John Caivano

IT Professional, Golf and NFL fan, Big-Macro follower

[Luke Gromen @LukeGromen]

2/ For example, US interest + Entitlements + VA are already at 105% of receipts.

We are already in "print the interest or default on USTs or Entitlements" territory

Rate hikes increase interest & reduce receipts.

You think they're gonna default? I don't.

And cutting with US govt at 25% of receipts & 30% of Personal Income drives recession, & US recession drives US deficits up 600-1000 bps of GDP, which means US recession drives US deficit from $2.1T to $3.9-5T...

...& then you'd have to include strong USD driven UST selling (like Japan last month), which would be easily another $1-1.5T per year in UST supply to absorb.

While US banks would ALSO be selling USTs to raise capital to fill losses in a recession, b/c banks were regulated into holding USTs as HQLA 12 years ago.

That all of this is not well understood yet makes me even more bearish on bonds, esp on a real basis v. gold.

[Forbidden HQ 🐇 @WearForbidden]

FORBIDDEN STUDIOS PRESENTS: UNSINKABLE

They were promised the ship could never go down.

He believed them.

[John Caivano @J__Cai]

@ianbremmer

[Nobody Special @JG_Nuke]

Scott Bessent is not the house.
The bond market is the house.
Scott Bessent owes the house $40 trillion.

[Luke Gromen @LukeGromen]

Thanks for hosting @LynAldenContact and me, @BTCsessions!

US Interest + Interest-like obligations (Entitlements + VA) being 105% of Federal receipts, growing ~2x receipts, in a good economy, means we are indeed "out of time" - a decision must be made, soon.

Full link below.

[Erik Townsend 🛢️ @ErikSTownsend]

Amen to that, Matt. The one big thing left for @elonmusk to do is to recognize that as good as wind+solar+batteries feels when you happen to be in the battery business, the fact remains that mass-produced advanced fission energy is by farour best strategy for planetary Energy Transition.

That would leverage human prosperity far more effectively and immediately than Elon's current obsession with trying to make humanity interplanetary before first correcting the serious energy infrastructure deficiencies we suffer from here on Earth.

And to be sure, a really solid terrestrial power infrastructure based on a mass buildout of safe, clean advanced fission is actually the best way (and probably a prerequisite) to achieving Elon's interplanetary species goals.

Next step would be to get to a full breeder reactor architecture and then design a safe, proliferation-proof closed fuel cycle and the complete elimination of stored spent fuel waste worldwide.

Elon, if you're reading, I already wrote the business plan to do this at scale, but my plan requires far more capital than is available to Aalo and the other advanced nuclear startups. I'd be happy to share that plan with Elon for free if he's serious about acting on it.

So I'd give anything for 20 minutes of Elon's full attention to sell him on why the most expeditious way to get to Mars is to start by doing Tesla over again for nuclear reactors right here on Earth. Robotic mass-production of XMRs is exactly what we need to conquer the cost curve and pave the way to eventually making nuclear energy cost far less than coal or gas.

p.s. Elon, if you're reading this, please ignore Matt's suggestion to buy some AaloPods for TerraFab. A far more prudent strategy would be to acquire and recapitalize Aalo right now, while they're still private, then on your first day in office (think kitchen sink day at Twitter), tear up their plan to build a 1GW/year nuclear reactor factory and replace it with a (funded) plan to fasttrack a 100GW/year factory--just to get started.

We'd need to build out about 9TW(e) of generation capacity to meaningfully eliminate fossil fuel dependence globally, so even the 100GW/yr factory would have to run 24/7/365 for 90 years straight to make all the energy we need right now.

The scale of opportunity (and profit, and frankly, global hegemonic power) is daunting. So the 100GW/yr AaloPod factory I want Elon to build is really just the opening act. And sadly, even at their amazing rate of success, @MattLoszak and @yasir_fission
will need several years to secure the capital to build even 50GW/yr.

Elon is the only man on Earth who could reset the whole plan to solve Earth's energy problem NOW rather than a decade from now after Matt and Yasir prove themselves and slowly build up meaningful production capacity.

Elon will never read this unless a shitload of people retweet it. If not you, who? If not now, when?

[GeniusThinking @GeniusGTX]

Elon Musk says the AI boom hits a WALL this year when we run out of power to run the chips.

He says the whole industry is about to learn a hard lesson in hardware.

Chip output is exploding, but electricity is nearly flat everywhere outside China.

So the two lines cross this year.

He says by the end of the year, we will be making more AI chips than we can actually turn on.

Millions of them pile up with nowhere to plug in.

In his words, the bottleneck for the next year is not chips, it is raw power.

Whoever can turn on the most chips fastest wins the race.

In the end, the AI race comes down to one thing:

Raw electricity.

— Elon Musk (.@elonmusk) on Dwarkesh Patel's (.@dwarkesh_sp) podcast

[Lino Carrillo @canadiensedeVzl]

@jackprandelli Venezuela cannot replace the 3+ million barrels/d Canada supplies to PADD II.

[Anthony Scaramucci @Scaramucci]

Carney now leads the West

[Gincent VanBini @The_Cavalryman]

@AGToddBlanche @FBI Love a chance to post this classic.

[EndGame Macro @onechancefreedm]

The Bond Market Rejected the Treasury Put

The 10 year Treasury yield collapsed after Treasury announced it would at least double certain long end liquidity support buybacks. Markets treated that as a backstop. Yields fell, shorts covered and traders began pricing a softer ceiling on long term rates.

By this morning, almost the entire move had been erased. The 10 year returned to roughly 4.70%, near where it traded before the announcement.

Why The Rally Failed

The buybacks change the composition of Treasury supply. They do not eliminate the deficit, reduce federal borrowing needs or create new money. Treasury can retire older long dated securities, but the government still has to finance itself elsewhere through bills, shorter maturities or future issuance.

The market first traded the headline. Then it traded the arithmetic.

The additional long end buying is small relative to the Treasury market and the government’s financing requirement. It can improve liquidity and temporarily reduce duration pressure, but it cannot overpower the forces pushing term premium higher.

The Timing Matters

Most of the reversal happened before this morning’s economic data. Stronger jobless claims and Philadelphia Fed data were not the original cause. They supplied the final push back through 4.70%.

The deeper repricing had already begun overnight as investors reassessed the Treasury announcement, oil rose and geopolitical risk around Iran and the Strait of Hormuz intensified.

The Fed minutes also revealed a more hawkish committee than markets wanted to believe. Several officials favored an immediate hike, while many indicated additional tightening may be necessary if inflation does not cool.

The Policy Contradiction

Treasury is trying to relieve pressure at the long end while geopolitics is raising energy inflation and the Fed is warning that rates may have to remain restrictive or rise again.

Treasury can influence long yields. The immediate rally proved that. But a small, delayed and finite buyback program cannot sustainably control them if inflation risk, fiscal supply and monetary policy are pushing the other way.

The Real Signal

The 10 year is not simply a growth and inflation instrument. It reflects the expected path of short rates plus a term premium for inflation uncertainty, fiscal risk, Treasury supply, volatility, liquidity and currency risk.

The market is saying Treasury changed short term positioning but did not materially change fair value.

More importantly, yields rose while oil strengthened, equities weakened and the dollar remained soft. That is not a clean growth signal. It looks more like investors demanding greater compensation to hold long duration U.S. debt in an unstable fiscal, inflationary and geopolitical environment.

The next test is whether the 10 year can hold above 4.70% to 4.75% and whether the 30 year retests 5.30% to 5.35%. If those levels break after Treasury has already increased its intervention, the message becomes much more serious.

Today was not proof that policymakers cannot influence the long end. It was proof that influencing it and controlling it are two very different things.

[Nostra, House of Gold @Nostre_damus]

Mood right now

[SilverTrade @silvertrade]

🚨5.316%! US 30-YEAR TREASURY YIELD EXPLODES TO RATES NOT SEEN IN NEARLY 25 YEARS⚠️

[Peter Spina ⚒ GoldSeek | SilverSeek @goldseek]

The rest of the world is tired of financing American (debt) exceptionalism … its debt-fueled overconsumption.

[zerohedge @zerohedge]

No Hikes For You https://t.co/Ojc7d6XSUu

[Elon Musk @elonmusk]

That was 10 years ago

Imagine 10 years from now

[Luther Walke @livin_as_luther]

@NUCLRGOLF @nypost @BrysonLegion The PGA Tour needs more Ryan Fox' - not more Bryson DeChambeau's. True fans want to see faster play with good sportsmanship - not increased showmanship and chest-thumping. Leave that stuff to LIV where it belongs.

[Peter Spina ⚒ GoldSeek | SilverSeek @goldseek]

Donald Trump won the U.S. elections 21 months ago.

China stacks gold for the 21st consecutive month…

[The Rabbit Hole @TheRabbitHole]

Reddit forgets the part where Elon makes things a reality.

Self driving cars.
Starlink Internet.
Neuralink.
Etc..