Warsh Fails the First Test Warsh has failed his first test: hiking into a negative growth shock. His mistake exposes a contentious thesis that will slowly become consensus: the bond market is no longer the smartest money in the room. Hedge funds’ growing influence challenges the old conviction that credit markets and bond vigilantes deliver sober judgments about economic fundamentals. When short-term, leveraged players dominate, prices can reflect crowded trades and groupthink rather than sound economic analysis. A Fed driven by those prices compounds the problem. Traders predict the Fed; the Fed follows their predictions. The hall of mirrors turns positioning into a policy signal and then mistakes that signal for independent judgment. Hiking into a negative growth shock is what happens when the central bank follows the crowd instead of assessing the economy. This is not your grandfather’s bond market. The supposed smart money may now be the dumb money at the table and a Fed that follows it risks becoming the dumbest player of all.

The Street is not positioned for what lies in front of them. Historic times 👇

AI Bubble? Bessent Sees No Systemic Threat If anyone on Wall Street is qualified to assess whether the AI boom threatens financial stability, it is Treasury Secretary Scott Bessent. His message to investors was clear: “I don’t see a systemic problem.” That does not mean every AI stock is fairly valued or every investment will succeed. It means there is a difference between speculative excess and a credit crisis. The doomers keep collapsing those distinctions, treating every ambitious spending plan as another dotcom bust waiting to happen. Bessent’s assessment deserves more weight than the reflexive bubble narrative. Watch the credit system, not just the headlines. Ignore the doomers.

Can Putin, Xi and Trump Get a Deal Done? Donald Trump may have an opportunity to end two wars through one bargain. The question is whether Vladimir Putin can help deliver an agreement with Iran, backed by Chinese economic incentives, in exchange for a negotiated settlement in Ukraine. Trump’s pragmatism makes the proposition worth testing. He sees adversaries not merely as enemies to defeat, but as parties with interests that can be traded. Two wars, one bargain, a peace dividend worth pursuing. The familiar Hegelian shorthand captures the opening: American pressure is the thesis, resistance to capitulation the antithesis. The synthesis is a settlement that secures essential interests without requiring either side’s unconditional surrender. Treasury Secretary Scott Bessent supplies the economic squeeze on Tehran. American naval power protects shipping through the contested Strait of Hormuz. Regional oil exports have surpassed prewar levels, according to the Wall Street Journal. The strategic opportunity is to squeeze Iranian revenues without choking the world economy. Regime change should not be the objective. Washington needs nuclear constraints and secure shipping, not responsibility for Iran’s next government. Russia has proposed taking custody of Iranian enriched uranium. Xi Jinping could provide economic incentives for compliance. Neither role should be assumed, but both should be tested. Sanctions relief follows verified concessions. Ukraine is the harder bargain. Putin wants recognition of his territorial gains, not simply continued possession. Trump must determine whether economic normalisation could persuade Moscow to defer that demand while accepting a defensible Ukrainian state. Kyiv’s consent is essential. A bargain imposed on Ukraine would lack the foundation for lasting peace. The Trump-Putin diesel deal hints at the economic opening. Relaxing sanctions to release Russian fuel creates scope for cooperation, but relief must purchase concessions, not subsidise aggression. Imagine American and Russian energy interests aligned around reliable supply, investment and predictable markets. They would remain competitors. They need not remain permanent strategic enemies. To be clear, many in Europe and Washington would oppose such a bargain. But Trump’s test is whether it advances American interests, not whether it satisfies the foreign-policy establishment. That is the America First shift: judge a settlement by the security and prosperity it delivers, not by whether it fulfils every allied ambition. The prize is a peace dividend: lower energy costs, easing inflation, more room for Federal Reserve rate cuts and capital redirected from destruction toward investment. Putin’s usefulness and Xi’s cooperation must be demonstrated, not presumed. Trump should offer reversible relief for measurable results. The test is not whether the three leaders can announce a grand bargain. It is whether they can make two settlements hold.

Yes a Supercycle in Crypto.

Truth 👇 Game on Stablecoin “Loophole” Left Open The OCC dropped a provision that would have treated certain arrangements between stablecoin issuers and third parties as presumed violations of the GENIUS Act’s ban on interest and yield.

Don’t bet against Elon. SpaceX core holding. Don’t overthink this. Solid Quarter, no one should be surprised. $SPCX

Bitcoin. Bearish to Bullish Intermediate trend change. Don’t overthink this. #Bitcoin

Digital Credit. Ignore the haters do some research. #Bitcoin fidelitydigitalassets.com/re…

SuperCycle is standing right in front of us. #Bitcoin

The US Economy is the Tale of Two Cities. Secular Growth and Interest Rate Sensitive Cycle. Yes the Fed is too tight.

Ignore the noise. The temporary energy shock is dissipating!! The U.S. is keeping the Strait of Hormuz open, and regional oil exports have surpassed prewar levels. Iran can still try and disrupt shipping, but disruption is not control and survival is not victory. No, Iran is not winning this war.

The great escape. The era of secular stagnation is over👇

No one should be surprised 👇

Leave the Cave Central bankers and much of Wall Street are still stuck in Plato’s cave, and they are still living in the 1970s. They treat growth as the enemy. Tariffs and energy shocks are misread as pure inflation threats rather than negative growth shocks. Wage gains are presumed inflationary on sight. Second- and third-round effects are treated as inevitable even when the data show nothing of the kind. For investors, this is not prudence. It is a costly misdiagnosis that systematically underprices the returns from expanding productive capacity and overprices the risk of real growth. Demand stimulus can stabilize a downturn. It cannot expand what an economy is able to produce. When supply is constrained, more spending simply raises prices. The larger and more damaging error runs the other way: treating supply-driven growth itself as the problem. Central banks that respond to rising investment, energy output, or productivity as if they were excess demand end up tightening into strength. The result is compressed valuations on real assets, weaker capital formation, and capital steered into financial engineering rather than capacity. The recognition that the economy is escaping decades of secular stagnation, and that the resulting growth is not bad, will arrive only when the evidence of expanding productive capacity becomes impossible to dismiss. Evidence is already pointing to green shoots of productivity growth. It will not come from models that still treat potential output as fixed, or from the reflex of reading every acceleration, tariff, or wage gain as an inflation shock. Central bankers need to follow Greenspan’s lead in the 1995 era. He saw that productivity gains were lifting potential growth and refused to treat the expansion as inherently inflationary. Until they do the same, policy will keep rationing the very investment that raises potential growth. Trump’s America First agenda is the Hamiltonian alternative, a clear pivot away from Keynesian progressive-left economic policies and toward supply-side capitalism. It prioritizes domestic industry, energy abundance, infrastructure, and the institutional conditions that turn capital into expanding output. This is not autarky. It is the deliberate rebuilding of American productive capacity so the economy can make more, reduce reliance on fragile foreign supply chains, and raise potential growth. For investors, that is the difference between a regime that rations returns and one that expands the set of investable, cash-flow-generating assets. The cave dwellers still confuse the shadow of inflation with the reality of productive capacity. That confusion is a policy error with direct costs to capital formation and investor returns. America First is the exit.

Bay Street Wants the Bank of Canada to Repeat a Known Mistake Canada’s financial establishment is once again urging the Bank of Canada to hike rates into an already weakening economy. Headline inflation hit 3.1% in September solely because gasoline prices soared nearly 28% year-over-year. Strip out that temporary energy shock and the picture reverses: trimmed-mean CPI has fallen to 1.8%, median is 1.9%, core excluding food and energy sits at 2.1%, and the monthly CPI gain was a negligible 0.1%. The real economy offers no case for tightening. GDP growth remains soft or stalled, and September brought a loss of 68,000 jobs with unemployment rising to 6.5%. Yet Scotiabank, Desjardins, and BMO have pivoted to calling for a hike next week, and markets are pricing high odds of one. They treat a gasoline-driven headline print and a modest rise in survey expectations as justification to tighten, ignoring that core measures remain comfortably inside the target range. This is precisely the error identified by Bernanke, Gertler, and Watson in 1997. Their research showed that the endogenous monetary-policy response accounted for a very substantial portion, in some cases nearly all, of the recessionary effects of oil price shocks. The oil shocks themselves were not the main driver of downturns; the rate hikes in reaction were. With underlying inflation already soft and activity weakening, hiking now would amplify the slowdown for little lasting gain on inflation. Bay Street is lobbying for a policy response the evidence has long shown to be counterproductive.