Speculation is the search for truth in price and time. Not investment advice - just personal views. Blog at paulomacro.substack.com
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Nothing I say should be construed as investment advice. I do not know your circumstance and so please treat my tweets as nothing more than what my thoughts are & what I’m doing with my own money. Please do your own work and consult your own financial advisor.
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New post up on the blog... link in bio or click below.
A Regime Change in Oil: Positioning, Physical Markets, & Broader Thoughts
Hope you enjoy!
substackfwd.xyz/?url=pauloma…
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I call this “much higher for much longer” regime shift
Not just the back end bidding up—Brent front vs M12 21d rolling correlation is dumping to levels unseen since last spring’s prompt spike(uncertainty blowout).
Setup flipped completely. Front is grinding slow, but long dated paper is rallying faster than back then.
Back end decoupling from the front signals a regime shift. Time to reprice the "crude dumps once this ends" consensus.
#oott #iran
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I am far from bullish credit but worth keeping in mind telecom/media accounted for ~ 70% of the increase in CCC spreads YTD while ~15% of the CCC cohort, mainly three names (Altice/Optimum/SFR). It's a credit cycle camp, but these names have been detonating CCC all year.
CCCs are now wider than the April 2025 tariff panic
CCC OAS: 12.78% vs 11.37% then
Single-B: 3.26% vs 4.86%
BB: 1.97% vs 3.06%
Is it a credit cycle, or a CCC cycle?
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When your generation is 21% of the population but own over 50% of the country’s assets, it’s kinda hard not to smile
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Paulo Macro retweeted
The beatings in the AI Trade will not stop until … well, you can guess 🫡
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Paulo Macro retweeted
Recent Trades & A Few Thoughts… Would love to get some feedback from the physic guys on my half baked thesis. Our desk is hopelessly split on this right now, and frankly i'm losing the plot.
Quick recap of my recent trades for context. As many of you know, I printed solid gains in precious and crypto over the summer, but got completely butchered on the long duration trade in September.
Trump and Bessent just sat on the sidelines watching as spectators, and my entire thesis collapsed right along with "that goddamn house." Swallowing my disgust, I bought bonds for the first time in five years—only to prove the age old market adage that "just bc something looks cheap doesn't make it good". Zero excuses on my end.
Then in late September, watching several late followers jump on the bandwagon way after the fact regarding the uptick in Hormuz transit, I started bidding crude. I fully topped up my position on October 2nd following "Macaron’s" SPR release announcement: x.com/CRUDEOIL231/status/210…
Right now i'm locking in some profits and rolling the book. Took off most of my Dec Brent calls that I’d been sitting on for months, and took profit on prompt WTI futures added in late September before rolling them over.
On Tuesday, seeing the Brent-WTI spread invert, I initiated shorts across a few tanker names. Since it was purely tactical, I covered a portion today. Here’s my working thesis on the WTI rally and the pullback in tanker freight:
1) Tankers are trickling out of the Middle East toward the Atlantic, which cools down freight rates. As the freight drag weighing on Americas and WAF physic diffs eases up, Atlantic barrels stage a broad rebound.
In Brent, as WTI Midland cargoes clear the North Sea Platts Window, the super tightening in Dated Brent begins to unwind. Given that the NSea Nov loading program doesn’t look particularly tight, physic diffs should soften into late October/early November.
This in turn starts supporting refinery margins, which had been crushed by exorbitant physic diffs and freight (quick reminder: real refinery margins factoring in landed costs are far uglier than headline cracks suggest—diesel crack is basically the only thing keeping the lights on).
Why are tankers ballasting back to the Atlantic, even in small numbers? Two lines of thought:
1-1) Iran is stepping up attacks in the Strait, and the US midterms are right around the corner.
Liftings could theoretically be down, though recent NOC tender activity out of the Gulf suggests otherwise. If that's the case, shipowners may finally be pricing in physical kinetic threats and shying away from the Middle East.
Rather than risk a vessel in this high margin tape, they might opt for longer haul Atlantic voyages—less lucrative than Gulf runs, but still plenty profitable on a risk adjusted basis.
1-2) STS capacity is redlining.
Putting the Gulf of Oman aside, Hormuz shuttle tanker capacity is strictly finite, and Saudi tapping into this network has triggered a severe bottleneck.
Transshipments are dragging out—some vessels are now chalking up over five separate STS legs just to hit their final discharge port. With demurrage stacking up and voyages turning into logistical deadweight, owners may simply be bypassing the Middle East altogether and rerouting to the Atlantic.
2) I personally doubt it, but freight rates themselves could just be peaking. Looking at the blown out spread between LR2 and MR earnings, clean-dirty switching looks pretty aggressive right now.
Coupled with that switching, rumors of Washington weighing sanctions relief on Russian-linked crude tankers might be dragging freight down.
That said even if sanctions are lifted tomorrow, it’s not like the entire ghost fleet immediately resumes mainstream service—many are already moving Urals anyway, so the marginal supply impact should be negligible.
Besides this peak-freight angle directly contradicts the oil glut bros preaching "more flows, more cargo"—after all tanker demand is a direct function of crude supply. I’m no shipping specialist, so I’ll leave that to the shipping desks to judge.
Bottom line: I’m leaning toward case 1-1, but the tape needs to validate it.
Over the next 2–3 weeks, we need empirical confirmation that loadings or transits out of the Middle East are actually taking a hit. If recent Iranian strikes knock even 2–3 mb/d out of Hormuz flows, this whole puzzle snaps right into place.
Either way here is the net effect as I see it:
- Prevents refinery run cuts
- US commercial crude draws and a bid back into the WTI structure
- Dated Brent softens
- Headline crack spreads compress, but realized refinery netbacks might actually bounce, with crude quality mismatches eventually forcing diesel cracks higher again.
- Crude starts clawing back the margin share previously monopolized by diesel and freight
What else am I missing here? Head's spinning from all the moving parts, so fire away with your thoughts.
#oott #iran
Now sell side research is completely losing its mind over the transit uptick.
Obviously i've been watching the Kpler and Vortexa prints, but take someone like @LVision_Trading , whom I've been following lately—a single independent tracker mapped out the entire volume rebound flawlessly weeks ago.
Kind of wild how it only magically became the topic du jour this week isn't it? What i actually wanted to see was whether this run rate is structurally sustainable or already putting in a local top, but crickets on that front.
Between hard bottlenecks on shuttling capacity, Tehran’s clear incentive to knock Trump down a peg while he’s taking victory laps over transit numbers, and this feeling like a textbook sentiment meme top—the urge to aggressively fade this consensus is getting overwhelming. Just saying.
#oott #iran
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There is Max Stupid and then there is hilarious beyond measure, but it is rare to get both.
You guys are gonna make me relaunch the Max Stupid thread aren’t you… not sure I’m strong enough 🤣
A company sent an AI recruiter to interview him, so he sent his own AI agent instead
The two AIs discussed the job between themselves. No human was on the call
Then both of them glitched, and got stuck saying goodbye to each other. Endlessly
Job interviews in 2026: your agent talks to their agent, and neither knows how to hang up
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Oh and to my point on CRWV / Countrywide, here's Mozilo in a March 2007 interview (months before the BSC credit funds blew up)...
"The CEO responded by going on TV to say that the mortgage turmoil was an “overreaction” that would “pass rather quickly” once people looked at the situation calmly."
'Overreaction'... 'irrationally'...
As my pal @TommyThornton reminds us, CRWV CEO has sold $275mm in stock just in the past 10 weeks.
thestreet.com/personal-finan…
Mmmmm… Firmus is more like New Century (nobody cares), CRWV is Countrywide (no idea who buys that turd, OWL is BSC, JEF is Lehman, and ORCL is AIG
Although to be clear, the lesson from ’08 is never again - damn the moral hazard and loss socialization - so JEF will get thrown to Jamie, and Ellison will get the favor repaid from Elon (remember larry saved him with the 3mm shares/$1bn in 2018) along with a nice Trump injection ala GM/Ford 2008. Cuz you know, we’re on an AI war footing and all and it’a existential that we win (ie that larry remains a billionaire).
Turducken … history gotta rhyme
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Mmmmm… Firmus is more like New Century (nobody cares), CRWV is Countrywide (no idea who buys that turd, OWL is BSC, JEF is Lehman, and ORCL is AIG
Although to be clear, the lesson from ’08 is never again - damn the moral hazard and loss socialization - so JEF will get thrown to Jamie, and Ellison will get the favor repaid from Elon (remember larry saved him with the 3mm shares/$1bn in 2018) along with a nice Trump injection ala GM/Ford 2008. Cuz you know, we’re on an AI war footing and all and it’a existential that we win (ie that larry remains a billionaire).
Turducken … history gotta rhyme
if this is 07, Firmus is the 2 BSC credit funds, maybe CRWV is BSC or Countrywide, leaving ORCL as LEH?
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*COREWEAVE CEO BLAMES SHARE DROP ON MARKET ACTING 'IRRATIONALLY'
no crying in the casino bro
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oh you know it's coming
I smell something familiar brewing…
you know that classic “BREAKING: per Pakistani sources” slop from Axios, Al Arabiya, Al Hadath, and Al Jazeera—claiming the Pakistanis just magically saved world peace.
Yeah those fucking “AAAA” 🥹 Smells like m fake news or coordinated jawboning on the horizon... absolutely reeking of complete horseshit.
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I was thinking back to the list below, and it occurred to me there was a tender little episode in my lifetime that we hadn't tagged base on in this Turducken of Market Disasters waiting to unfold. Then I saw the afternoon swaps news.
Look I did LatAm for a long time, and even I had to ask multiple friends still operating those markets as locals "umm what the hell?" And they all said: "why would they do this??" So yea, everyone is blown away at what they were even thinking never mind doing.
And then it hit me... we got our Orange County 1994.
So we can add that to the dinner table...
I was asked by pal Kevin Muir for his Year End Special on the Market Huddle podcast what the biggest surprise of 2025 was for me (don’t miss it - should be out next week).
Hands down it was the confluence of so many extremes *and* the acute level of each. While I would like to think over ~25 years I had seen it all (dotcom, RE/GFC, Flash Crash, Volmaggeddon, Covid/2021, among many defining moments), it just never occurred to me we could take them all to historic levels simultaneously. I truly didn’t imagine in 2022 when writing the All Clear Echo (just search for the thread) that we could achieve such levels of Max Stupid…and so much more.
1. Nifty Fifty 1970-72? Nah, not wild enough… let’s make it 7 stocks at 40% of the S&P.
2. Dotcom 2000 retail mania? Nah, not enough. Send it into the trillions and make the old 90s Datek Online into a Robinhood app with virtual balloons for manic gambling addicts.
3. $800bln of securitized subprime mortgages in ABS gone wild? Nah, that’s so 2007 bro… try $1T+ of AI investment to start, jam through hundreds of billions in datacenter debt in a few months, securitize and/or SPV that sht too, and fuel it all in the background via trillions in unregulated, opaque private credit, invisibly linking unlisted PE corporate America into a cross-correlated levered morass… and now pretend we will never get a credit cycle again.
We operate in a Turducken of the riskiest periods in market history, to a degree where even value legends like Howard Marks demur and say “well, not all bubbles are bad”… and then because it’s not enough, we need the delicious stuffing in the center:
Portfolio insurance ’87? Flash Crash? Nah, that market topology wasn’t unstable enough bro. How about offering daily options and let retail (see #2 above) send 0DTE to over 50% of options volume?
Well, I hope you guys are ready for 2026. I for one can’t imagine any surprises. I mean…I’m pretty sure I’ve seen everything by now.
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This rarity in the business is what we call The Doubletap. A privileged few - think Meriwether and other legends
Leopold Aschenbrenner's biggest positions are getting hit again
Here's what his top holdings done since October highs:
• SanDisk $SNDK: down 19%
• Bloom Energy $BE: down 6%
• Nebius $NBIS: down 11%
• CoreWeave $CRWV: down 13%
• Micron $MU: down 14%
• SharonAI $SHAZ: down 30%
SanDisk and Micron are 55% of the fund, per Q2 13F
In July, a drawdown like this triggered a forced sale of his book to Citadel
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New post up on the blog - see link in bio or click below.
Tech & Energy, or Tech vs Energy? Plus Copper & Palladium
Not advice, DYODD etc... hope you enjoy!
substackfwd.xyz/?url=pauloma…
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