5.15.26 afternoon space

Good evening and welcome to A Brief Subscription Spaces, May 15th, 2026. I think I figured out the recording. What was happening is my internet is so fast that the machine can't process it. So I have to wait until it processes before I post it. I got a no reading, but then I check later and show the two hours or whatever. So I think that that's the solution. It's going to be very brief. We're going to be recorded. I just want to run over. I updated the curve momentum charts. And despite all the noise, we have five curves flattened on a momentum basis and four steepen using the 50 versus the 200 day. If you strip out the policy rate, because he's not hiking. No matter what they do, I don't think he's hiking. I'll probably have the votes to switch to a neutral bias. But you have a lot of guys like Druckenmiller, not Druckenmiller in this case, Gunlack, who's been so wrong about so many things. He's on CLSD after the meetings. He talks his book so much. That guy Howell that you guys have been listening to, the Australian, I think, who's the liquidity indicator and lagging. So he was bullish Bitcoin and bullish gold. Gunlack the same. And one of the panel on CLSD today. But recently, since the last meeting, this turns out gold could go to 4000. Yeah, it could go to four on its way to 3,503. You look at the loss of volatility, look at the loss of the entropy, look at the loss of energy, look at the decay of the Hamiltonian. It's like Bitcoin. Devol can't get out of its own way. They keep on thinking they can run it. Now, when you break down Devol, you can lift Bitcoin. But only a certain amount until people say, hey, that's out of control. So I made some adjustments today. Mid curve is that people are raising balance sheets and dumping their mid curve. But the curve flattened. I think 3.30, 5.30, 7.30, 10.30, I think they all flattened. So. I want you to imagine the people wearing that wearable app. And they talk about doing steps. They're very locally minded. They do 10,000 steps. Okay. That's two miles. Let's say. Well, they actually, in a day, they actually travel 25,000 miles without noticing it. And with no velocity because they end up where they started as the Earth rotates. But again, that's local. The Earth is rotating around the sun. We're heliocentric folks. We're not geocentric. And how many miles an hour are we doing there? But our sun is traveling around our black hole center of our galaxy. How many miles are we traveling? 700,000 miles, whatever. How fast is our galaxy traveling through our universe? And then you have the other question of universe of universes. You have to have a frame of reference. You must have at least special relativity. You must use two-dimensional Euclidean geometry at a minimum. You have to see what Costco did today. I'm not advocating for any company. But we had a trifecta on February 26th before this very potent war. Trump went to China. He got absolutely nothing. It was smart that he didn't try to get anything. He has to play nice to the dictator Xi because he's already destroyed Xi. He's gotten rid of a ton of Xi's export to America, which are reliable. Exports to emerging markets aren't when their currencies are melting down. And they don't have the energy. What do we have now with the storage in the Strait of Hormuz? And then you've got the first reaction, the doubling of pipeline, from what I understand, another million and a half barrels from Dubai. What do they do after that? Do they add another million and a half barrels because they're out of OPEC? And then what do they decide to do after that? What if they decide to make six million barrels or seven? What if they rent their barrels? What's Iran going to do? Attack boats going from part of the Persian Gulf to Dubai to then ship it around the Strait of Hormuz? One thing about Obama, I don't know if it's true, but if he had wanted to really control Iran, and he left open the ballistic and the terror proxies, you can make the argument he was going to use that to get started, and then have an excuse to go after that because they couldn't stop cheating. That's the argument we have for Trump now. Trump's come to believe that these people are lunatics. They're going to cheat. So what's he going to do? He'll make an agreement. Mario Neufeld and Malcolm Nance and all the Trump aides are going to say, Trump lost as hard as anyone can lose. The war was a disaster. They are so set back. The value of the Strait of Hormuz is deteriorating. And he'll make a deal. They'll negotiate. And when they negotiate in bad faith after the midterms, he'll come back and he'll mow the lawn. But by then, the deflationary effects of the high oil price will be evident. The knowledge of nuclear capacity, capability can't be unlearned. There's a lot of equipment that can be destroyed. The knowledge of a lockdown like COVID and the development of all the tools and the Zoom and the robot work, well, you can't unlearn that. The planes that don't fly to Europe and Americans go to Yosemite National Park, Jellystone National Park. The American economy is strong and strengthening and our tax collections are growing. And when we finally get this clown show, freak show, AI.com clone version 2.0 into stability from dollar normalcy without dollar suppression from sadistic political policymakers. When Micron traded more calls than the S&P and the NASDAQ combined, did you need a lot of thinking to think that's a short-term top? That's enthusiasm. And now you have a lot of call writing, but that can eventually cause put skew to develop. Remember, if you're selling call skew, you can sell it into negative, but that's put skew. So you have, I didn't even check. Let me just check right now. Where did we close? Oh, so it's up in the nest. Costco, $1,048.95. That's higher than $1,048 and, what was it? $1,048.61 was the highest monthly close. You've got a lot of bears trapped there. Walmart, last month, which was the highest monthly, was $1,031.93. So we're $0.48 below that. But on the week, Walmart was up on the week. Lilly was up on the week. Johnson & Johnson was up on the week. Costco was up quite a bit on the week. Coca-Cola was up on the week. Philip Morris was up. International was up on the week. Nexterra was up a little, a teeny small. Altria, Philip Morris Domestic was up on the week. McDonald's was not. Merck, just fractional. Pfizer down. So, money's going into the big stuff. We were breaking out and people were saying, it's over for Feng and everyone has got amnesia because of a couple of bombs dropped on a Persian rug factory. Because it's oil and rugs and they can't sell the oil. They can send these very exquisite rugs over land, but the value by weight. You can't have a $100,000 Persian rug. If you want $100,000, you've got to sell 1,000 barrels of oil. That's 50,000 gallons. That's something on the order of a half a million pounds. The rug is 50 pounds, 100 pounds. So, I hope you've learned one thing and I want you to maintain your own models. I want you to just consider mine, not to contradict yourself, but just to see how they work together. I think the age of information buying is ending or deteriorating and liquidity buying is an ascension. On October 28, 2022, low from the pin tweet is we've gone over. Max long at that point, contact discretionary. 15-year level rally to last for years. We've got policy support that extended it beyond my basic expectations, but that too will pass. We are going to continue to watch the 15 curves together. We added another death cross. The 10-year, 30-year is flattening. That is the 20-year, 10 years forward. And these people are talking about the five-year break-evens, which is the nominal versus the tips. Folks, people buy the tips because they want the embedded option because there's value in having an option. They can't have it elsewhere. They overpay for the tips. I am doing my Monday positions. I'm looking to get more strips and lose bonds. I want to raise balance sheet and I want pure duration. That's the way I see it. I'm raising balance sheet. I'm deleveraging. I'm selling volatility. Prove to me they can get long duration higher than shorter duration in the market, not the policy, not the two-year, barely the three-year. They may overwhelm the three-year. How about the five-year, 10? How about the five-year, 30-year? How about the 10-year, 7-year, 30-year, the 10-year, 30-year? Show me when that stops working. I can't get July 14, 1981 out of my head. I'm driving an ice cream truck, struggling to pay for college, working 18 hours a day probably, many days, six days a week, five and a half days a week, 844 basis points. Don't you ever forget that number. Don't you ever think of not having that number, 844, the number of basis points of inversion caused by the confluence of the Nixon de-pegging us from the gold standard Bretton Woods currency regime that lasted for 26 years, August 15, 1971. And you had to go price discovery on currency volatility because you had to peg. And then that caused OPEC to full supply. And then we had the Iran-Iraq war, and along the way, inflation or rates, 844 basis points. We got to 110. We had so much economic activity. We had organic steepeners on, fighting it, massive growth, 13% nominal GDP. Recently, we had a lot of GDP back then, 844, and then they steepened the curve by 1,200 basis points. That's a lot of leverage buildup. That's a lot of stimming. That's a lot of people making a lot of money, KKR. Folks, it's revenge of Main Street. They're not going to be able to keep these rates up here with buying their crazy tech stocks at infinity overvaluation. Micron, more calls than S&P and NASDAQ. Go remember in time why this was not a correction, why this is looking peakish. The dollar strength coming up. So, for me, and I'm not giving anyone any advice. That's not my job. I'm telling you what I'm thinking, how markets work. The framework of your walking 10,000 steps, but you're traveling 25,000 miles around the Earth in a day. That's 1,250 miles, was it? 1,000 divided by 24 is 50, 40. So, about 1,040 miles an hour that the Earth is rotating, and we're going through our galaxy, and our galaxy is going through the universe. So, you're going a million miles an hour. You don't feel it. Local gravity. The black hole at the center of our galaxy is affecting you, but much less because it's inverse quadratic. Either way it is, it's exponentially decayed. Let's watch price. Let's watch these curves. Let's watch these fives. 3.30, 5.30, 10.30. Let's watch them. Let's remember the sequence of policy support. Pump Jack Powell. Let's remember that Powell had five people under his watch that resigned for violating the rules, which were really liberal, and they still broke them. And then you have a sixth, who is paying less interest rate than she legally should. In my opinion, she's an unconvicted criminal. This is the caliber of the corruption of the guy who stood up pre-textual. You have no right to not respond to a subpoena, in my opinion. The policy makers have done a lot of policy, and the policy is getting exhausted. And I'm not going to say when it has to get exhausted, but I am saying that I'm watching for it. I'm watching the flattening from, what is it, from 10 to, let's see, curves. Let's take a look. 10.30, let's look at that. We're at 5.25, folks. Look at this. We're 1.1 basis point away from a death cross. How is AI not massively deflationary in 10 years? In 10 years, what's the adoption of AI, of driverless cars going to be? Okay, all I can fit on this one page, going back to before all the rate cuts, is 10 basis points. Okay. Now, let me go weekly so I can capture more. So, we did get, yeah, this is a good chart. We did get a minus 17, or minus 18, up to 70, to about 88, and that's going to, let's just widen it. September 26, 2022, we were minus 18.3. Let's see if I can get that. Okay, we got it. Nice. So, we're up 88.3. Okay, and then where are we right now? Five and a quarter, 5.25. We're below the 56.5, and then we have 40.05, so we have a 16. We're four out of 16. We're 25% along the way. Now, we had an excitation with these rates. Where are we? Okay. So, that last rate cut in December 24 really lifted this thing into the stratosphere. We broke out of a damped harmonic oscillation into a coiling channel. We steepened, and we went from, we went from, what's that number? Get over there. Okay. We went from 13 to 70. Okay, so we added 57. So, what's 17 and a half divided by 57? Seven. Fifty-seven divided by 17 points. Wait a second. 17.5. We'll take the inverse of that. So, we're 31% of the way down. We're 31% of the way down on the 1030. Another seven on 57 is less than four. So, we take it down to 48.5. So, I'm looking from a frame of reference. I'm looking at the 30-year priced and 10-year units. That's my denominator, my knob. And then, oops. Let's get over here. So, we're nine month levels. We have an intraday low of 51.4. So, I'm waiting for us to go into the 49s, which brings us back to June. And then, to get some really low numbers, Liberation Day, we've got to get into the 39. I mean, I'm just looking for this. I'm just looking for motion. I'm going to find out the story. I'm going to reverse engineer a story later. I want it to be consistent, not cartoonish, not a burlesque. But when we're below the 200 day moving average on the 1030, and we're going to become increasingly insulated, then we're going to be, when we take out 20, take out 10. I mean, oh, you know what? Let's make a trendline. This is a nice looking trendline. Let's get a ruler. There's a ruler. Okay. And then let's get this line. And that takes us to, let's say, 40 is the trendline. You know, we're still in excitation. We're still 12 1⁄2 above. I'm seeing deflation, market-based expectation. I don't want to be early. I need a little more confirmation. Remember, I can add, I can lighten. I'll get bigger later, you know. I mean, when am I going to be excited when I have a weekly death cross in the 50-week versus the 200-week and the 10-year, 30-year spread, and the 10-year, 7-year spread? Well, let's put that away. Let's get rid of that ruler. Where are you, ruler? Okay. Save that. And now let's find another chart. 7.10. How about 5.10? 35. So that was 125 up from 45. That's 170. I don't know. Everyone's got amnesia. Everyone's got amnesia. Everyone's got amnesia. Okay, let's put these up. Everybody's got amnesia. Okay, I'm posting this subscriber, and we'll swing it up into the nest. So, you know, I am concentrating my duration, and I just don't understand how people cannot understand how deflationary from asset price deflation to just economic deflation in 10 years. We don't even know what's going to be going on in the world in 10 years at this rate. How many businesses are funded? How many unwindings are going to be? So I just want to leave you this weekend keeping in mind the reality of the flattening of the market-based curves, not the policy curve. They smashed the middle, but they didn't get the long end. And my plan is to shed some duration in the middle of the curve and grab it back more distilled in the long part and save balance sheet for opportunities later. Okay, this is going to be a short one. I just wanted to run through that, and maybe Sunday night we'll do something. Okay, thank you, everyone. Bye-bye.