backwards. But I think that's what they kind of want is this like, you know, Jim Carson's talking about this good cop, bad cop. But yeah, my guess is like you probably Dragon Morse tooth and nail to do it and it's probably like a framed as an insurance cut and a one and done. But that again yeah. Insurance hike. Yeah. It makes things spicy though because if the next month shows another continued leg up in inflation. So I don't know man, I would have to say I think the market like if you hike you probably help the long end a little bit, right?

Jack Farley: Yeah.

Weekly Roundup: If you don't, you definitely put pressure on it. But for risk like maybe we sell off enough into it where it's just like a relief regardless of what happens. I'm not really sure. It definitely depends on kind of what volume and price does do into the event. But clearly the bond market's been signaling this for a while. We've been above 50% for some time and equities are just starting to care, which I find interesting because the bond market's been saying this and equities are only starting to care now that it's in the purview.

Jack Farley: Yeah, yeah, I'm like definitely ready to be stopped out on my notion of like max hawkishness and actually the realization of a hike, like it's just getting so desperate. So I'm willing to be wrong there and but to your point, like it really depends again what CPI print does tomorrow. I'm kind of holding my reservations of, of where I'm going to lay my cards down until then. And I have no edge in prediction predicting cpi. Like I just, yeah, I don't think I'm smart enough for that. So really I just have to decide like yeah to that point. And then really the question for me is is this just an insurance hike, a credibility hike, kind of tame the rest of the committee that's pushing for a hike and that sort of thing and really dragging the seals or does it become a bit more of this sustained thing? To your point like do we do we got the hike in September and then suddenly the talk gets going again for, for October or December or what have you. And obviously you know, if we start to hear about something in October that's really close to the midterms and whole host of other issues there. Another little experiment that I did in my, in my vibe coding here is, is actually I was really curious about like what is, what is the reaction from long end bonds after the first hike and what is the context of what drives the long end into that first hike? So it was actually a really interesting analysis because my opinion, and this is kind of what validated here is it really matters what part of what composition of a long bond yield is heading higher. Is it inflation expectations going up or is the term premium going up that's leading to higher real yields? And what's quite interesting here is that when it's inflation expectations leading so like 2022 you see continuation higher in long bond yields even, even into the hike. But interestingly enough when it's more term premia story which you can see has been the leading driver, yes inflation expectations are a bit higher but the main driver of long bonds recently has been this term premia composition. And if you look at historical precedence of first hikes based on the lead up when it's term premia led, that's really the bond market screaming for we need a credibility hike which feels like we're at now and you can see the moments where that happens where you get that hike and especially like this one and done credibility hike based off term premium screaming for it. You actually see long bond yields sell off. So in my opinion, depending on again how hot the CPI print is and whether there's any sort of hint at it being a start of a hiking cycle versus not I certainly don't believe it's the start of a sustained hiking cycle yet I, I see no reason to believe that. To me it feels like it would be the thing that you would actually see this reaction of like a hike but long and falling. What do you think of that?

Weekly Roundup: Yeah, it's, I don't know which part of the curve I like better in that situation because I do think structurally there are such issues with the long end. I, I, I kind of agree with you though. The SOFR curve right now into June and September of next year basically has three hikes priced in and I have a very very very difficult time seeing them get above, above that like that. That seems if they did three, if they ripped three hikes in the next six to nine months like you got to imagine the stock markets taking an absolute beating.

Jack Farley: Yeah.

Weekly Roundup: Ripping three hikes into $120 oil and like that just, that sounds, sounds like a crazy recession. Yeah. So I would fade that but I think you only can fade that once they start because if, if they continue to kick the can kick the can. You know, who knows like these things are kind of reflexively self reinforcing if you know we could get even more. And plus I think inflation still surprises to the upside at least for a month. Maybe it could longer we got to just see. So I'm kind of with you. I lean lean towards being with you. I might prefer SOFR in that case because it's just a little bit more I think like something they have a little bit more control over. But granted they're intervening every day on the long end. So the curve is also flattened pretty hard into this stuff. So I, I, I could imagine some steepening to come out on the other side like if, if they're, yeah if they're getting more doish at the Fed because of growth problems that removes the need to like cap the long end as as much so I'm with you though on that sentiment. Like the question as the 10 year hits 5% or close to it here is, is, you know, what is the underlying real growth plus inflation that this should kind of command and you're definitely starting to get up into the upper bounds probably of that.

Jack Farley: Yeah, yeah. I mean so much of that growth question, I don't. So you kind of think we're peeking out in terms of growth because a lot of this has obviously been fiscal deficit and AI spend. So do you think you see in AI investment infrastructure kind of slowing down here? Is that the read through?

Weekly Roundup: I think the, the, the rate of change, the growth in it is definitely slowing. So it's decelerating at a, at best and you know, no, it's not, definitely not declining at least in the foreseeable. But the rate of change I think will slow and is slowing and, and it's the main driver of the economy. Plus think about how often we see these lagged real rates take their toll. It's usually comes months after where you know, we're sitting above 2 now for quite some time. Spreads on the long like junkier stuff are widening financial conditions for all purposes outside of stocks which are just keeping support in the midterms are tightening. And so that usually works with a lagged effect. And I think a lot of the fiscal impulse stuff that has been enacted to boost things into midterms will fall away as well. And you also just don't have a very pretty outlook on the other side of elections because you can have some debt ceiling, budget issues, gridlock in the House and Senate, a lot of disagreement. And even if you know that the data center and AI trade that, that's getting such political backlash and it's not even just a Democrat thing, it's, it's across the aisle. So I think the outlook is just so murky that yeah, I would not like the Fed inflation is not in a good spot. But, but when it's energy price driven like this, that's going to cause demand destruction too. And I, I do think growth, growth will be peeking out and, and yeah decline from here into next year.

Jack Farley: Yeah, the like really sticky drivers of inflation like wage growth are still not really perking up. Like you just, I just can't get on board a sustained hike cycle until that starts to really turn and accelerate like it's been. Yeah, it's investment and obviously that yeah, you need to have a view on the rate of growth of that. And then yeah, it's, it's oil and headline and the derivatives of that and obviously like next month, you know, we got oil breaking above 100 here today. So, so that can you know, lead to a further positive whipsaw. Let's talk a bit about like tactical trades here in light of all of this especially like an update on this debasement trade idea that like obviously the narrative of it got really ahead of itself the back of this, this Besson buyback announcement. And you know, of course like there's going to be many times where they really, the market's going to test this idea, especially in light of this, these big question marks around how the Fed wants to react to this. Because you know, Besson doing what he's doing is obviously on the surface at odds with what war is saying that he cares about, which is, you know, getting out of the game of, of markets for the Fed as much. So to me, like I, I, I was fully ready and embraced to, you know, give back some of my gains on those debasement trades over this murky period into the lead up of the Fed. And that's fine. You know, that's where I like it always matters to know like what price you get in and how much buffer of P and L you have for whether you're willing to give some of that back because you just don't want to overthink. Like the last thing I want to do right now personally is end up being right on my thesis. But getting stopped out in the interim, like, I would just be pretty bummed about that. Say we get like a, a cool CPI and they don't hike next week and then you get this like big rally or whatever and oh man, like you know, this slightly hot PPI print today in the bond market testing, Besson stopped me out right before the next like higher. Like I'm just willing to take some, you know, egg on my face in the interim to ride that wave. So that's kind of where I'm at is like, look, I, I got into these in a good position to ride a bit of, of downside short term. Knowing that like over the next year or so I, I feel like it'll do well. But yeah, curious how you're thinking about that.

Weekly Roundup: Yeah, I tend to agree. I mean if you, everything, if you entered decently on, you know, in advance of this run up is still fine and, and it's all outperforming stocks. So yeah, I think a simple, you know, there's plenty of ways to hedge it with the, whatever asset you own as well as with other, you know, beta and equity indices. I mean small caps and Russell have gotten smoked nasdaq like it's all, it's all underperformed quite meaningfully since, since the pop. I think that we talked about it at the time and have for many months. What makes this tricky is it's so tightly controlled and influenced. Right. The thesis is that, so you have to be comfortable and heads up on the idea that they also part of the game is that they also need to let air out and let volume expand and basically you know, kind of ding the, the debasement trade in order to, to kind of run the next leg. So I think that's important to keep in mind because there is, there is a lot of uncertainty. I mean one thing we, I would say I would bet on into next year is that I do think Democrats will perform well in the midterms. Definitely take the House, probably the Senate. That one's although less likely. But in years past a lot of, you know, the quote unquote compromises is more spending and less market friendly things which you know, as we know, you know, usually is kind of more socialistic in tendencies. And it's inflationary. And so I think like, yeah, very much so that the fundamental thesis is unchanged but you have to be ready for path risk. I, I, I think it could be very bumpy because again Besant knows exactly the ramifications if he just lets commodities go up into the right for, for forever. But certainly the dips are to be bought. I mean Nvidia is back or was I guess like pre this stuff. It was like back to like, like 5 1/2 to 6 trillion market cap. And to keep that thing elevated, you know you're going to need some big, the bond market's at a couple trillion, you know, you're going to need some big big government bazookas and inflation isn't going away. Like they're going, we're talking about potentially having a growth problem here with inflation at three and a half percent. So you know, that's messy. Yeah, like, you know, it should not surprise anyone if in the next year or two there's 4 or 5, 6 inflation. Yeah.

Jack Farley: the same time too. So much of that growth is dependent on the AI race. And yeah, it's a bipartisan hatred of AI right now. And dude, the people at these frontier models are not doing favors with themselves when they're tweeting about doomsday scenarios and that, oh, not only are you going to lose your jobs, but you're also all going to die if you're trying to get data centers built and like friendly, you know, perceptions of AI. You're, you're like what, what the hell are you doing? Like there's, there's governors or like there's, there's people running in the midterms right. Now that were supportive of data centers that are now, because the polling is switched so aggressively, are now anti data center. So, you know, even your supporters are bailing right now. Like, that's just a, that's just a shit show.

Weekly Roundup: It's crazy, man. I don't. Yeah, it reminds me so much of 2021 crypto for this reason because in the same way that people were making so much money back then, it creates these unpoppable egos and untouchable hubris where you're just. There's wealth created out of nowhere that creates mints young people into, you know, more money and power than they ever could have imagined. And then the human thing is to like take that and run with it. And we're seeing it play out like the, the cloak of invincibility that seems to be kind of draped over the industry is it's going to get tested like every one of these frontier tech industries do. And you know, it's with Trump and Besson and everybody, you know, totally read Congress. It's easy to look at it and say we're fine. You know, like, we can over lever ourselves, we can over commit to all these plans, we can, you know, do all this incestual financing and someone's always going to bail us. But it gets a lot trickier when you don't have that agreement. And yes, okay, let's say the Republicans keep, keep the Senate. There's still a big loss in political capital that occurs, which on the margin just reduces the Trump and broader administration's interest, willingness or ability to use all of these political coercion tactics with corporations or foreign governments supply chains. It's sticky, man. I don't know. Like, I, I just, I think a lot of air has been let out of the semiconductor trade, which was the momentum trade. And you know, there was, there was a pop earlier this week that showed some signs of life, which.

Jack Farley: Yeah, Leopold back in the markets. I heard. Really, he's yay, he's back in, dude. Yeah. I don't know. Like, I saw some, some commentary on it, but yeah, man, doubling back. So, I mean, it's just the Leopold bit again, seems like.

Weekly Roundup: I feel like. Yeah, if there's one lesson to take away from a bubble is the. As fun and long and forever. The, the run up felt like the same thing is true in the opposite direction. And so like you're gonna get these crazy relief rallies that make it seem like it's all back and then that brings those prices higher prices bring out more of the trapped Top buyers. And it's usually a really painful, messy thing that lasts months. And once a trade is so in vogue that it's levered to the gills, hundreds of billions of 3x levered ETF volume, a fund for 40 billion levered four times, like, once that stuff gets to the main page and then rinses out, that's usually an area you don't want to go near for a minimum six months, maybe a year.

Jack Farley: And it. And it's not even that, like, it's going to go lower. Like, you know, the day after Leopold sold and got liquidated, we were just like, I think bottom's in, but it doesn't mean it's a good trade. Like, it's gonna be dead money for a while. And we've just been ranging ever since. Like, there's just a lot of healing that needs to happen because, like, there was so much leverage built up to get these. These bottleneck trades where they were. Like, that's just going to take a long time to churn through.

Weekly Roundup: And yeah, we saw it with bitcoin, which seems to have worked through a lot of that supply.

Jack Farley: Gold in January.

Weekly Roundup: Yeah, silver, gold, the metals. I mean, it's tough. It's tough because there's a lot of different trades that worked over the last year, whether it be metals or semis or whatever. And a lot of them are sort of in this weird, pat like, situation where, you know, people instinct is to buy. But, you know, the market might be trying to. To develop some new leadership. And one of the things that surprised me actually over the last few weeks is how despite the. The worsening of the situation in Iran, plus the, the supply and demand picture deteriorating and, and price being a vertical line, the oil positioning data is still fairly light for what I'd expect it to be. Obviously, we're starting to get a little bit more antsy kind of gappy moves last few days. But it seems like, yeah, people always. You always go back to what, you know, before kind of recognizing the new leadership that might have emerged.

Jack Farley: Yeah. 100. All right, well, I think we can leave it at that. For those that are still listening 40 minutes in, we're gonna start to get some guest appearances with us on the roundup moving forward here. So stoked to have that start to roll out. Looking like we're gonna have Vincent, Delaware. Jonas next week for the first one of those. So that'll be a ton of fun. Get the three of us chopping it up. He has some, you know, he's, he's so Good. I'm a big fan of his, so it'll be great to have him on. We're gonna start to get some more people rolling in, so. Yeah, should be a fun time here. We're post Labor Day, so time to lock in here.

Weekly Roundup: Yeah, it'll be great to have Vincent next week post Fed. A lot going down, and. Yeah, mix it up so every now and then, people don't have to hear

Jack Farley: just us yelling at each other. It should be good.

Weekly Roundup: All right, man.

Jack Farley: Yeah, thanks. We'll see what the CPI brings for us tomorrow. And, yeah, see where the cards fall from there.

Weekly Roundup: Good stuff. Oh, dude, I. I watched. Have you watched the movie Fargo? Yeah, yeah, I watched it. This. I always get made fun of in New York because people would say, I have that.

Jack Farley: Yeah. Oh, you betcha.

Weekly Roundup: I finally watched it for the first time, fully through, and it was like I was just laughing at so many parts. Even though it's a movie, there's. You're not really laughing yet. Yeah, because, like, how exaggerated they make that exit.

Jack Farley: But there's, like, heritage.

Weekly Roundup: Yeah. There's multiple stretches where they're just like, yeah, yeah, yeah, yeah, you bet. Yeah, you betcha.

Jack Farley: Or don't. You know?

Weekly Roundup: It's a great movie, though. I definitely want to watch some more of that. That. Those producers stuff.

Jack Farley: Oh, man, they're amazing.

Weekly Roundup: But.

Jack Farley: All right, well, have a good. Yeah, have a good rest of the week and see you on the other side.

Weekly Roundup: Oh, yeah, we'll do. See you. Thanks. Later.