Slotin Capital

Bloomberg by trade, Polymarket by tendency

[Slotin Capital @SlotinCapital]

Indonesia & Malaysia declared Malacca 'not an international strait' in 1971 and it took decades to bury. Legitimise one toll and every littoral reopens the file. 80% of China's oil transits Malacca.

[JustDario @DarioCpx]

VIX is still at 16 - stock traders are living in La La Land

[Slotin Capital @SlotinCapital]

Would've expected the US to be prepared for the response and haven't seen evidence of a high number of impacts. That being said, if US soldiers have died it's going to be limit long $BNO

[The Hormuz Letter @HormuzLetter]

BREAKING: Iran's IRGC announces it struck the US Marine Camp Titin base in Jordan with a heavy barrage of ballistic missiles, killing "a large number of American forces" and destroying "several important facilities and enemy attack helicopters," per Tasnim.

The IRGC says the retaliation is for a US strike on a residential home in Sirik that hit a wedding ceremony, killing and injuring nearly 50 Iranian civilians including a child.

[Slotin Capital @SlotinCapital]

The historical precedent for sustaining near-zero ERPs in a tightening cycle is poor. For the ERP to mean-revert even modestly toward its post-GFC average of ~3.5–4%, either the 10-year yield needs to fall significantly, or equity prices need to decline materially.

[Slotin Capital @SlotinCapital]

S&P 500 forward earnings yield sits at 5.16% against a 10-year Treasury yield of 4.80% leaving an equity risk premium of just 36 basis points. Premium has averaged well above 300bps over the past decade. $SPY is not discounting a sustained inflation/tightening cycle

[Slotin Capital @SlotinCapital]

During the dot-com era, negative ERPs existed in a world of falling inflation and a Fed that was broadly accommodative. Today, the ERP is near zero with the Fed actively hiking, oil at $90/bbl, and geopolitical risk elevated.

[Warren Pies @WarrenPies]

No one on the FOMC will say this explicitly, but there will be no stopping the momentum toward a hike if oil remains this high going into the September meeting.

Dec oil <$1 from new highs.

If oil is this high, there is no realistic CPI/PPI/NFP number that will stop a hike.

[anirudh @kamathematic]

ain't no way

[Slotin Capital @SlotinCapital]

Unpopular opinion, Trump only consistent feature is that he cares about markets more than his own children. He also loves a deal. He won't cause a sovereign debt crisis over Iran. That being said, it's always darkest before dawn and I'm not sure the suns on the horizon.

[Slotin Capital @SlotinCapital]

Trump is going to need a hall of fame level PR blitz today. Other than ending the war, I'm not sure what levers he has left to pull.

[*Walter Bloomberg @DeItaone]

TRUMP: I HAVE RULED OUT USING A NUCLEAR WEAPON ON IRAN

[Slotin Capital @SlotinCapital]

Seems not improbable. Short term bullish, medium term bearish for oil.

[Faytuks Network @FaytuksNetwork]

A U.S. official said the plan is intended to reduce the risk of Iranian attacks on oil tankers, U.S. Navy ships and Air Force aircraft, describing the approach as “mowing the lawn.” - Axios

[Slotin Capital @SlotinCapital]

U.S. officials told Axios that the White House was leaning against approving strikes to avoid escalating with Iran.

Let's see.

[Slotin Capital @SlotinCapital]

If this isn't a negotiating tactic this is thesis invalidation. US struck Iran because it was trying to mine the strait, Iran returned fire and caused limited damage. Unless the claim of limited damage is understated, I don't see why Trump moves up the escalation ladder here

[Slotin Capital @SlotinCapital]

Indonesia & Malaysia declared Malacca 'not an international strait' in 1971 and it took decades to bury. Legitimise one toll and every littoral reopens the file. 80% of China's oil transits Malacca.

[Slotin Capital @SlotinCapital]

At the May Beijing summit Xi explicitly opposed any attempt to charge for the Strait of Hormuz's use. The ramifications for the Taiwan Strait, South China Sea, Strait of Malacca etc are significant

[Slotin Capital @SlotinCapital]

Surprised this point doesn't come up more often. Whilst US military capacity degrading is in China's favour, a prolonged conflict further strains and already weak Chinese economy. That being said, China won't be dictated to on sanctions.

[Slotin Capital @SlotinCapital]

The current unquantifiable is what Iran wants. We know the US want a deal. We know the political establishment (eg Pezeshkian) want a deal. But what do the hardliners want?

A) They accept they cannot achieve total victory and are escalating for leverage to restart talks
B) They still believe they can win by outlasting the US and their demands are so egregious they are an ultimatum designed to be rejected

All hinges on how bad Iran are hurting.

[Slotin Capital @SlotinCapital]

Surprised this point doesn't come up more often. Whilst US military capacity degrading is in China's favour, a prolonged conflict further strains and already weak Chinese economy. That being said, China won't be dictated to on sanctions.

[*Walter Bloomberg @DeItaone]

BESSENT: WE HAVE MORE IN COMMON WITH CHINESE ON IRAN

[Energy Headline News @OilHeadlineNews]

Bessent: Iran is "lashing out kinetically" because it is losing.

[Slotin Capital @SlotinCapital]

BESSENT ON U.S. BOND MARKET: DON'T BELIEVE I CAN CHANGE EQUILIBRIUM PRICE-CNBC INTERVIEW

[Slotin Capital @SlotinCapital]

Going to test Bessent's resolve to fight a war on all fronts

[Slotin Capital @SlotinCapital]

@EpsilonTheory Biden era was structurally higher though. It averaged 351¢ vs. 323¢ for the Iran war era