What we will cover today gets to the very root of WHERE these flows are coming from and HOW to think about the changes in real purchasing power caused by sovereign debt risk. I have already laid out the framework for WHY these changes have taken place here. If you have been following the research, then you know why bonds are down so much right now and why it is beginning to drag on equities. My strategies signaled these risks well before Bessent tried to step in front of a market that is much bigger than him.

Big Picture:

Let’s start by dispelling the most misleading ideas people hold on either end of the spectrum. Domestic inflation can most certainly cause equities to crash. We saw this over and over in the 70s, and it was THE driver of flows in 2022 during the inflationary bear market. There is a deceptive idea in the financial community that inflation helps equities go up, which glosses over the entire mechanism: inflation also decreases liquidity by revaluing the purchasing power of dollars. There is always a risk for every reward in the system, and it doesn't matter if it is in real or nominal terms. When an entire generation thinks that debasement is functionally free money without any risk, you know they have minimized the risks that are required for making money in markets.

The chart below shows the precarious environment that we are CURRENTLY in. The largest drawdown in recent history for total returns in bonds makes the previous 40 years look like a walk in the park. The important thing to take note of is that this shows TOTAL returns and not just outright interest rates. If we adjusted these returns for inflation, the drawdown would be even deeper.

When we look at history, low and stable inflation creates a positive environment for risk assets, but when we begin to tip into higher volatility on either the deflation or inflation side, the entire game changes: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4153468

When volatility rises on either side of the distribution, you need to make more informed and active management decisions in order to offset the drawdown. If you want to benefit from the volatility, the bar is set incredibly high, but the payout is just as high because the entire financial industry and global monetary system have been structured to be long 60/40 and short volatility. This is WHY, if you understand the drivers of volatility for both deflation and inflation, you have an incredible opportunity to benefit from these changes instead of being crushed by them.

This is why I explained in the previous report (link) that the drivers of growth and inflation are so much larger than any single action by the Fed or Treasury. Government spending and the AI capex build-out are the most significant drivers of interest rates, and the oil shock is only amplifying this.

Scott Bessent has said that the inflationary impulse is only a supply shock. This statement in itself is an attempt to misdirect people away from the real drivers of long-end interest rates:

Notice that long-end real rates (blue) are making new highs while inflation swaps (orange) remain in their range. This, along with today's CPI print, which showed core measures decelerating, indicates that we are facing a larger structural issue with interest rates that is being amplified by energy prices, as opposed to merely a supply shock that will eventually push interest rates back down to cycle lows.

These subtle rhetorical plays by Bessent have significant implications for WHERE we go in equities and HOW HIGH we can go in rates. Think about what the data says vs. the narrative Bessent is trying to subtly float (remember, the US controls oil prices right now given its role in the Strait of Hormuz).

Headline CPI and the forward swap curve for CPI are both in a very reasonable range given the inflation risks in the system. The larger question is about the growth side of the equation and what everyone refers to as “term premia” (the compensation investors require to move out the duration risk curve). Bessent is trying to focus people on short-term inflation, while the real issue is government spending and high nominal GDP.

You will notice that Bessent is taking action on the long-term rate and FX side at the same exact time Warsh and the Fed are pausing on the short term interest rate side. For the last 2 months, short-end real rates have been in a range, which shows the Fed continuing to hold an overly accommodative stance on monetary policy relative to the conditions that exist.

This overly accommodative stance comes with almost 100bps of hikes priced into the terminal rate. The chart below shows the U7 SOFR contract, which shows HOW MANY hikes are priced between now and Sept 2027. This is the highest point of the forward curve, which means the market is pricing hikes until Sept 2027 and then a pause by the Fed.

The way you want to think about the chart above is by asking: HOW MANY hikes need to be priced into the forward curve before long-term bonds find a bottom and financial conditions tighten marginally? Until the Fed tightens enough to cause this, bonds remain skewed to the downside.

This was the exact logic I laid out in the bond strategy I published last week, which explained that when the volatility regime begins to rise in bonds AT THE SAME TIME that bonds underperform crude and equities, it is a clear sign that downside is beginning to materialize. The logic for this and the TradingView model were laid out here: LINK

We now have a clear understanding of the big picture and WHAT is happening. But the more important questions are: WHERE are we moving from here, and HOW MUCH risk exists for equities as Bessent manipulates and misdirects the market?

The Next Move In Bonds And Interest Rate Volatility:

While bonds have fallen recently, there are two important factors to understand in order to determine HOW MUCH FARTHER they can fall and the risk of a counter-trend move:

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The crisis that the global monetary system faces today is not one in the private sector but in the public sector, in real purchasing power terms as well as in the terms of trade that shift cross-border flows. Policymakers are in the process of being backed into a corner where they will be forced to decide WHO they are.

On one side, fiscal spending needs to increase in order to meet defense spending targets due to the rising threat of China. This is WHY we have seen equity names that have the highest sensitivity to fiscal spending rally so much from the 2022 lows. Governments can no longer ignore this threat because it is tangibly impacting taxes and labor markets.

The clearest example is how Germany allowed its industrial base to be carved out by Chinese exports and is now taking in significantly less tax revenue because of it. In order to fund the deficit, it needed to raise taxes on the consumer due to its short-sighted incompetence.

Germany is one of many countries being forced into a corner, and now the market is pushing them into an even tighter spot as long-term interest rates rise and increase the cost of financing deficits. 30-year government bond yields are at record-high levels as a result.

And notice that yields have been making new highs even with inflation at 2%. This reality is so much larger than domestic inflation!

But who cares? This is Germany. It doesn’t matter for the United States or other major countries, right?

Once the world begins to realize that Germany is getting pushed into a corner and that the divergence of long-end yields from inflation is the same exact pattern in the United States and Japan, it will wake up to the fact that every major country is being pushed into the same exact corner.

The world does not truly understand the sovereign risks unfolding and how they impact global interest rates and FX markets. These markets are the asymmetric linchpin on which the entire economy turns. Interest rate and FX markets are not two separate markets; they are two sides of the same coin, and every good, service, or asset is denominated in these coins.

Political parties won’t have the willpower to change until they are forced to. The largest changes in the world are ALWAYS driven by changes in policy that cause dramatic changes in interest rates and FX. This is the entire point of global macro: it focuses on these changes and expresses views that have the highest sensitivity to them.

Here is the problem though: while policymakers cloak inaction in virtue signaling, the private sector is trying to make as much money as humanly possible while the music is playing. The amount of credit and liquidity in the system has increased so much that GLOBAL banking sectors are sitting at all-time highs across every major country. The AI arms race has been the destination of all this credit and liquidity, but this doesn’t change the fact that governments are being backed into a corner. While policymakers choose inaction, liquidity is being added to the system because they want to kick the can down the road until they are forced to act. The problem is that WHEN they are forced to act, there will be secondary effects across the private sector that dramatically change the amount of credit and liquidity in the system.

This PATH of policymakers and the private sector riding the trend is the most important factor to navigate over the next 18 months, especially because we are already seeing elements of the sovereign risk being priced into SOME markets, but the inevitable second- and third-order effects have not played out yet. This is what we are going to focus on.

The Great Escalation:

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As I have consistently laid out, the greatest risk to financial markets continues to be the carry trade and interest rate risk. Both of these are sources of liquidity that are now being actively manipulated by policy actors. Policy actors do not operate within the same risk management framework as market practitioners because they are operating on the calendar schedule of the political cycle and don't have the same P&L constraints that help drive efficiency on the active risk-taking side of financial markets.

The most important question to answer in this regime is: HOW can we actively implement a strategy in this low-volatility period so that we know WHEN to execute around these policy errors?

The following report explains this and provides you with the tools to implement the ideas. If you haven’t already, you can download the entire codebase for the models I provided. They are all free, and you can feed them into AI and ask it to actively implement the ideas explained in these reports.

The Trading Strategy for Long-Term Bonds:

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Last week, I published my report explaining the entire macro picture and the tensions for WHERE we are moving next: see here

If you have been following along in the chat, I have been updating you in real time about WHAT the specific levels in ES would flip us from neutral to bearish within the current reflexive feedback loops we are in:

The recent note I sent out reiterated that my overall stance is one of holding cash and waiting but I was still taking short-term trades with small size from the long side. As we hit the 7670 level in ES, this has changed. Batting singles over the last month has gone incredibly well: buying gold (link), shorting vol into NVDA and Jackson Hole, and reiterating over and over that bonds are skewed to the downside and remaining BELOW the previous FOMC level.

Now this has changed.

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We are always in the process of updating how the range of probabilities is changing across multiple time horizons and how the constraints on each player act as anchors for those probabilities. These macro events function as clearing events where large players adjust hedges based on how their strategies are pricing fair value for an asset, as well as the vol positioning on that asset.

Some managers are adjusting exposure to meet benchmarking goals, vol targets, or their overall balance sheet, or they are simply running risk as discretionary traders. There are so many different players making decisions for so many different reasons, and everyone is trying to obtain whatever edge they can to squeeze P&L out of the market.

Differentiation will always be the defining element for those who generate alpha.

If you are following along with my active updates and the recent reports, you understand the structural elements of the new monetary regime we are moving into and how it directly connects to price action: see below for the initial context

My Views Heading Into Tomorrow:

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Saying we are in a bubble grossly underestimates the power of the underlying forces driving capital across global markets. False narratives diagnosing price action always set the stage for epic melt-ups and catastrophic melt-downs because uninformed market participants are forced to buy and sell at inopportune times.

Professional risk takers approach the future with humility by starting from first principles and ascertaining how they can add value to the liquidity process that dynamically unfolds. Starting from first principles instead of starting with narratives produces dramatically different outcomes and is what differentiates those who make asymmetric returns on the credit cycle melt UP and melt DOWN.

This report will explain WHAT the unique drivers of the current credit cycle are, WHY they matter for global financial markets, HOW the drivers are directly connected to specific markets, and then give you all of the models (the actual code) to monitor these flows in real time.

Macro Context:

Let’s start with the big picture to frame the underlying drivers for WHAT is happening. First, nominal GDP is running at 6.5%, which is incredibly high relative to recent history. This acceleration to a higher level of nominal GDP is WHY long-term interest rates have been rising.

You will notice that even during the oil shock earlier this year, long-term inflation swaps remained in their range, and real rates have been the primary driver of higher nominal yields in the 30-year. This is because growth and term premia, not inflation expectations, are what have been pushing long-end rates higher.

Long-end rates are pointing to the fact that there is a lot more driving interest rates than short-term inflation expectations; it is about the strength and breadth of underlying growth. Notice in the chart below, which shows 1-year nominal rates, that the Fed is holding rates ABOVE inflation. The blue bars visualize when real rates are driving the short end vs inflation expectations (orange). Historically, when the Fed begins widening the spread between nominal rates and inflation, it is trying to take a more restrictive stance. Simply put, if there is a ton of growth in the economy, even if inflation is falling, the Fed does not need to cut rates.

The more growth there is in the system, the higher the Fed can hold short-end rates (white) above inflation expectations (orange). The risk in the system is that if growth decelerates and the Fed pauses, this can create a liquidity gap in markets that pushes the highest-beta equities down. This is why the 2nd derivative of growth in both economic data and stock fundamentals has such a heightened significance right now. Smaller changes can have a larger effect due to the compressing spring in macro liquidity.

The question is: WHERE is all of this growth coming from that is allowing the Fed to hold rates above inflation? And how much of it is real GDP vs inflation? If we can understand this, then we can begin to break down the drivers of interest rates and the sustainability of macro liquidity in the current credit cycle (see previous report providing geopolitical context here: LINK).

The 2026 AI Liquidity Thesis:

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• First, I feel incredibly grateful and privileged to be able to have a seat at the table in markets. I have had some amazing people in my life who have helped me grow and bet on me. If you are reading this, then you are also part of those people who are deciding to actively bet on who I will be in the future.

• Second, I want to curate the highest-quality macro research product that empowers you to make the best decisions for your unique bet you're taking on yourself right now. Your unique bet may not look like everyone else's, which is why it’s YOURS, and it’s special to YOU. The Capital Flows Substack has taken a lot of different forms over the years as I learn the best way to both put myself in the best place to produce high-quality insights as well as bring the best macro analysis from my unique perspective. I have decided that the best way for me to accomplish this is to focus solely on writing the highest quality analysis that fully represents my views instead of doing a daily livestream. While I enjoy the daily livestream and interacting with everyone, I don’t feel that it’s the best environment for me to share my best work.

  

• Third, I will still have livestreams once in a while when I feel that the moment merits it. The main focus will be me sharing higher-quality reports multiple times a week to accurately map the capital flows of each country and draw attention to the places I am actively generating alpha. I will also be more active in the Substack Chat to answer questions and provide daily updates (link).

• One of the greatest edges I have had over the years is to be asset class and country agnostic. This allows me to shift toward the highest opportunities in the world while employing my fundamental macro framework as an anchoring point. When this edge of being asset-class agnostic is combined with taking highly concentrated positions, there is immediate differentiation from the rest of the world, who are chasing beta and giving up future upside to decrease short-term drawdowns. This is the space I will continue to live in because it allows me to lean into the unique aspects of who I am as a trader and find alpha that is perfect for ME to gain an edge. Bringing this to you in the Capital Flows Substack in the highest quality form possible is my goal.

Ok, let’s dig in now.

How Bessent Is Establishing A New Monetary Order

The largest structural changes that occur in an economy or financial markets almost always stem from regulatory changes. Regulation functionally changes the path and potential for capital to flow between various assets. We are seeing a coordinated effort by the current administration to increase US dominance across every lever in financial markets, economic activity, fiscal policy, monetary policy, energy independence, and global trade.

The most recent actions by Bessent in the Yen markets and now in the Treasury buyback program illustrate this exact dynamic. But WHY is Bessent doing this? And why is he doing it in this exact way? This is the question we need to answer. If we can understand the WHY behind Bessent’s actions, then we can understand WHERE capital is likely to flow.

There are 3 major ideas to understand the WHY behind Bessent’s actions:

• First: Bessent, Warsh, and Trump are actively coordinating to conduct an economic and financial counterattack on China. If they can fix the largest imbalance in the world, the largest problems will begin to fade away. I explained the entire logic behind this for global trade flows and how it connects to AI in this article:

• Second, the utopian dream of laissez-faire economics has ZERO place in today’s world. In a nonlinear system, more and more components are becoming critical for national security. Bessent, Warsh, and Trump understand this, and they are actively taking every lever to shift how the very essence of free markets works.

  

• Third, the three policy levers are working in the same direction. Warsh is holding rates below where the neutral rate would put them. Bessent is stabilizing the FX market, so the carry trade doesn’t unwind, while adding liquidity through buybacks. Trump is unlocking a new layer of financialization via Hyperliquid. The combined effect is that more capital can be deployed into the US financial system.

So how does the net effect of these three things connect to WHERE capital is flowing in markets?

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Main takeaways from the macro playbook section:

• Short term positioning in equities is too aggressive while the tape confirms it: Monday sold off with zero mean reversion into the close, the overnight and London sessions failed to bid, and the cash open could not attract buyers. That sequence of liquidity provision failing at every session handoff is the signal, and the takeaway is a pullback this week is live even though the bigger picture is not bearish.

• Credit spreads are at cycle lows while thirty year yields sit at highs, WHICH tells you inflation risk is higher than recession risk. If recession were the dominant risk, spreads would be widening and yields falling, so the real tail is a 2022 style regime where rates and spreads rise together, and the tripwires are crude, core CPI, and the inflation data.

• Rising net interest payments relative to GDP mechanically push bond yields higher: the government pays out more, holders spend those coupons back into GDP, and the Treasury issues more supply to fund it. That feedback loop, confirmed by government outlays accelerating into July, is WHY the bear steepening in the curve keeps running.

• The three greatest risks to equities remain interest rate volatility rising on inflation, the carry trade unwinding while foreigners sit max long AI stocks, and unflushed leverage in semis. Positioning there has not capitulated, everyone rejustified the fundamentals and bought the dip, so SMH is the decision point between another down leg and a higher low back to all time highs.

You can find the free recording on the Equity Positioning Playbook here in the YouTube video:

There is no livestream tomorrow. The next breakdown comes as a report on the site instead.

Proprietary Report On Equity Positioning And Volatility

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Main takeaways from the macro playbook section:

• Bonds made new lows and thirty year rates printed a cycle high, and nobody watching these streams should be surprised. The short bond thesis was laid out at the highs, the position is on sides, and the goal never changes: get trades on sides, move stops to breakeven, and preserve risk rather than chasing lows.

• A live gold trade played out on the stream in real time. A capitulating player moved the order book on the bid side at the highs, and the play was to go with him while he executed, then fade once the bid pressure was done. The same player showed up on the sell side hours later, and the round trip was worth roughly 150 ticks.

• The order book is pattern recognition, not inside information. Market makers run the same song and dance every day, so the edge is identifying anomalies, HOW an order navigates the book, and whether it is urgent or passive. Years in the seat staring at the same market pay extreme dividends because the anomalies jump out.

• Charts cannot show you the 8,000 lot offer resting above your long. That is WHY short term futures traders without order book data are leaving a massive informational input on the table, and WHY institutions model the limit order book even when they are not taking directional trades.

• The three greatest risks in equity markets right now: interest rate volatility from higher inflation, a carry trade unwind against the leverage in the system, and vol complacency at the highs. Leveraged ETF flows into the Micron and SanDisk products show the dip got bought, not capitulated, and one week vol sitting below one month vol says hedging pressure is complacent exactly at the highs.

• Every move in markets is path dependent. If the forward curve prices fewer hikes and more cuts, that eases financial conditions, stimulates the economy, and forces long end rates higher. The two year decomposition shows real rates doing the work while the short end gets less restrictive, which is exactly the mix that lets the long end keep rising, because inflation is a liquidity contracting mechanism.

You can find the free recording on the Order Flow Playbook here in the YouTube video:

Tomorrow's Livestream: Equity Positioning:

Tomorrow's stream takes on WHERE equity positioning actually sits, from the leveraged ETF flows chasing semis to the put selling that never let the leverage clear. It will map HOW to read that positioning at the index and sector level so you know WHAT is priced and WHAT is not.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On Positioning In A Low Covariance Regime

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Main takeaways from the macro playbook section:

• From 1988 through 2020 interest rates only moved down, and that single trend hardwired the biases behind the 30 year mortgage refi playbook, the 60/40 portfolio, and the entire asset management industry. Since 2020 that regime is over, and anyone running a strategy that only works when rates fall has a hope, not a plan.

• The covariance between the S&P 500, the 30 year rate, and the dollar is the framework for reading this market. The largest moves of every macro cycle, melt ups and meltdowns alike, occur when all three assets move in lockstep, and 30 year yields pushing back toward all time highs is exactly WHERE to watch that alignment forming.

• While everyone argues over a September hold versus hike, only about 42 basis points of hikes are priced into the terminal rate through 2027 as the long end bear steepens. A long end that bear steepens through a Fed debate is telling you nominal GDP is running hotter than consensus believes.

• Inflation retraced its entire spike, yet bonds never caught a bid, and that answers the whole question of WHY this is still a bear market. Crude holding its levels, corn and wheat bid, copper elevated, and a stagflation reading in the short term macro impulse all say the pressure on bonds is structural, not cyclical.

• Financials, the sector most sensitive to delinquencies, are rallying as rates rise, and the 10s30s curve is bear steepening, which does not happen in a collapsing economy. The data says the system can withstand higher rates, so the "rates up means everything breaks" view has no support.

• Money market funds paying 3 percent are not a safe harbor, because purchasing power erodes whenever growth accelerates, even with inflation flat. Real rates versus inflation expectations is the decomposition that tells you WHAT is actually driving rates, and in a world changing this fast, not taking risk is what gets punished.

You can find the free recording on the Bond Market Playbook here in the YouTube video:

The member section connects this framework to the live regime and positioning, with the recording linked at the bottom of this report.

Monday’s Livestream: The Next Stage Of Macro Trading:

Monday's stream takes on WHY trading macro flows is the most important thing to understand in a world where disruption and fundamental change are constant. It will map HOW the entire Capital Flows process is built around that reality, from regime identification to attribution to live positioning.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On The Bond Bear Market

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Main takeaways from the macro playbook section:

• The S&P 500 is trading at some of the highest valuations in history, but high valuations alone do not cause crashes. Crashes come from asset liability mismatches when positioning gets too aggressive, so the valuation level is a sensitivity reading, not a sell signal.

• Decomposing index returns shows the majority of S&P moves over the last two years, and especially year-to-date, came from valuation expansion rather than earnings. Valuations are driven by macro liquidity, the quantity of money in the system and the price of money, which is WHY the pullback earlier this year was valuation contraction and a buying opportunity, not an earnings event.

• At these valuation levels the system is hypersensitive: a small contraction in macro liquidity that would barely register in a normal regime can now produce a 10% index move in either direction, because the base of money supporting prices is so excessive.

• Tech is the entire market. The S&P is up nearly 20% over six months and 11 points of that came from tech alone, yet everyone staring at NVIDIA and GPU credit risk is missing the bigger macro liquidity question. NVIDIA's pullbacks have been driven by the market and the sector, not its fundamentals, and compute financialization, with NVIDIA moving to guarantee residual GPU value and own the market around its own product, only deepens the monopoly.

• The carry trade is the quantity of money channel feeding this market. A falling yen has funded yen-denominated leverage into US equities, and Aussie yen and peso yen grinding higher confirm capital is moving out the risk curve. If the carry trade unwinds, it does not matter how strong CapEx or NVIDIA earnings are: even a modest pop in the yen can drive a 10% equity drawdown, and the 2024 unwind took the Nikkei down 27% peak to trough.

• Cross asset covariance is falling, which means the market is shaking off every shock, but the tails are compressing. VIX rising alongside ES making new highs is short covering and hedges getting cooked, and it signals the probability of an extreme move is increasing even as the index melts up.

You can find the free recording on the Equity Risk Playbook here in the YouTube video:

The member section connects this framework to the live regime and positioning, with the recording linked at the bottom of this report.

Macro Decks From today's stream:

• All slide decks by Jaymes: LINK

Tomorrow's Livestream: WHEN WILL THE BOND MARKET STOP CRASHING?

The thirty-year just auctioned at 5.21%, the highest yield in a quarter century, and the question now is WHEN the bond market stops crashing. The stream will map the drivers of the long-end selloff, what a durable bottom in bonds actually requires, and the signals that mark capitulation.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On The Dangerous Risk Building In Stocks

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Main takeaways from the macro playbook section:

• Interest rates and FX are the same trade expressed in two markets. If the Fed makes a policy mistake, the long end reflects it, and if a government shifts issuance or supply and demand on the long end, the currency absorbs it. Watching one without the other means missing half the picture.

• The yen's divergence from interest rate differentials is explained by one thing: the quantity of money in the system. The Ministry of Finance funding deficits with bills over bonds while the Bank of Japan suppresses the short end devalues the exchange rate even when rate differentials sit still. That is the mechanical reason the devaluation trend persists.

• The impossible trinity is the constraint map for every central bank: a country can only choose two of a fixed exchange rate, free capital movement, and independent monetary policy. China manages its currency behind a closed capital account while the US runs free capital movement with independent policy, and that asymmetry shapes global flows.

• Decomposing nominal rates shows the recent drop in two year yields came from the inflation swap side while real rates stayed restrictive. The long end barely moved, WHICH tells you the Fed can be significantly more restrictive without generating credit stress. That is not a dovish signal, it is a high pain threshold.

• Bonds will not bid until the AI CapEx cycle ends or the credit behind it collapses. These are two sides of the same trade, and the way to front run the turn is the value chain itself: electricity permits, zoning approvals, and grid buildouts get secured before any data center announcement hits a press release.

• Buying breakouts beats buying dips in a trending devaluation. The question is never whether an asset is overbought or oversold, it is WHAT the drivers say about how much further things can move from here.

You can find the free recording on the Interest Rate Mechanics Playbook here in the YouTube video:

The member section connects this framework to the live regime and positioning, with the recording linked at the bottom of this report.

Macro Decks From today's stream:

• All slide decks by Jaymes: LINK

Tomorrow's Livestream: The Dangerous Risk Building In Stocks:

Equity valuations sit at highs while the long end of the curve quietly bear steepens underneath them, and that combination is WHERE the real danger accumulates. The stream will map the specific risks building inside stocks, which sectors carry the exposure, and what signals confirm the risk is going live.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On The Hidden Mechanics Behind Interest Rates

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Main takeaways from the macro playbook section:

• Debt levels increasing is not bearish. A crisis only occurs when there is an asset-liability mismatch, which is WHY NVIDIA structuring its balance sheet with more debt against appreciating GPU collateral is the company betting on itself, not a warning sign.

• Inflation is modeled by taking every source of nominal demand against every source of real output. The velocity of M2 is a worthless input, and anyone actually mapping inflation is using real time credit card data, savings balances, and pricing power across every major retailer.

• Core CPI decelerated from 2.9 to 2.6 year over year, and at the current speed of deceleration the print lands near 2% by year end. Tomorrow’s CPI and the PPI print behind it are the events that set the macro regime from here.

• Bonds will not bid until AI CapEx ends or the credit behind it collapses. The nowcast is running near 5.8% real GDP with fixed investment accelerating, and roughly 40% of S&P 500 returns over the last year are connected to AI.

• Inflation sensitive equity factors are already moving, with steels and metals up 43% and ags up 16% year to date, while short end inflation swaps from Japan to the UK show WHERE the global pressure is building next.

• The warning signs are stacking incrementally: inventory to sales ratios are falling while government spending rises, and real rates at new highs are still not restrictive enough to slow the US economy.

You can find the free recording on the Inflation Risk Playbook here in the YouTube video:

The member section connects this framework to the live regime and positioning, with the recording linked at the bottom of this report.

Tomorrow’s Livestream: The Hidden Mechanics Behind Interest Rates:

Interest rates sit at the center of every asset price in the global system, yet most investors never look at the machinery that actually sets them. Tomorrow’s stream will map HOW policy, collateral, and debt issuance interact to drive the rate structure and WHERE the next repricing is likely to come from.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On Inflation Risk and The Bond Market Repricing

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Main takeaways from the macro playbook section:

• The NFP print set a short term top in both bonds and equities, and the FOMC level in bonds is now the line that defines interest rate risk into this week.

• Everyone in the system is structurally short interest rates through mortgages, corporate debt, and leverage, so a repricing of rate volatility hits far more portfolios than people expect.

• Interest rate volatility is far too low against an economy this resilient. The MOVE index sitting at the lows while growth runs in excess of leverage compresses the spring, and a money impulse or a supply shock through crude takes rates and blows them out.

• The yield curve regime indicator shows the downward moves in bonds are being driven by bear steepening. The long end is saying the Fed is not restrictive enough, and the code for the indicator is free in the Substack chat.

• Government outlays are accelerating on both an outright basis and as a share of GDP, which forces a higher premium into long end rates. The deeper mechanic is the trade war: when foreign savings flood into the country, someone has to run a matching deficit, and since the household sector deleveraged after 2008 that borrower has been the US government while China suppresses its currency to hold the imbalance in place.

• The highs and lows in the S&P and the Russell are directly connected to the highs and lows in bonds right now. Trading ES without watching bonds means missing half the picture.

You can find the free recording on the Currency Wars Playbook here in the YouTube video:

The member section connects this framework to the live regime and positioning, with the recording linked at the bottom of this report.

Tomorrow’s Livestream: Inflation Risk In The Global Economy:

Inflation risk is quietly building across the global economy while positioning still assumes the disinflation trend holds. Tomorrow’s stream will map WHERE the pressure is concentrated across commodities, wages, and government spending, and WHAT it means for rates, FX, and equities.

Paid subscribers can join the livestream with this link (the first half will be free and streamed to Twitter and YouTube, where the second half will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

Proprietary Report On Currency Wars and FX Volatility

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The first half will go over all of the main ideas from the macro playbook on currency wars and currency volatility. It will be free and streamed to Twitter and YouTube. The second half will focus on all of the proprietary models and proprietary research that is reserved for paid subscribers, and will only be available here on Substack.

Paid subscribers can join the livestream with this link:

Stream Link For Paid Subscribers

In order to get the full context for what we will cover tomorrow, I would encourage you to listen to the short spaces (link) I just did and read the recent article on the new FX regime we are moving into.

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The stream maps the exact conditions that decide the yen’s next move, WHY the VIX is rising alongside a 2% equity rally, and HOW the carry trade feeds the entire liquidity picture for the AI trade.

Tomorrow’s Livestream: The Current State Of The Global Economy

Growth, inflation, and policy are diverging across every major economic bloc at the same time. The stream will map WHERE the global economy actually sits right now, HOW the major blocs are diverging, and WHAT that means for positioning into the next regime.

Paid subscribers can join the livestream with this link (the stream will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

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I would encourage you to read the article first, then watch the recording attached: The Misdirection Play: Warsh and Bessent’s Unspoken Pact to Fund AI Dominance

Tomorrow’s Livestream: FX Positioning And The Suppression Of Volatility

FX positioning has become one of the most crowded expressions in macro while volatility across currencies continues to compress. The stream will map WHERE positioning is concentrated, HOW volatility is being suppressed, and WHAT breaks the regime.

Paid subscribers can join the livestream with this link (the stream will only be available on Substack for paid subscribers):

Stream Link For Paid Subscribers

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