Analyst of tax-advantaged savings programs "A truth that’s told with bad intent beats all the lies you can invent."
Chapel Hill, NC
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A powerful summary of where we were, where we are and where we're going.
Of course, a meltdown in AI cannot wipe out the economy.
The treasury swaps market is making it very clear that is banks were prolific in their credit extension and part from the earnings on their swaps that they didn’t hedge adequately because they relied on BYP Bernanke, Yellen and Powell to ease at the first hint of flattening ( slight exaggeration)
If you want to get rid of inflation, you must do something that we can measure. You must do something that we can test you must for now create a thought experiment what happens when the yield curve inverts to the earnings of banks when they start to mark their swaps and swap options to market and their earnings, go down and just take a look at Goldman Sachs and Morgan Stanley and JP, Morgan, and Bank America and Wells Fargo and Citi group and as their earnings decay their credit formation by law is reduced so you don’t have the monetary expansion that fosters the sustainment of inflation, not withstanding the fact that core is only 2.4Percent and that PC is overstated by 1.45% just on investment services alone and when you look back to October 19, 2023 and mortgage rates fell in less than 11 months by 192 basis points and JP Morgan comes out September 12 24 saying we are losing our interest margin we want you to steep in the curve that last part I added the curve did steep in 229 basis points from policy to the 10 year, but that doesn’t happen in an environment with the curve is already steep because carry build the carry trade buildup dominate the steer crew and dollar suppression
We’re gonna have a very rapid hundred basis point decline and mortgage rate and then an even more rapid follow 100 decline and an even more rapid follow 100 beyond that because we’ve already eaten through a third of the Covid error long duration mortgages that could otherwise slow down the process of lower mortgage rates and this K economy is gonna flip the script and become a special K where the outdoor laborer start getting so much better treatment the unemployment rate fall below 3% because what if Nvidia chopped by 75% they only have 40,000 workers $125 million of market cap per worker you fire one person you’re not chopping 125 million off of GDP we had policy interference since.com with massive monetary expansion and the current administration and it’s central Bank chair have said the clown show is over conjunction is a requirement for compression of risk so we’re gonna see a lot more pain in the curve in the inversion in banks in the euro that’s all gonna hurt tech that’s gonna hurt banks that’s about 2/3 of the stock market. Where’s our money going a lot of it to money heaven but a lot of it to interest rate sensitive and low Beta.
But if you think it’s anything like the GC, that was a choice by the Big bank did not refinance mortgages and let the average homeowner off the hook and have extra scratch at the end of the month that log jam has been eaten through by the beavers known as the Independent mortgage brokers that only one volume, so we’re just gonna have a bar flattener lead to a bear rotation lead to a bull flatter and we’re gonna cause Europe to invert and they only get their credit from their banks 87%
So you will see as we flatten they flatten they’ll go to a neutral bias. They’ll go to an easy bias and then they’ll cut while we aren’t and we’ll get a wishbone curve and we’ll get dollar strength and the earnings won’t be there and Credit will widen and second to derivative growth will go from acceleration to deacceleration and it’s gonna be Goldilocks for Main Street and people who are not experts on this who don’t understand the swap market, who don’t understand the fixed income market, who don’t understand the mortgage market are squawking like experts, and they’re selling you down the river use your eyes not your ears. When you see the big bangs going down you know they’re gonna slow their lending. You know it’s gonna slow down the boil of inflation
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John Tuesday retweeted
When you work in markets, you give a bigger lens of volatility, unfortunately for too many people the 20 years of PB&J the prior three Central bankers, smothering volatility at every opportunity it became a lost art, but it’s fundamental it’s not emergent.
Treasury volatility is foundational equity commodity crypto credit they’re all emergent and so you need to look to foundational to understand what’s going on
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John Tuesday retweeted
Warsh’s well telegraphed strategy of policy normalization has triggered as expected an expansion of treasury volatility; treasury volatility has gone through the eye of the storm, with de minimus media coverage.
Elevated 2 year note volatility and the associated widening of yield spreads with Germany will mechanically drag up currency volatility, and these increases are toxic to the goldilocks assets like commodities with their zero yields and equities with their volatile beta earnings over a market cycle.
The consequences of Warsh’s policy normalization will be the transformation of trillions of dollars of unrealized capital gains generated during a largely uncorrected 24 year bull market into an accelerating rise in the level of capital gains tax payments just like in 2000-2.
This will accelerate the flattening cycle of the yield curve the has been historically under reported. The underreported inversion of a 30Y versus a 20Y UST yield from the start of the Iran war and the earlier flattening of 30Y to 10Y to 30Y, which started 57 weeks ago.
The flattening of the UST yield curve will create a wishbone effect where the US flattener leads to a bull steepener in Europe.
The wishboning of the global curves due to the greater limits on spread widening on the longer end versus the policy, end of the curve will drive up the dollar and drive down commodity and leveraged beta(financials, banks, PE, and PC), beta(AI) and beta volatility.
The Warsh policy of normalization of treasury volatility in the absence of a conjuncture(an emergency) means he wants a higher stacked cost of funding which is
Real rates plus
Inflation plus
Treasury volatility plus
Credit(and equity)volatility plus
Currency volatility
This will create a global dollar, yen and collateral shortage.
The aforementioned is barely evident in the current pricing of the derivatives markets in;
Vega
Skew
Kurtosis
For the following markets;
Sovereign
Credit
Equity
Currency markets.
Following the dollar and credit events, the next sequenced event that flattening triggers is a historic duration annihilating refinancing wave.
In conclusion, these volatility normalizations, as they pass through the information cone into expansion, more news coverage, will reflexively(Soros concept) produce historic levels of disinflation like 1989 Japan.
The architecture of the system is not prepared for what must happen.
Information inertia, which is the incuriosity of the media, will allow this process to develop more aggressively in the highly likely absence of adequate reporting.
This is the greatest alpha opportunity in generations.
The current historic liability driven investor(LDI) shortage of pure duration in the system is the greatest alpha opportunity is pure US and Japanese distilled duration.
The potential supply of pre-conjuncture policy generated virtual duration is no longer available and the net supply of synthetic duration created by corporations, PC and PE which evaporate and decay over different time frames is receding briskly as evidenced by widening credit spreads and reduced issuance and IPOs.
We are at the advent of the greatest involuntary duration grab of all time, which will accelerate at a pace that the market architecture is unprepared to deal with.
The number of interactions of information due to policy habituated capital inertia will require massive beta decay before adequate levels information will be produced to alter market participants “buy the dip” investment behavior.
Nevertheless, the architecture of the system and a fair standard model of markets viewed through frame of a risk field of exquisite interconnectedness, ensure that this is inevitable.
The ocean of pristine alpha, after generations of beta masquerading as alpha, is at hand.
@GeorgeGammon @hendry_hugh @GZuckerman @izakaminska
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Financials aren’t benefiting from the counter trend steepening or higher rate trend.
The decay and the financials is the Achilles heel, the ballast the anchor for the S&P, which will drag the NASDAQ down because the competition from these rates is so severe that that Capital attraction cross assets that normalization of flow towards fixed income is normalizing because of the decaying growth rate of price of equity
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If you wanna learn about an extremely dangerous time in financial markets that was so hazardous, it caused the chairman of the federal reserve to accommodate so much inflation to interfere with the contagion that he drove the NASDAQ up 450% in just 16 months and higher beta up much much more.
He then proceeded, having warned people that he would, to hike rates after the peak by 50 basis points and preemptively driving the dollar to 121 over the next 15 months and then he went super dovish followed by PB&J Powell, Bernanke, and Janet Yellen. That policy interference is with us and the dollars escalation higher is a measurement of the decay of that policy interference that the current Sherman said is his policy transformation.
No policy driven volatility suppression outside a conjunction, which is contagious risk
Inside Long Term Capital youtu.be/0NJzrx_RMRY?is=7FBd… via @YouTube
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John Tuesday retweeted
In addition to Peking, wouldn’t you also need the flattening that started 56 weeks ago to stop so that you don’t have further upward pressure on the dollar as we get the rate differential between the US and Germany about to overtake its 200 week moving average.
The demand for AI investment, although way over done is not going to end anytime soon and so you would expect a very vibrant supply in the two year note of the US Treasury.
Conversely, the US flattener is causing a German flattener and because they only have a single mandate and they get 3 1/2 times as much of their credit out of banks in Germany versus the US with Germany at 87% and only 25% in the US.
So traditionally and is likely now German rallies are bull Steepeners and that leads to a wishbone curve where we are both flattening while they are bull steepening
And that, then leads to just more strength, you can track the dollar with the yield differential on the short end of the curve, not the policy, but the two year because that reflects expectations as well.
So that’s why we show the two-year yield differential widening, and the German yield curve flattening
This is because the world is going to experience the greatest shortage of sovereign duration for the age in global population, and all of the synthetic Goldilocks superposition, duration and credit equity and commodities will transform and become unsuitable and get replaced by pure distilled US in Japanese and G-7 duration demand
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John Tuesday retweeted
This @LRB piece from @DowningAm is just a fantastic tour d'horizon of Britain's energy system. A must-read for anyone hoping to navigate the coming decade. Remember: energy is more or less EVERYTHING! lrb.co.uk/the-paper/v48/n17/…
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John Tuesday retweeted
#FinanceDaily Another marvelous show today.
Listen on recording
@WorldStrategist @anasalhajji @OfficialBBrooks @paul__mangione @KaufmanPulse @davevermilion @EladioSantiag14 @DuaneHope5 @GaryCardone @CarloDAngelo @JustinBrady @truthmarch2103 @ArgueAlone @PolarityRadio @ravikarkara @SpecialSitsNews
x.com/i/spaces/1OxwbnVWeoDJB…
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John Tuesday retweeted
Of course, a meltdown in AI cannot wipe out the economy.
The treasury swaps market is making it very clear that is banks were prolific in their credit extension and part from the earnings on their swaps that they didn’t hedge adequately because they relied on BYP Bernanke, Yellen and Powell to ease at the first hint of flattening ( slight exaggeration)
If you want to get rid of inflation, you must do something that we can measure. You must do something that we can test you must for now create a thought experiment what happens when the yield curve inverts to the earnings of banks when they start to mark their swaps and swap options to market and their earnings, go down and just take a look at Goldman Sachs and Morgan Stanley and JP, Morgan, and Bank America and Wells Fargo and Citi group and as their earnings decay their credit formation by law is reduced so you don’t have the monetary expansion that fosters the sustainment of inflation, not withstanding the fact that core is only 2.4Percent and that PC is overstated by 1.45% just on investment services alone and when you look back to October 19, 2023 and mortgage rates fell in less than 11 months by 192 basis points and JP Morgan comes out September 12 24 saying we are losing our interest margin we want you to steep in the curve that last part I added the curve did steep in 229 basis points from policy to the 10 year, but that doesn’t happen in an environment with the curve is already steep because carry build the carry trade buildup dominate the steer crew and dollar suppression
We’re gonna have a very rapid hundred basis point decline and mortgage rate and then an even more rapid follow 100 decline and an even more rapid follow 100 beyond that because we’ve already eaten through a third of the Covid error long duration mortgages that could otherwise slow down the process of lower mortgage rates and this K economy is gonna flip the script and become a special K where the outdoor laborer start getting so much better treatment the unemployment rate fall below 3% because what if Nvidia chopped by 75% they only have 40,000 workers $125 million of market cap per worker you fire one person you’re not chopping 125 million off of GDP we had policy interference since.com with massive monetary expansion and the current administration and it’s central Bank chair have said the clown show is over conjunction is a requirement for compression of risk so we’re gonna see a lot more pain in the curve in the inversion in banks in the euro that’s all gonna hurt tech that’s gonna hurt banks that’s about 2/3 of the stock market. Where’s our money going a lot of it to money heaven but a lot of it to interest rate sensitive and low Beta.
But if you think it’s anything like the GC, that was a choice by the Big bank did not refinance mortgages and let the average homeowner off the hook and have extra scratch at the end of the month that log jam has been eaten through by the beavers known as the Independent mortgage brokers that only one volume, so we’re just gonna have a bar flattener lead to a bear rotation lead to a bull flatter and we’re gonna cause Europe to invert and they only get their credit from their banks 87%
So you will see as we flatten they flatten they’ll go to a neutral bias. They’ll go to an easy bias and then they’ll cut while we aren’t and we’ll get a wishbone curve and we’ll get dollar strength and the earnings won’t be there and Credit will widen and second to derivative growth will go from acceleration to deacceleration and it’s gonna be Goldilocks for Main Street and people who are not experts on this who don’t understand the swap market, who don’t understand the fixed income market, who don’t understand the mortgage market are squawking like experts, and they’re selling you down the river use your eyes not your ears. When you see the big bangs going down you know they’re gonna slow their lending. You know it’s gonna slow down the boil of inflation
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John Tuesday retweeted
Xijing Research Institute dean Zhao Jian: "For years, the conventional wisdom was that China’s economy was held hostage by its real estate sector. Today, Beijing faces a new, equally perilous predicament: an economy dangerously overreliant on exports. The core issue is not that Chinese manufacturing is too competitive, but that this advantage is essentially subsidized by the severe compression of domestic consumption and labor costs. Rebalancing is no longer optional; it is urgent."
Interesting Caixing article. I wouldn't say this is the policymaking consensus yet, but the speed with which similar views have been spreading in public suggests that we may be nearing a turning point in the narrative.
caixinglobal.com/2026-09-22/…
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John Tuesday retweeted
Betting on the yen: the risks of the carry trade ft.trib.al/lVN6ELp
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John Tuesday retweeted
Quiet please, the currencies are sleeping ft.trib.al/y2vk45V | opinion
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This thread gives a broader context of the very eerie parallel between the evolution of a market panic in 1873 (doubts, a summer panic in Vienna (Leopold, anyone?) and then Jay Cooke fails to raise capital
Liaquat Ahamed: [crash starts in Vienna, but then]"You get this false period of calm..you get a period of 3-4 months where nothing happens..Meanwhile, Jay Cooke..suddenly finds...he's not able to raise capital...When he announces [it] there is total panic"
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John Tuesday retweeted
A quantized treasury yield curve has been smothered this week.
What I call the “tiff”the 3 to 5 year has compressed 70% this week alone and I think we’re likely in the next couple of weeks to invert on a trend and protracted basis.
This will be contagious. This will trigger demands for more collateral. This is a liquidity gap. This is a liquidity failure. This has no solution under wash because he said he’s gonna allow the normalization of the volatility, the skew and the kurtosis curve of the treasury market. He used the word normalize. He said he wouldn’t suppress volatility outside of conjuncture episodes his word for an emergency.
This quantized inversion will help flatten global curves reduce expected rate hike, paths internationally amongst the G7 and lead to a dollar breakout above an 18 month high monthly close of 101.3.
Nvidia told us they expect to accelerate by 30%. The other members of the crew said please slow down for whatever reason the high-yield market the triple C rated paper is breaking out to post Covid wides.
The handwriting is on the wall. It’s on the floor. It’s on the ceiling. It’s spreading and it’s everywhere and everyone could just think where’s a good place to buy more risk. Well the market is signaling with this massive accelerating inversion. It’s time to exit whatever calibration you want and migrate to pure pristine distilled US and Japanese sovereign duration in my opinion.
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John Tuesday retweeted
Caixin: "China has unveiled a sweeping five-year plan for its electronic information manufacturing sector, aiming to boost the industry’s annual revenue beyond 30 trillion yuan ($4.5 trillion) by 2030."
This is extraordinarily ambitious. There is no directly comparable global measure because China’s definition is unusually broad, encompassing everything from integrated circuits and advanced computing to consumer electronics and energy electronics. But global consumer-electronics manufacturing generated about $2.1 trillion in 2025, while global semiconductor sales were under $1 trillion.
China’s target therefore implies that it expects Chinese electronic-information manufacturing to account for an extraordinarily large share of global production by 2030.
This requires of course both that the massive expansion in its global share can occur without a collapse in profits, and that the the rest of the world (especially East Asia, where much of the production is currently concentrated) is willing to accommodate the Chinese target by giving up its own share of production.
caixinglobal.com/2026-09-17/…
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John Tuesday retweeted
During almost 30 month from just before Silicon Valley blew up until the end of 2025 Powell’s reckless dovishness steepened the yield curve 2-30 years by 258 bp. The curve has reversed 77bp over the past almost 9 months .
You are focused on this nominal 10 year yield and you’re not addressing what’s going on with a real yield and so you’re missing this enormous acceleration of flattening, which essentially has no path but to revert to new cycle lows.
There’s huge manifestation of rising real yields and swaps and tips and the 77 basis point flattener and I’m sorry to say I think it is very mistaken to be focused on the nickels and dimes of the incremental higher yield of a 10 year, can it creep a couple of basis points above 5%.
There is enormous action in the curve that nobody at Bloomberg or CNBC or any major outlet is talking about and this is fundamental. This is gonna destroy the commodity “” cycle which never had a shot. It was only Powell’s reckless easy and now he’s out and Warsh says I’m not gonna be a super dove unless it’s needed.
So well, you’re focused on the 10 year. All you really should be focused on is the flattening curve which will eventually create volatility suppression in the bond which will mechanically drive more Capital into the bond and then the whole Carval just continue to flatten through inversion and cause the low in prices of bonds than Notes, then bills in that order
@tracyalloway
You must start highlighting the biggest action in the room and the five-year 10Y that’s a 55 weeks old curve acceleration.
Don’t allow your listeners to be left on informed about the longest trend of all market prices in a market that’s much bigger than equity, fixed income is much larger than equity as you know.
The horse is out of the barn. You’ve got to start talking about it.
We are about to experiencing an inversion along some part of a kinked yield curve that should not be allowed to happen without you highlighting the risk of it happening even though in my work it’s a risk it’s a certainty
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