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Fiscal.ai
There are only 15 software companies in North America that have:
5yr Revenue CAGR: >30%
&
EV/Gross Profit: <5x https://t.co/v67SfYXf6j
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There are only 15 software companies in North America that have:
5yr Revenue CAGR: >30%
&
EV/Gross Profit: <5x https://t.co/v67SfYXf6j
tweet
Offshore
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EndGame Macro
A High Without Momentum And The Real Story Behind the Median Income Chart
Once you dig into the Census Bureau’s own release, the story shifts. They’re very clear that the 2024 median income isn’t statistically different from 2023 or even from 2019. In plain English, that means the typical household today is standing in basically the same spot it was before Covid, once you adjust for inflation. The bump on the chart looks meaningful, but the data itself doesn’t support that kind of victory lap.
The Lived Experience Doesn’t Line Up
Even if you accept the number at face value, the lived reality for most families tells you something else. Housing, childcare, groceries, insurance…those are the bills people can’t avoid, and they’ve risen much faster than the broad inflation adjustment used in the headline number. So a flat median income ends up feeling like a step backward. People aren’t imagining the squeeze. When the Census report notes that wage gains were effectively erased by higher costs, it lines up with what you hear from almost anyone trying to balance a family budget right now.
The Median Masks Uneven Ground
The other issue is that a single median number glosses over enormous differences across groups. The Census data show that Hispanic and Asian households made real progress, while Black households actually saw a decline and White households saw no statistically meaningful change. Only Hispanic households are clearly better off today than they were in 2019. That means the overall number is being pulled upward by a few pockets of improvement while others are barely hanging on. It’s a national average stitched together from very different economic realities.
Data Footnotes Matter More Than People Think
There are also technical quirks you’d never know from looking at the chart. The Census updated its migration estimates and flagged increased nonresponse bias for Hispanic households, which means some of the reported gains might reflect who answered the survey, not just actual economic improvement. This doesn’t invalidate the data, but it does mean you shouldn’t use it as proof that American households broadly surged ahead.
The Real Story Beneath the Headline
When you put all of this together, the picture is much more grounded. Household income isn’t collapsing, but it’s not breaking new ground either. Most families are dealing with higher costs that eat away at whatever nominal progress they see. And the small gains that do exist are concentrated in certain groups, not shared across the board. So the headline isn’t technically false, it’s just incomplete. It stretches a flat, uneven reality into something that sounds like economic momentum. And that’s why it doesn’t resonate with what people feel in their own lives.
tweet
A High Without Momentum And The Real Story Behind the Median Income Chart
Once you dig into the Census Bureau’s own release, the story shifts. They’re very clear that the 2024 median income isn’t statistically different from 2023 or even from 2019. In plain English, that means the typical household today is standing in basically the same spot it was before Covid, once you adjust for inflation. The bump on the chart looks meaningful, but the data itself doesn’t support that kind of victory lap.
The Lived Experience Doesn’t Line Up
Even if you accept the number at face value, the lived reality for most families tells you something else. Housing, childcare, groceries, insurance…those are the bills people can’t avoid, and they’ve risen much faster than the broad inflation adjustment used in the headline number. So a flat median income ends up feeling like a step backward. People aren’t imagining the squeeze. When the Census report notes that wage gains were effectively erased by higher costs, it lines up with what you hear from almost anyone trying to balance a family budget right now.
The Median Masks Uneven Ground
The other issue is that a single median number glosses over enormous differences across groups. The Census data show that Hispanic and Asian households made real progress, while Black households actually saw a decline and White households saw no statistically meaningful change. Only Hispanic households are clearly better off today than they were in 2019. That means the overall number is being pulled upward by a few pockets of improvement while others are barely hanging on. It’s a national average stitched together from very different economic realities.
Data Footnotes Matter More Than People Think
There are also technical quirks you’d never know from looking at the chart. The Census updated its migration estimates and flagged increased nonresponse bias for Hispanic households, which means some of the reported gains might reflect who answered the survey, not just actual economic improvement. This doesn’t invalidate the data, but it does mean you shouldn’t use it as proof that American households broadly surged ahead.
The Real Story Beneath the Headline
When you put all of this together, the picture is much more grounded. Household income isn’t collapsing, but it’s not breaking new ground either. Most families are dealing with higher costs that eat away at whatever nominal progress they see. And the small gains that do exist are concentrated in certain groups, not shared across the board. So the headline isn’t technically false, it’s just incomplete. It stretches a flat, uneven reality into something that sounds like economic momentum. And that’s why it doesn’t resonate with what people feel in their own lives.
Adjusted for inflation, the median household income for Americans in 2024 was *the highest it’s ever been* https://t.co/qMesQvJyx0 tweet
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EndGame Macro
Cyclical America Is Quietly Rolling Over And The Rest Will Follow
The labor market doesn’t weaken all at once. It breaks in sequence. The most interest rate sensitive jobs crack first, and everything else follows with a lag. And when you look at these two panels side by side, you can see that sequence playing out almost in real time.
Construction and manufacturing payrolls have clearly rolled over. They peaked, wobbled, and then pushed lower. That’s exactly what @EPBResearch describes in the early chapters of the cycle…the first signs of stress always show up in the sectors that live closest to credit conditions. Residential construction and durable goods manufacturing the most cyclical slice have led every downturn of the last few decades.
Meanwhile, non cyclical payrolls are still grinding higher like nothing’s wrong. That’s the part that makes the headline numbers so misleading. When you blend both sides together, the total payroll figure still looks healthy because the slower moving sectors (healthcare, education, government linked services) don’t react until much later. By the time they start weakening, the process is already well underway under the surface.
My Read on What This Means
To me, this split tells a very straightforward story…the labor market isn’t collapsing, but the foundation has already started to soften. Construction and manufacturing turning down is the predictable after effect of two years of tight money. When cyclical employment slows, the unemployment rate drifts up, full time work gets replaced by part time work, and only then does the broader labor market begin to feel it.
We’re now somewhere in the middle of that sequence. The unemployment rate has already pushed above 4.4%, full time share of employment has slipped under 79%, and part time for economic reasons has ticked higher. None of that screams recession by itself but taken together, it paints a picture of momentum that’s fading, not stabilizing.
So while the aggregate payrolls still look fine on the surface, the leading edge is already bending. And once the cyclical side turns, history says the rest of the labor market eventually follows. The real question now isn’t whether the slowdown is happening, the charts already answer that. The question is whether the Fed has and will ease quickly enough to keep this from spilling over into the non cyclical sectors. That’s the hinge point for the next few quarters.
In other words, if you want to know where the labor market is heading, don’t watch the big headline on jobs day. Watch these two charts next to each other. They’ll tell you the story long before the monthly payroll number does.
tweet
Cyclical America Is Quietly Rolling Over And The Rest Will Follow
The labor market doesn’t weaken all at once. It breaks in sequence. The most interest rate sensitive jobs crack first, and everything else follows with a lag. And when you look at these two panels side by side, you can see that sequence playing out almost in real time.
Construction and manufacturing payrolls have clearly rolled over. They peaked, wobbled, and then pushed lower. That’s exactly what @EPBResearch describes in the early chapters of the cycle…the first signs of stress always show up in the sectors that live closest to credit conditions. Residential construction and durable goods manufacturing the most cyclical slice have led every downturn of the last few decades.
Meanwhile, non cyclical payrolls are still grinding higher like nothing’s wrong. That’s the part that makes the headline numbers so misleading. When you blend both sides together, the total payroll figure still looks healthy because the slower moving sectors (healthcare, education, government linked services) don’t react until much later. By the time they start weakening, the process is already well underway under the surface.
My Read on What This Means
To me, this split tells a very straightforward story…the labor market isn’t collapsing, but the foundation has already started to soften. Construction and manufacturing turning down is the predictable after effect of two years of tight money. When cyclical employment slows, the unemployment rate drifts up, full time work gets replaced by part time work, and only then does the broader labor market begin to feel it.
We’re now somewhere in the middle of that sequence. The unemployment rate has already pushed above 4.4%, full time share of employment has slipped under 79%, and part time for economic reasons has ticked higher. None of that screams recession by itself but taken together, it paints a picture of momentum that’s fading, not stabilizing.
So while the aggregate payrolls still look fine on the surface, the leading edge is already bending. And once the cyclical side turns, history says the rest of the labor market eventually follows. The real question now isn’t whether the slowdown is happening, the charts already answer that. The question is whether the Fed has and will ease quickly enough to keep this from spilling over into the non cyclical sectors. That’s the hinge point for the next few quarters.
In other words, if you want to know where the labor market is heading, don’t watch the big headline on jobs day. Watch these two charts next to each other. They’ll tell you the story long before the monthly payroll number does.
Cyclical vs. Non-Cyclical Payrolls
It’s always most important to analyze the health of construction & manufacturing because you can spot potential inflection points first, as they occur in these sectors before bleeding into the aggregate statistics.
https://t.co/9OWAVVQlDG https://t.co/DZoXI9RybF tweet
Clark Square Capital
This is sooo good.
LONG POSITION SIZING: PART 2
Investors generally spend a disproportionate time and mental energy seeking to quantify position level up/down and financial projections, while often using little analytical rigor in position sizing, which also materially drives returns. This is the premise behind @alpha_theory. An (updated)🧵:
1. Summary
2. Background
3. Framework
4. Example
5. Conclusion
1. SUMMARY
At my prior fund, we historically sized positions based on a combination of our conviction and how much we thought we could lose if we were wrong. I copied this approach when I went out on my own, but layered in additional criteria adjust for factors that make a position inherently more risky or uncertain - examples include dinging sizing for companies that are burning cash, have substantial leverage, or where the margin for error in our assessment is likely to be wide.
After 1.5yrs of collecting data based on how I classified each investment at position inception and subsequent results, I believe I am able to refine my approach to sizing with a better appreciation for which factors were most correlated with good/bad outcomes, and in this way hope to improve sizing logic so we make more on our winners and less on our losers over time. While this approach isn’t perfect, I believe it’s better than sizing based purely on emotion, instinct, and memory, all of which are faulty and subject to cognitive biases. It’s also much harder to refine your approach to sizing if the inputs to that initial decison were all done in your head.
2. POSITION SIZING - BACKGROUND
I worked at 4 funds before starting my own. At 2, sizing was a block box - I either didn’t know our position sizes or never heard how the PM thought about sizing. At the two where sizing was discussed, at one it was based on a loose feeling of conviction, irr, and max position size. At the second, there was a concept of value at risk (not wanting to lose more than a certain amount) and conviction in sizing, but position sizes tended to cluster all at the same level, about 60% below max position size, and the conceptual discipline wasn’t always enforced in practice.
At all 4, the amount of time we spent thinking about how to size positions was a fraction of the time we spent on other activities. And while there was a loose framework with all of them, sizing ultimately came down to the pm and or analyst having a feeling this was a very good idea and should be sized close to max. I’m not sure this is necessarily a bad thing - there’s something to be said about intuition, especially where the PM has a history of having very good intuition for the best ideas (my prior fund). But intuition leaves no record of thought process to be improved upon, is hard to impart to analysts without decision making authority, and changes based on mood, recent experience and cognitive biases not founded in logic.
@Alpha_Theory is great software, but many of its basic principles can be copied without using it. At its core, the premise is that you can break down the elements of “judgment” and “intuition” into variables that you are forced to record at the time of your initial investment and change over time as the position matures. This has a few benefits over an intuitive approach:
1) it enforce a discipline around why you size things the way you do and is less prone to emotion based decision making.
2) It also allows analysts to - who are often closer to the work - to contribute more to sizing because they can help inform your variables. It’s hard for them to have influence when the PM hides behind just their “judgment”
3) it allows for a fact based assessment in retrospect around where mistakes in judgment or position sizing were made, that can be incorporated into future sizing decisions. If you have robust systems, you can also take this data and put it into a tool like Lightkeeper to see which variables were most associated with the best or worst outcomes. - HF Reflections tweet
This is sooo good.
LONG POSITION SIZING: PART 2
Investors generally spend a disproportionate time and mental energy seeking to quantify position level up/down and financial projections, while often using little analytical rigor in position sizing, which also materially drives returns. This is the premise behind @alpha_theory. An (updated)🧵:
1. Summary
2. Background
3. Framework
4. Example
5. Conclusion
1. SUMMARY
At my prior fund, we historically sized positions based on a combination of our conviction and how much we thought we could lose if we were wrong. I copied this approach when I went out on my own, but layered in additional criteria adjust for factors that make a position inherently more risky or uncertain - examples include dinging sizing for companies that are burning cash, have substantial leverage, or where the margin for error in our assessment is likely to be wide.
After 1.5yrs of collecting data based on how I classified each investment at position inception and subsequent results, I believe I am able to refine my approach to sizing with a better appreciation for which factors were most correlated with good/bad outcomes, and in this way hope to improve sizing logic so we make more on our winners and less on our losers over time. While this approach isn’t perfect, I believe it’s better than sizing based purely on emotion, instinct, and memory, all of which are faulty and subject to cognitive biases. It’s also much harder to refine your approach to sizing if the inputs to that initial decison were all done in your head.
2. POSITION SIZING - BACKGROUND
I worked at 4 funds before starting my own. At 2, sizing was a block box - I either didn’t know our position sizes or never heard how the PM thought about sizing. At the two where sizing was discussed, at one it was based on a loose feeling of conviction, irr, and max position size. At the second, there was a concept of value at risk (not wanting to lose more than a certain amount) and conviction in sizing, but position sizes tended to cluster all at the same level, about 60% below max position size, and the conceptual discipline wasn’t always enforced in practice.
At all 4, the amount of time we spent thinking about how to size positions was a fraction of the time we spent on other activities. And while there was a loose framework with all of them, sizing ultimately came down to the pm and or analyst having a feeling this was a very good idea and should be sized close to max. I’m not sure this is necessarily a bad thing - there’s something to be said about intuition, especially where the PM has a history of having very good intuition for the best ideas (my prior fund). But intuition leaves no record of thought process to be improved upon, is hard to impart to analysts without decision making authority, and changes based on mood, recent experience and cognitive biases not founded in logic.
@Alpha_Theory is great software, but many of its basic principles can be copied without using it. At its core, the premise is that you can break down the elements of “judgment” and “intuition” into variables that you are forced to record at the time of your initial investment and change over time as the position matures. This has a few benefits over an intuitive approach:
1) it enforce a discipline around why you size things the way you do and is less prone to emotion based decision making.
2) It also allows analysts to - who are often closer to the work - to contribute more to sizing because they can help inform your variables. It’s hard for them to have influence when the PM hides behind just their “judgment”
3) it allows for a fact based assessment in retrospect around where mistakes in judgment or position sizing were made, that can be incorporated into future sizing decisions. If you have robust systems, you can also take this data and put it into a tool like Lightkeeper to see which variables were most associated with the best or worst outcomes. - HF Reflections tweet
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EndGame Macro
Why EM Is Up Big And Why the Story Isn’t as Simple as It Looks
If you only look at the year to date column, it feels like EM suddenly woke up…up around 30%, Europe and Japan small caps right behind, and the U.S. no longer carrying global equities. But when you look across the other columns, a clearer picture emerges. EM has dominated the 6 and 12 month windows, but it’s one of the weakest performers over the last month. That’s what a front loaded rally looks like, a big move that started earlier in the cycle and is now running into some fatigue.
And when you line that up with policy, it actually makes perfect sense. The Fed didn’t wait until late 2025 to turn; the real shift started in late 2024 with the three rate cuts in September, November, and December. That’s also when the dollar rolled over from the 110s back toward the high 90s. It didn’t collapse, but it broke its uptrend. That change in tone set the stage for everything that followed.
Why the Move Started Before 2025 Even Began
By January, the market wasn’t operating in higher for longer anymore even if policymakers weren’t ready to say it out loud. Inflation had cooled, long yields looked like they had topped, and the Fed had already eased a full percentage point off the peak. Global investors went into 2025 massively overweight U.S. mega caps and massively underweight everything else. That’s all you need to ignite a rotation.
Once the dollar stopped rising and the Fed stopped tightening, EM and foreign small caps instantly looked like the only parts of the world that hadn’t already been bid to the moon. And unlike past cycles, there were real local stories this time…India’s tech and services boom, Mexico’s near shoring wave, Southeast Asia picking up supply chain flows, commodity economies finally catching a bid after a decade of underinvestment. Those aren’t just macro trades, they’re genuine growth narratives.
So the early 2025 surge was the combination of relief, cheap valuations, and real idiosyncratic strength. The cuts in September and October 2025 didn’t cause the move they just extended the backdrop that allowed it.
Where This Actually Leaves Us
The important nuance is that none of this means global dollar conditions have suddenly become easy. A strong EM equity year doesn’t erase the fact that countries like Argentina still needed massive swap line and IMF support, or that euro area banks remain deeply exposed to short term dollar funding. Equity markets can look great even while the dollar plumbing underneath is still stressed. That’s the difference between the surface story and the structural one.
My Read
2025 was the catch up phase, the global portfolio unwind after a decade of everything flowing into the same handful of U.S. names. The big move happened once the Fed turned in 2024 and the dollar broke its trend. From here, the winners won’t be EM in the broad sense. They’ll be the countries with real engines behind them with near shoring, AI and semiconductor supply chains, energy and metals investment, political stability rather than the ones that rallied just because they were neglected.
The table tells you who benefitted from the initial rotation. The harder question, and the one that matters now, is who can actually keep climbing once the easy part is over.
tweet
Why EM Is Up Big And Why the Story Isn’t as Simple as It Looks
If you only look at the year to date column, it feels like EM suddenly woke up…up around 30%, Europe and Japan small caps right behind, and the U.S. no longer carrying global equities. But when you look across the other columns, a clearer picture emerges. EM has dominated the 6 and 12 month windows, but it’s one of the weakest performers over the last month. That’s what a front loaded rally looks like, a big move that started earlier in the cycle and is now running into some fatigue.
And when you line that up with policy, it actually makes perfect sense. The Fed didn’t wait until late 2025 to turn; the real shift started in late 2024 with the three rate cuts in September, November, and December. That’s also when the dollar rolled over from the 110s back toward the high 90s. It didn’t collapse, but it broke its uptrend. That change in tone set the stage for everything that followed.
Why the Move Started Before 2025 Even Began
By January, the market wasn’t operating in higher for longer anymore even if policymakers weren’t ready to say it out loud. Inflation had cooled, long yields looked like they had topped, and the Fed had already eased a full percentage point off the peak. Global investors went into 2025 massively overweight U.S. mega caps and massively underweight everything else. That’s all you need to ignite a rotation.
Once the dollar stopped rising and the Fed stopped tightening, EM and foreign small caps instantly looked like the only parts of the world that hadn’t already been bid to the moon. And unlike past cycles, there were real local stories this time…India’s tech and services boom, Mexico’s near shoring wave, Southeast Asia picking up supply chain flows, commodity economies finally catching a bid after a decade of underinvestment. Those aren’t just macro trades, they’re genuine growth narratives.
So the early 2025 surge was the combination of relief, cheap valuations, and real idiosyncratic strength. The cuts in September and October 2025 didn’t cause the move they just extended the backdrop that allowed it.
Where This Actually Leaves Us
The important nuance is that none of this means global dollar conditions have suddenly become easy. A strong EM equity year doesn’t erase the fact that countries like Argentina still needed massive swap line and IMF support, or that euro area banks remain deeply exposed to short term dollar funding. Equity markets can look great even while the dollar plumbing underneath is still stressed. That’s the difference between the surface story and the structural one.
My Read
2025 was the catch up phase, the global portfolio unwind after a decade of everything flowing into the same handful of U.S. names. The big move happened once the Fed turned in 2024 and the dollar broke its trend. From here, the winners won’t be EM in the broad sense. They’ll be the countries with real engines behind them with near shoring, AI and semiconductor supply chains, energy and metals investment, political stability rather than the ones that rallied just because they were neglected.
The table tells you who benefitted from the initial rotation. The harder question, and the one that matters now, is who can actually keep climbing once the easy part is over.
Emerging markets now +30.01% YTD
ex-US small caps very strong in 2025 https://t.co/6XpGtfjJLb tweet
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EndGame Macro
A Clearer Read on What SOFR Is Telling Us Right Now
The SOFR spike isn’t random, and it isn’t exotic. It’s the repo market flashing that short term dollar liquidity is getting tight again. Fed funds looks calm because it reflects banks sitting on reserves. SOFR moves because that’s where the people who actually need overnight cash…dealers funding Treasuries, levered funds rolling positions are forced to pay up when the system gets pinched.
QT has been draining reserves, Treasury supply has been heavy, and balance sheet space hasn’t magically grown. So when a little pressure hits like month end mechanics, a big settlement, a small risk off…SOFR jumps above fed funds. It’s not 2019 level chaos, but it’s a reminder that we’re now operating close to the edge of ample reserves, not in the middle of it.
Why the Giant Wedge Matters
That wedge on the long term chart actually tells the whole story of the last few years. The top of it is the 2019 repo crisis, when SOFR exploded and exposed how fragile the plumbing really was. The bottom is the Covid liquidity flood, when cash overwhelmed collateral and SOFR sagged below fed funds for months.
Ever since then, the peaks have gotten lower and the troughs have gotten shallower. That’s what creates the triangle. It’s the result of the Fed adding guardrails like the standing repo facility on one side and the ON RRP on the other and the market learning to react faster. The system still gets stressed, but the swings don’t get as extreme because everyone cuts risk earlier and the Fed steps in sooner.
But the wedge also tells you something a little uncomfortable…the room for error is shrinking. Every time the system swings, it hits those lines a little quicker. When we finally break out of that wedge, it’s going to mean something real, either the Fed has to flood the system again because funding is too tight, or the system is drowning in cash again because something triggered another wave of easy liquidity.
A More Honest, Slightly Conspiratorial Read
If we’re being honest, the timing is hard to ignore. By late 2019, dollar funding was already cracking. The Fed had to quietly restart repo operations, then bill purchases, and was insisting it wasn’t QE. And then Covid hit and suddenly the Fed had the perfect justification to open the floodgates the way the plumbing had already been begging for.
You don’t have to believe that was planned. You just have to acknowledge the pattern…real stress shows up in the plumbing, the narrative arrives later to explain the rescue.
And now the plumbing is tightening again. QT is nearly over, but the stress signals are creeping back into the short end. SOFR is jumping. The wedge is narrowing. And we’re heading into a period where any shock…geopolitical, credit, or something out of left field could give policymakers the next clean excuse to pour liquidity back in.
If history’s any guide, these charts are less about predicting a crisis and more about noticing the same cycle repeat: the system tightens, the stress leaks into SOFR, and eventually something forces the Fed to refill the tank.
The wedge is basically the market saying that it’s running out of room again.
tweet
A Clearer Read on What SOFR Is Telling Us Right Now
The SOFR spike isn’t random, and it isn’t exotic. It’s the repo market flashing that short term dollar liquidity is getting tight again. Fed funds looks calm because it reflects banks sitting on reserves. SOFR moves because that’s where the people who actually need overnight cash…dealers funding Treasuries, levered funds rolling positions are forced to pay up when the system gets pinched.
QT has been draining reserves, Treasury supply has been heavy, and balance sheet space hasn’t magically grown. So when a little pressure hits like month end mechanics, a big settlement, a small risk off…SOFR jumps above fed funds. It’s not 2019 level chaos, but it’s a reminder that we’re now operating close to the edge of ample reserves, not in the middle of it.
Why the Giant Wedge Matters
That wedge on the long term chart actually tells the whole story of the last few years. The top of it is the 2019 repo crisis, when SOFR exploded and exposed how fragile the plumbing really was. The bottom is the Covid liquidity flood, when cash overwhelmed collateral and SOFR sagged below fed funds for months.
Ever since then, the peaks have gotten lower and the troughs have gotten shallower. That’s what creates the triangle. It’s the result of the Fed adding guardrails like the standing repo facility on one side and the ON RRP on the other and the market learning to react faster. The system still gets stressed, but the swings don’t get as extreme because everyone cuts risk earlier and the Fed steps in sooner.
But the wedge also tells you something a little uncomfortable…the room for error is shrinking. Every time the system swings, it hits those lines a little quicker. When we finally break out of that wedge, it’s going to mean something real, either the Fed has to flood the system again because funding is too tight, or the system is drowning in cash again because something triggered another wave of easy liquidity.
A More Honest, Slightly Conspiratorial Read
If we’re being honest, the timing is hard to ignore. By late 2019, dollar funding was already cracking. The Fed had to quietly restart repo operations, then bill purchases, and was insisting it wasn’t QE. And then Covid hit and suddenly the Fed had the perfect justification to open the floodgates the way the plumbing had already been begging for.
You don’t have to believe that was planned. You just have to acknowledge the pattern…real stress shows up in the plumbing, the narrative arrives later to explain the rescue.
And now the plumbing is tightening again. QT is nearly over, but the stress signals are creeping back into the short end. SOFR is jumping. The wedge is narrowing. And we’re heading into a period where any shock…geopolitical, credit, or something out of left field could give policymakers the next clean excuse to pour liquidity back in.
If history’s any guide, these charts are less about predicting a crisis and more about noticing the same cycle repeat: the system tightens, the stress leaks into SOFR, and eventually something forces the Fed to refill the tank.
The wedge is basically the market saying that it’s running out of room again.
Secured Overnight Financing Rate (SOFR) - Effective Fed Funds Rate (EFFR) is spiking again.
Basically, when SOFR exceeds EFFR that means there's liquidity shortages in the banks' overnight lending market (REPO).
*I can't explain why there's a giant wedge on SOFR - Fed Funds https://t.co/ndKrtRT8JS tweet
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Clark Square Capital
Good tips on how to find news about your stocks
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Good tips on how to find news about your stocks
How to find news about your company:
- ChatGPT/Gemini though be specific
- Google "site:https://t.co/l1q6HgqBkM" and Tools/Past month
- Google News, specific time period
- Grok or Twitter search: specify company name
- Google "company name site:https://t.co/beYLV8lnY7" tweet
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Wasteland Capital
Nasdaq 100 top 15 YTD. $MU on top at +181%. Noone else is even close. The number 2 is 54% behind Micron.
Only one person gave you both (a) the number 1 Nasdaq 100 stock YTD and (b) the number 1 Mag7 stock YTD, $GOOG, both by far, with perfect entry points.
Another great year. https://t.co/rW2F8WaMsq
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Nasdaq 100 top 15 YTD. $MU on top at +181%. Noone else is even close. The number 2 is 54% behind Micron.
Only one person gave you both (a) the number 1 Nasdaq 100 stock YTD and (b) the number 1 Mag7 stock YTD, $GOOG, both by far, with perfect entry points.
Another great year. https://t.co/rW2F8WaMsq
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EndGame Macro
What Japan’s 2 Year at 1% Is Really Telling You
Japan’s 2 year yield at 1% looks like nothing if you’re used to U.S. or European rates. But in Japan, that print is loud. It’s the first time since 2008 the market is saying short term money in yen is not basically free anymore.
For decades you could take zero for granted: zero policy rate, zero bond yield, zero cost to borrow yen. That made Japan the world’s favorite funding source and a quiet liquidity engine in the background. The 2 year drifting up to 1% is the market’s way of saying that equilibrium is slipping.
The front end of the curve is about expectations, not today’s BoJ meeting. A 1% 2 year says investors think the average policy rate over the next couple of years will sit somewhere around that level, not back at zero. Inflation has finally shown up, ultra easy policy has lost some credibility, and Tokyo is running big fiscal packages into an already heavy debt load. Put together, lenders are no longer willing to accept symbolic yields just because it’s Japan. They want a real return.
And yet the fundamentals underneath are still fragile. Growth is patchy, the population is aging fast, productivity is flat. You’ve got an economy that can’t easily withstand aggressive tightening, but a bond market that doesn’t want to live with crisis era rates forever. The 2 year is parked right in the middle of that contradiction.
How Stable Is This Shift If the World Rolls Over?
That’s the part almost everyone skips over: this signal is real, but it’s also conditional.
If the global economy rolls into a serious deflation scare with real demand destruction, falling prices, unemployment rising Japan will not stand there and salute a 1% 2 year. No country on earth is more traumatized by deflation than Japan. They spent thirty years trying to escape it. Faced with a global bust, the BoJ would push rates back down, restart heavier bond buying, reopen facilities, and lean on the curve again.
The difference now is how they’d do it. After the last experiment with negative rates and hard yield caps, they know the side effects: broken market plumbing, bank profitability crushed, a permanently weak yen that backfires when imported inflation spikes. So even in a deflation shock, I’d expect them to aim for near zero with more flexibility rather than reinstalling the old pinned at 0% forever regime. Short rates could drift back toward the floor, but with more willingness to let yields move once the panic passes.
So the 2 year at 1% is both a message and a test. It’s a message that the zero rate era is, for now, over. And it’s a test of how far Japan can walk away from that era before growth, debt service, or the next global downturn forces them to turn back.
My Read on the Bigger Picture
Right now, the higher 2 year is tightening the screws at the margin. Borrowing in yen is more expensive. Some carry trades stop making sense. Japanese investors have a stronger reason to keep money at home instead of buying foreign bonds. That quietly pulls liquidity out of the global system and nudges the entire Japanese curve into a new zone that investors can’t ignore anymore.
But you have to hold two ideas in your head at once.
One that this is the first real signal that Japan is trying to rejoin the world of positive rates, and that matters for everything from FX to Treasuries.
Two if the world genuinely tips into deflation, Japan will be one of the first to run back toward the firehose, even if it tries to do it in a more modernized way.
So the 2 year at 1% is not a permanent state; it’s a snapshot of where the market thinks Japan can live as long as the global cycle doesn’t fully break. If that cycle cracks, the old instinct of cutting hard, buying bonds, fight deflation at all costs will still be sitting just under the surface.
JAPAN 2-YEAR YIELD RISES TO 1% FOR FIRST TIME SINCE 2008 - zerohedge tweet
What Japan’s 2 Year at 1% Is Really Telling You
Japan’s 2 year yield at 1% looks like nothing if you’re used to U.S. or European rates. But in Japan, that print is loud. It’s the first time since 2008 the market is saying short term money in yen is not basically free anymore.
For decades you could take zero for granted: zero policy rate, zero bond yield, zero cost to borrow yen. That made Japan the world’s favorite funding source and a quiet liquidity engine in the background. The 2 year drifting up to 1% is the market’s way of saying that equilibrium is slipping.
The front end of the curve is about expectations, not today’s BoJ meeting. A 1% 2 year says investors think the average policy rate over the next couple of years will sit somewhere around that level, not back at zero. Inflation has finally shown up, ultra easy policy has lost some credibility, and Tokyo is running big fiscal packages into an already heavy debt load. Put together, lenders are no longer willing to accept symbolic yields just because it’s Japan. They want a real return.
And yet the fundamentals underneath are still fragile. Growth is patchy, the population is aging fast, productivity is flat. You’ve got an economy that can’t easily withstand aggressive tightening, but a bond market that doesn’t want to live with crisis era rates forever. The 2 year is parked right in the middle of that contradiction.
How Stable Is This Shift If the World Rolls Over?
That’s the part almost everyone skips over: this signal is real, but it’s also conditional.
If the global economy rolls into a serious deflation scare with real demand destruction, falling prices, unemployment rising Japan will not stand there and salute a 1% 2 year. No country on earth is more traumatized by deflation than Japan. They spent thirty years trying to escape it. Faced with a global bust, the BoJ would push rates back down, restart heavier bond buying, reopen facilities, and lean on the curve again.
The difference now is how they’d do it. After the last experiment with negative rates and hard yield caps, they know the side effects: broken market plumbing, bank profitability crushed, a permanently weak yen that backfires when imported inflation spikes. So even in a deflation shock, I’d expect them to aim for near zero with more flexibility rather than reinstalling the old pinned at 0% forever regime. Short rates could drift back toward the floor, but with more willingness to let yields move once the panic passes.
So the 2 year at 1% is both a message and a test. It’s a message that the zero rate era is, for now, over. And it’s a test of how far Japan can walk away from that era before growth, debt service, or the next global downturn forces them to turn back.
My Read on the Bigger Picture
Right now, the higher 2 year is tightening the screws at the margin. Borrowing in yen is more expensive. Some carry trades stop making sense. Japanese investors have a stronger reason to keep money at home instead of buying foreign bonds. That quietly pulls liquidity out of the global system and nudges the entire Japanese curve into a new zone that investors can’t ignore anymore.
But you have to hold two ideas in your head at once.
One that this is the first real signal that Japan is trying to rejoin the world of positive rates, and that matters for everything from FX to Treasuries.
Two if the world genuinely tips into deflation, Japan will be one of the first to run back toward the firehose, even if it tries to do it in a more modernized way.
So the 2 year at 1% is not a permanent state; it’s a snapshot of where the market thinks Japan can live as long as the global cycle doesn’t fully break. If that cycle cracks, the old instinct of cutting hard, buying bonds, fight deflation at all costs will still be sitting just under the surface.
JAPAN 2-YEAR YIELD RISES TO 1% FOR FIRST TIME SINCE 2008 - zerohedge tweet