Macro is thinking about systems: can the system accelerate, or could the system break down?

Today is an example of the latter, because of this: Let the Bond Market Speak.

The greatest macro trader of all has spoken, and it would appear he has spoken against one (Bessent) or both (plus Warsh) of his key acolytes. It is remarkable thing.

The result? The ‘I told you so’ caucus is in full voice: if tut-tutting and chin-stroking drove P&L, we’d all retire tomorrow.

There’s nothing in Druckenmiller’s Op-Ed he’s not said before, and anybody who can fog a mirror knows:

a) the U.S. fiscal situation is perilous;

b) neither party seems inclined to reduce spending;

c) there’s a faint whiff of panic in Bessent’s treasury market meddling; and

d) to equate Iranian sanctions to D-Day is both a confession that the United States has zero interest in kinetic re-engagement with Iran, and hyperbolic.

Bottom line, Druckenmiller’s Op-Ed probably confirmed all our priors about the situation, and our priors about a Trump administration that appears to be flailing.

So what?

• Start here, with this October 2023 Bessent podcast.
• Podcast host: ‘But if you were to describe global macro at its very essence, how would you describe it?’ Bessent: ‘You are observing the world, you're observing markets, you're observing what you think should happen and you're observing what is happening. It's good and bad that you can look around the world and you're looking for mispricings, you are looking for policy errors, you're looking for political changes. So basically you are looking for change on the margin and you want to see what the market is giving you. What is the market giving you? What's the opportunity set? Because you might think you have a great idea’.
• Bessent: ‘I remember being at this Santa Fe Institute conference and one of the speakers was talking about what competence ratio do you need to get to increase your position? So in theory, if you can get to 51%, then you should keep getting bigger and bigger. I would say that my philosophy, certainly Stan Druckenmiller's philosophy. He's incredible in thinking about asymmetry is what's the market giving me? What's my upside downside, and how should I size that?’
• Bessent: ‘If you have a great idea, it can never be big enough. I found. I think his quote is, it's like shooting fish in a barrel. I think there's a change in market structure and either the fish can shoot back or the metal ties holding the barrel together have gotten bigger and the bullet can bounce back and hit’.

Now what?

• I am not Panglossian on the U.S. fiscal situation, and I agree with anyone who says there’s a faint whiff of panic coming from the Trump Administration (of which Carney is taking full advantage - and Trump’s response was forward-starting tariffs? Odd.)
• Druckenmiller didn’t care that any reader could figure out his WSJ Op-Ed was written by Ai.
• That renders it no less pungent.
• But I want you to consider something else.
• And that is the greatest macro trader of all time has just conducted a real-time experiment on treasury market sentiment and positioning.
• This is why he is so brilliant.

My point is this: if treasuries cannot sell off after Druckenmiller speaking out against one or both of his acolytes, then who (in the near term) is left to sell the long bond?

Today is a great day to be thinking slow.

Be well, invest well.

See you later.

JA

Wimbledon.

Today is an example of the latter, because of this: Let the Bond Market Speak.

The greatest macro trader of all has spoken, and it would appear he has spoken against one (Bessent) or both (plus Warsh) of his key acolytes. It is remarkable thing.

The result? The ‘I told you so’ caucus is in full voice: if tut-tutting and chin-stroking drove P&L, we’d all retire tomorrow.

There’s nothing in Druckenmiller’s Op-Ed he’s not said before, and anybody who can fog a mirror knows:

a) the U.S. fiscal situation is perilous;

b) neither party seems inclined to reduce spending;

c) there’s a faint whiff of panic in Bessent’s treasury market meddling; and

d) to equate Iranian sanctions to D-Day is both a confession that the United States has zero interest in kinetic re-engagement with Iran, and hyperbolic.

Bottom line, Druckenmiller’s Op-Ed probably confirmed all our priors about the situation, and our priors about a Trump administration that appears to be flailing.

So what?

• Start here, with this October 2023 Bessent podcast.
• Podcast host: ‘But if you were to describe global macro at its very essence, how would you describe it?’ Bessent: ‘You are observing the world, you're observing markets, you're observing what you think should happen and you're observing what is happening. It's good and bad that you can look around the world and you're looking for mispricings, you are looking for policy errors, you're looking for political changes. So basically you are looking for change on the margin and you want to see what the market is giving you. What is the market giving you? What's the opportunity set? Because you might think you have a great idea’.
• Bessent: ‘I remember being at this Santa Fe Institute conference and one of the speakers was talking about what competence ratio do you need to get to increase your position? So in theory, if you can get to 51%, then you should keep getting bigger and bigger. I would say that my philosophy, certainly Stan Druckenmiller's philosophy. He's incredible in thinking about asymmetry is what's the market giving me? What's my upside downside, and how should I size that?’
• Bessent: ‘If you have a great idea, it can never be big enough. I found. I think his quote is, it's like shooting fish in a barrel. I think there's a change in market structure and either the fish can shoot back or the metal ties holding the barrel together have gotten bigger and the bullet can bounce back and hit’.

Now what?

• I am not Panglossian on the U.S. fiscal situation, and I agree with anyone who says there’s a faint whiff of panic coming from the Trump Administration (of which Carney is taking full advantage - and Trump’s response was forward-starting tariffs? Odd.)
• Druckenmiller didn’t care that any reader could figure out his WSJ Op-Ed was written by Ai.
• That renders it no less pungent.
• But I want you to consider something else.
• And that is the greatest macro trader of all time has just conducted a real-time experiment on treasury market sentiment and positioning.
• This is why he is so brilliant.

My point is this: if treasuries cannot sell off after Druckenmiller speaking out against one or both of his acolytes, then who (in the near term) is left to sell the long bond?

Today is a great day to be thinking slow.

Be well, invest well.

See you later.

JA

Wimbledon.

Today is an example of the latter, because of this: Let the Bond Market Speak.

The greatest macro trader of all has spoken, and it would appear he has spoken against one (Bessent) or both (plus Warsh) of his key acolytes. It is remarkable thing.

The result? The ‘I told you so’ caucus is in full voice: if tut-tutting and chin-stroking drove P&L, we’d all retire tomorrow.

There’s nothing in Druckenmiller’s Op-Ed he’s not said before, and anybody who can fog a mirror knows:

a) the U.S. fiscal situation is perilous;

b) neither party seems inclined to reduce spending;

c) there’s a faint whiff of panic in Bessent’s treasury market meddling; and

d) to equate Iranian sanctions to D-Day is both a confession that the United States has zero interest in kinetic re-engagement with Iran, and hyperbolic.

Bottom line, Druckenmiller’s Op-Ed probably confirmed all our priors about the situation, and our priors about a Trump administration that appears to be flailing.

So what?

• Start here, with this October 2023 Bessent podcast.
• Podcast host: ‘But if you were to describe global macro at its very essence, how would you describe it?’ Bessent: ‘You are observing the world, you're observing markets, you're observing what you think should happen and you're observing what is happening. It's good and bad that you can look around the world and you're looking for mispricings, you are looking for policy errors, you're looking for political changes. So basically you are looking for change on the margin and you want to see what the market is giving you. What is the market giving you? What's the opportunity set? Because you might think you have a great idea’.
• Bessent: ‘I remember being at this Santa Fe Institute conference and one of the speakers was talking about what competence ratio do you need to get to increase your position? So in theory, if you can get to 51%, then you should keep getting bigger and bigger. I would say that my philosophy, certainly Stan Druckenmiller's philosophy. He's incredible in thinking about asymmetry is what's the market giving me? What's my upside downside, and how should I size that?’
• Bessent: ‘If you have a great idea, it can never be big enough. I found. I think his quote is, it's like shooting fish in a barrel. I think there's a change in market structure and either the fish can shoot back or the metal ties holding the barrel together have gotten bigger and the bullet can bounce back and hit’.

Now what?

• I am not Panglossian on the U.S. fiscal situation, and I agree with anyone who says there’s a faint whiff of panic coming from the Trump Administration (of which Carney is taking full advantage - and Trump’s response was forward-starting tariffs? Odd.)
• Druckenmiller didn’t care that any reader could figure out his WSJ Op-Ed was written by Ai.
• That renders it no less pungent.
• But I want you to consider something else.
• And that is the greatest macro trader of all time has just conducted a real-time experiment on treasury market sentiment and positioning.
• This is why he is so brilliant.

My point is this: if treasuries cannot sell off after Druckenmiller speaking out against one or both of his acolytes, then who (in the near term) is left to sell the long bond?

Today is a great day to be thinking slow.

Be well, invest well.

See you later.

JA

Wimbledon.

Today is an example of the latter, because of this: Let the Bond Market Speak.

The greatest macro trader of all has spoken, and it would appear he has spoken against one (Bessent) or both (plus Warsh) of his key acolytes. It is remarkable thing.

The result? The ‘I told you so’ caucus is in full voice: if tut-tutting and chin-stroking drove P&L, we’d all retire tomorrow.

There’s nothing in Druckenmiller’s Op-Ed he’s not said before, and anybody who can fog a mirror knows:

a) the U.S. fiscal situation is perilous;

b) neither party seems inclined to reduce spending;

c) there’s a faint whiff of panic in Bessent’s treasury market meddling; and

d) to equate Iranian sanctions to D-Day is both a confession that the United States has zero interest in kinetic re-engagement with Iran, and hyperbolic.

Bottom line, Druckenmiller’s Op-Ed probably confirmed all our priors about the situation, and our priors about a Trump administration that appears to be flailing.

So what?

• Start here, with this October 2023 Bessent podcast.
• Podcast host: ‘But if you were to describe global macro at its very essence, how would you describe it?’ Bessent: ‘You are observing the world, you're observing markets, you're observing what you think should happen and you're observing what is happening. It's good and bad that you can look around the world and you're looking for mispricings, you are looking for policy errors, you're looking for political changes. So basically you are looking for change on the margin and you want to see what the market is giving you. What is the market giving you? What's the opportunity set? Because you might think you have a great idea’.
• Bessent: ‘I remember being at this Santa Fe Institute conference and one of the speakers was talking about what competence ratio do you need to get to increase your position? So in theory, if you can get to 51%, then you should keep getting bigger and bigger. I would say that my philosophy, certainly Stan Druckenmiller's philosophy. He's incredible in thinking about asymmetry is what's the market giving me? What's my upside downside, and how should I size that?’
• Bessent: ‘If you have a great idea, it can never be big enough. I found. I think his quote is, it's like shooting fish in a barrel. I think there's a change in market structure and either the fish can shoot back or the metal ties holding the barrel together have gotten bigger and the bullet can bounce back and hit’.

Now what?

• I am not Panglossian on the U.S. fiscal situation, and I agree with anyone who says there’s a faint whiff of panic coming from the Trump Administration (of which Carney is taking full advantage - and Trump’s response was forward-starting tariffs? Odd.)
• Druckenmiller didn’t care that any reader could figure out his WSJ Op-Ed was written by Ai.
• That renders it no less pungent.
• But I want you to consider something else.
• And that is the greatest macro trader of all time has just conducted a real-time experiment on treasury market sentiment and positioning.
• This is why he is so brilliant.

My point is this: if treasuries cannot sell off after Druckenmiller speaking out against one or both of his acolytes, then who (in the near term) is left to sell the long bond?

Today is a great day to be thinking slow.

Be well, invest well.

See you later.

JA

Wimbledon.