Preferred stocks serve as supplemental income tools
“Typically, people want to invest in preferred stocks because they have a bit of an income focus. They typically pay higher fixed dividends than common stocks and often have some pretty attractive yields, anywhere from 5% to 8%, and so that makes them pretty attractive for these steady cash flow seekers. But that also changes where they are as well with respect to their position in the capital stack. They sit above common equity, meaning if a company goes bankrupt, you would get some claim on assets before common stock shareholders do, but they are below bonds as well.”
“There was never really, like, exogenous quality sustainable yield. And I think the first the first glimpse of that was Athena, last year or two years ago when we had, like, exogenous yield that was not due to, you know, like, leverage against Bitcoin. It was, to some extent, leverage because it was, still driven by the funding fees, but it was somewhat upon exogenous yield. And what we observe with Prime is when you have something that is sustainable, and can sustain sustainable and at scale, it takes a bit of time, but people start trusting it.”
Bitcoin surged past $78k following Trump’s ceasefire extension
“Bitcoin is back above $78,000, as investors go risk on across the board, leading many to wonder if this is yet another bull trap, or if we're actually going to see a major breakout and a move into the 80s. Bitcoin jumps over $78,000, hits 11-week high amid Trump's Seek Fire extension. I mean, I don't even know how to talk about the war anymore because I get accused of having TDS and I feel like I'm losing my mind.”
Derivatives data indicates the rally lacks speculative froth
“The derivatives market for Bitcoin is weak. It is just sending a lot of really miserable signals. You've got bases down. I haven't seen lows like this in ages. You've got skews suggesting a very heavy weighting towards puts. You've got the funding rate was negative yesterday. Today, I think it's tempted to be positive. In other words, the derivatives markets are saying that, hey, we're not frothy.”
Solana leads in high-yield onchain credit origination
“Think we kind of all looked at the past few years, and we thought low risk DeFi is a thing. And, everyone's happy to earning a two and a half percent or 3% forever, and I just simply don't believe it. Or maybe Solana is more higher risk appetite in general and is more keen to get, you know, 12% yield. We found that people are extremely interested in getting this this extra yield as long as they understand the asset.”
Kamino provides the liquidity layer for tokenized assets
“Camino was born about three years ago, kind of out of a of a need to serve some of the stable coins, in Solana. It's you initially, it was, an LP, protocol to to tokenize LPs, and then it once we realized that, actually, the bottle end was not well served or did fit all the needs, we decided to build our own bottle end as well. The reason why it was all created was to serve DeFi and Solana because we thought the blockchain will, create a lot of economic activity, which is what is happening now.”
Industrials show resilience despite shifting economic narratives
“Ticker XLI is the State Street Industrial Select Sector SPDR ETF... Even if the economy is starting to turn, you're not really seeing signs of a breakdown in industrials and certainly not seeing a sign of a breakdown in this ETF. A lot of what has happened in the market this week has been centered around the narrative of AI, AI spending, and really the lack of monetization across the board and hasn't really spilled over into other sectors. Unless you're overweight a ridiculous amount relative to what the market weight is of industrials, I don't see any reason why you would want to fully exit this industrials ETF.”
Software volatility stems from AI monetization concerns
“What really drove the market today? Well, it was the feeling that there was a bit of a bottoming in software. It was a focus as groups attempted to break seven straight declines. Bit of a pick up in commentary. We saw a lot of discussion about very oversold conditions and some pushback against some of the more dire predictions revolving around that AI competition that was part and parcel for why the market was doing what it was doing. In addition, you had elevated hyperscaler capex, still a positive for the broader AI trade.”
Investors are rotating from altcoins back into Bitcoin safety
“The Bitcoin dominance index is this morning reached its highest point since I think November of last year. So what we're seeing is in part new money coming into the market, and Bitcoin is the obvious on ramp, it's tentative still. But I think we're also seeing some rotation out of other crypto assets into the safety of Bitcoin.”
Financial markets today act as debt refinancing mechanisms
“And we've made the case for some time that financial markets today are debt refinancing mechanisms and you need balance sheet capacity to roll over debt. And that balance sheet capacity you can measure with global liquidity. Real economy liquidity is something different. And that is much more measuring the transactions in the real economy.”
“One of the things that we've been pointing to, which was very much a contrarian view back January 1, was that yield curves would basically begin to flatten by the middle of the year. That was a very different view than the consensus, which was basically wedded to the idea that yield curves would steepen, and probably steepen significantly because of inflation problems at the long end.”
“We've all seen how tech earnings calls have really highlighted a new risk. There isn't enough electricity to power the new data centers. We'll talk about the utility super cycle as power companies raise rates to build this new capacity. We'll also touch on a story I saw today about KPMG pressing its auditors to cut costs, or rather to cut the price they charge KPMG due to AI cost savings. What does that mean for the audit industry and really industry as a whole?”
RWA looping allows users to leverage credit returns
“I think we always wanted to get here to have something like quality assets that people can simply hold on chain, self custody, or, you know, borrow land loop, which is, like, kind of, like, a a similar way of tranching it, you know, getting the senior trash or the junior trash by lending or by looping it. We always wanted to have this, but the the assets were never there. So we always had native, crypto, so ETH and Bitcoin, and stable coins.”
Figure tokenizes billions in HELOCs for onchain distribution
“Figur's been at, sort of the RWA, intersection of of TradFi and credit origination since 2018. You know, we set out to really rebuild capital markets, but doing so, on chain. And so, you know, we're vertically integrated across the whole stack from credit origination, mostly known for tokenizing HELOCs, on chain. Done about 22,000,000,000, of those to date. We structure the cash flows, and then we also distribute, across TradFi and DeFi.”
Accelerating real economy sucks liquidity from financial markets
“The reason for that is not because central banks are tightening and withdrawing liquidity, it's because the real economy is actually accelerating or increasing its appetite to be more correct. It's working capital demands and that is sucking liquidity out of markets. Now, whether that is because of higher oil and energy costs, or whether it's because there's more inventory build, more capex spend, more economic activity going on, is kind of a moot point.”
Bond market yields signal tension despite equity optimism
“Generally the bond market has the reputation of being the intelligent market. And so it's where the macro traders tend to focus. And that has been signaling squeeze coming up. I mean, yields for the 10-year are up at 4.23%, 4.3%. That's high when you consider that the Fed actually started the cutting cycle quite a while ago now. And it's also high considering yesterday we had the hearings on Capitol Hill.”
Global liquidity is inflecting lower toward turbulence phase
“The liquidity cycle, which dominates market movements, is basically inflicting lower. And we're in the season that we currently call speculation, which is a late one, take that as the autumn, precedes what we call turbulence. And turbulence is probably, as the name suggests, a very difficult time for risk assets.”
Bitcoin is performing as a hedge against global instability
“It starts to feel like there's spot accumulation. It's tentative. This is not the frothy risk asset narrative that we're accustomed to seeing in Bitcoin, and it could have to do with the hedge against crazy from those that actually take time to understand Bitcoin. For those that do so tend to buy the hedge against crazy narrative, I count myself in that particular bucket, which is why it tends to outperform when things are crazy.”
“Micron Technology has had quite, quite a positive performance recently. It is a leading semiconductor memory and storage company, so they make DRAM, NAND, Flash, and high bandwidth memory. It's one of the few major global suppliers in an industry that has a lot of high barriers to entry, not just because of input costs, but also because of the required technological understanding and ability to develop these very complex and small products. This HBM, it's high bandwidth memory, right? This is really what's been driving it here.”
Investors should transition to defensive risk-off positioning now
“Effectively, what these things are, they're moving counter cyclically. When you get a strong economy, that's absorbing liquidity and financial markets tend to lose out because financial liquidity is depressed. Our view has been basically to pay back risk during this period. I mean, not get out of markets entirely, but we're basically moving more risk off, that's for sure.”
