weekend notes

Hope all goes well… “All consequences are at your own risk,” warned the People’s Liberation Army in their viral video, delivered in Hong Kong’s local dialect, as troops and tanks conducted anti-riot drills. Courageous protesters carried on, tear gas tumbling. 1,000 Russian pro-democracy protesters were arrested last weekend. Moscow riot police beat the crowd. 600 hundred more were arrested yesterd

AHis two youngest swam in the Sound. Racing to a buoy. The water sparkled, late afternoon. And he sat on the beach, recalling such races with his brothers, decades ago, circles around the sun. In the distance was Long Island, rising abruptly, its cliffs a warm glow. His dad told him stories when he was little, about fantastic things. Dinosaurs and Wooly Mammoths. Asteroids and ice ages. Indians an

Hope all goes well… “Saw tremendous hedging this week in VIX options,” said Roadrunner, the market’s biggest trader in equity vol. “Looks like they’re buying the S&P, then buying 3x the equivalent amount of VIX calls. When vol (and the vol of vol) gets this cheap, maybe that’s the new way people will protect their portfolios instead of buying bonds,” he said, darting a look left, right. “And,

A“War is the continuation of politics by other means,” said the Commander, quoting Carl von Clausewitz. We were discussing geopolitics. “Negotiations that precede every conflict continue throughout every war,” he said. “We’re seeing that play out in real time right now, but in highly charged domestic political environment.” America’s military is non-partisan, faithfully defending the Constitution,

A“Imagine Congress appropriates $1bln to refurbish Air Force One,” said Warren Mosler, pioneer of Modern Monetary Theory (MMT). We were discussing the financial architecture that allows the Fed to create money. “The Department of Defense (DoD) hires General Dynamics to upgrade the airplane. The US Treasury instructs the Fed to credit General Dynamic’s account at JP Morgan with +$1bln. The Fed simu

Hope all goes well… “She got it right,” said White House economic advisor Larry Kudlow, marking the first time a senior member of Trump’s team has had anything nice to say about Alexandria Ocasio-Cortez (AOC). “She said the Phillips curve is no longer describing what is happening in today’s economy,” continued Kudlow, “And Powell largely agreed. He confirmed that the Phillips Curve is dead, the Fe

Hope all goes well… Dusted off an anecdote on systematic investing from 2017 (see below). Back next Sunday with full weekend notes. Week-in-Review (expressed in YoY terms): Mon: Xi/Trump restart trade talks, China Markit-Caixin manufacturing PMI -0.8 to 49.4 (5mth low), Asean manu PMI 49.7, HK protesters storm government legislation buildings, Trump visits NK, Iran exceeds 2015 nuclear agreement f

AOnce upon a time they built a system. They promised state workers a pension. At the system’s birth, the nation was in a Great Depression, stocks were in free fall. So naturally, the system’s creators invested in safe bonds. For decades, system membership expanded, assets soared. World War II came and went. The cost to win was enormous, the federal government incurred a staggering debt. To grow it

Hope all goes well… “I had a great meeting with President Xi of China yesterday, far better than expected,” tweeted Trump. “I agreed not to increase the already existing Tariffs that we charge China while we continue to negotiate. China has agreed that, during the negotiation, they will begin purchasing large amounts of agricultural product from our great Farmers. At the request of our High-Tech c