SHORT YEN

“I am basically in the camp that a nineteen seventies second inflation wave is effectively baked in the cake. Like, that's pretty how far I am in that direction. And the OBB, the tax incentives, the reheating the economy, run it hot is absolutely here, and I just think it's not gonna be the run it hot everyone wants for the Nasdaq and other risk asset prices.”

“The Fed communicates way too much. Every couple days there's some Fed governor talking; the forward guidance and these dot plots lock them in. We saw this in 2021 where, because they had given forward guidance on QE continuing, it took another six months before we even got to the announcement of ending it. We were at almost double-digit inflation and the Fed was still doing billions a month of QE because of this constraint they put themselves in.”

“US dollar usage is surging, which sounds very counter-narrative to a lot of what you see these days about de-dollarization and the basement of the currency. You would think it would be going the opposite direction right now based on everything we talked about regarding questioning US hegemony and reserve status, but it's clear it's actually the opposite.”

“Tesla expects their capex to be over 25 billion this year. Everyone is basically forced into this because before the competition was about raising debt to buy back stock and shrink equity. Now, we have this frontier that we're pursuing and if you don't raise a lot of debt and pursue it, you're going to be so left behind because this is a divergent technology. It is a 21st-century industrial revolution and you can't just sit there while others build the rails.”

“You need to own them. You have to own the hard assets because at some point, the pain's gonna be enough where they're gonna step in, and that's when your golds and commodities of the world just take their next leg higher.”

“We're seeing this recalibration of the composition of the economy happening. It's interesting to compare data center versus general office spending; the economy is fundamentally changing. This isn't just a sectoral thing to view anymore. We're spending more and more time talking about this because it is literally the marginal driver of growth in the US right now.”

“I think the yen is the clue to watch. If the yen really breaks 160 with volume and power, the dollar wrecking ball emerges and causes credit problems. You could have a blow-off top in the AI data center infrastructure boom at the same time, but you could also be starting a whole new credit cycle if the Fed is going to lower rates. The yen is the key to watching that liquidity.”

“You know what's interesting is ESG died right when inflation returned at the top of 2022. The extrapolation is that ESG was just a zero-rate phenomenon, and as soon as real life costed something and we hit an affordability crisis, it went away. Now you see it with the energy crisis; you have people talking about energy security, which is a complete 180 from the dialogue of the last decade.”

“I think the next risk here is an export restriction control or ban of some sort. This is gasoline prices. They're up massively, over up over 33% to start the year, in The US here, and they're still rising. And this is, let gasoline prices go to the moon as textbook for how to lose an election. What could he do? He could put a export restriction. That would send Brent rocketing.”

“We're seeing this recalibration of the composition of the economy happening. It's interesting to compare data center versus general office spending; the economy is fundamentally changing. This isn't just a sectoral thing to view anymore. We're spending more and more time talking about this because it is literally the marginal driver of growth in the US right now.”

“US dollar usage is surging, which sounds very counter-narrative to a lot of what you see these days about de-dollarization and the basement of the currency. You would think it would be going the opposite direction right now based on everything we talked about regarding questioning US hegemony and reserve status, but it's clear it's actually the opposite.”

“There was an interview with the CEO of Nvidia where he said the biggest bottleneck we have right now with AI data center buildouts is we can't find enough plumbers for the data centers. The bottleneck isn't the semis; it's literally just the plumbers needed to be in there setting up the plumbing. There is this whole cascade of second, third, and fourth derivative impacts that is really fascinating and probably not talked about enough.”

“Are we in a late cycle boom where you see oil taking off like this? It's generally a sign that this is the end of the cycle, and oil and the rate of inflation change really breaks the back of everything. When I see this spread of Europe versus The US, I think to my brain, nineteen ninety eight Asian financial crisis where you left all the Asian economies, and you put your money right back into The US.”

“You guys know the dollar smile, which is basically the dollar strengthens in a really good time of The US economy and then a really bad time where it's a haven demand. What I actually think in a fiscal dominant world is more relevant today is the yield smile where if you look at the last few years, they're just managing to this low volatility, passive grind up of flows supporting the equity market, 10% a year. But if you go too hot, you get persistent inflation, persistent growth, and higher yields.”

“Bessent played a key role in breaking the pound. In 1992, Black Wednesday, he assisted George Soros in betting against the pound. They built a 10 billion dollar position against the pound. And now he's sitting in the exact opposite seat. Do you think about the irony of that where he's trying to control everything? He was 29 years old. He ran the London office. It identified the housing market economy were too weak to support high interest rates. And now he's sitting here in this exact same seat.”

“This was the first Fed meeting since 1992 with this many dissents. There was eight in support of no change and then four dissenting. And then even to complicate the matter further, three of them were dissents in terms of wanting to it was actually technically speaking, they said, this who supported maintaining the target range for the federal funds rate, but did not support inclusion of an easing bias in the statement at this time.”

“What can they do? Let it breach. And if that happens, the dollar strengthens and yields globally rise because if 160 goes, Japan yields rise, US yields rise. Okay. What happens if they defend it at 160? They weaken the yen and weaken the dollar. Nasdaq sell off. But weaker dollar is inflationary in The US in a time where we're already reaccelerating on Main Street and yields rise.”

“Powell's really throughout his whole tenure, he's been pretty steady. And I think this is a testament to how the Fed messaging and forward guidance, it's like software they figured out where they can kinda just tweak everything and the market prices it in. And then once the Fed meeting actually happens, it's not there's it's, like, inconsequential. It's a it's like sell the news every single time now.”

“You know what's interesting is ESG died right when inflation returned at the top of 2022. The extrapolation is that ESG was just a zero-rate phenomenon, and as soon as real life costed something and we hit an affordability crisis, it went away. Now you see it with the energy crisis; you have people talking about energy security, which is a complete 180 from the dialogue of the last decade.”

“The Fed communicates way too much. Every couple days there's some Fed governor talking; the forward guidance and these dot plots lock them in. We saw this in 2021 where, because they had given forward guidance on QE continuing, it took another six months before we even got to the announcement of ending it. We were at almost double-digit inflation and the Fed was still doing billions a month of QE because of this constraint they put themselves in.”

“So there's really no path to the Fed cutting in '26 without a crisis. You know, or according to when they make the date revamp the data to make it more accurate to to paint the picture they want. But I think that's the my biggest takeaway is just, you know, the the treasury has control monetary and fiscal policy.”

“Tesla expects their capex to be over 25 billion this year. Everyone is basically forced into this because before the competition was about raising debt to buy back stock and shrink equity. Now, we have this frontier that we're pursuing and if you don't raise a lot of debt and pursue it, you're going to be so left behind because this is a divergent technology. It is a 21st-century industrial revolution and you can't just sit there while others build the rails.”

“I think the yen is the clue to watch. If the yen really breaks 160 with volume and power, the dollar wrecking ball emerges and causes credit problems. You could have a blow-off top in the AI data center infrastructure boom at the same time, but you could also be starting a whole new credit cycle if the Fed is going to lower rates. The yen is the key to watching that liquidity.”

“There was an interview with the CEO of Nvidia where he said the biggest bottleneck we have right now with AI data center buildouts is we can't find enough plumbers for the data centers. The bottleneck isn't the semis; it's literally just the plumbers needed to be in there setting up the plumbing. There is this whole cascade of second, third, and fourth derivative impacts that is really fascinating and probably not talked about enough.”