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Quiver Quantitative
JUST IN: Senator Dave McCormick just filed up to $200K in new Bitcoin purchases.
McCormick sits on the Senate Subcommittee on Digital Assets.
Full trade list up on Quiver. https://t.co/0tZvw4A7mC
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JUST IN: Senator Dave McCormick just filed up to $200K in new Bitcoin purchases.
McCormick sits on the Senate Subcommittee on Digital Assets.
Full trade list up on Quiver. https://t.co/0tZvw4A7mC
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Offshore
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EndGame Macro
I’m fairly confident if they actually came out with this movie that it would probably be a massive success 🤣
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I’m fairly confident if they actually came out with this movie that it would probably be a massive success 🤣
holy shit sydney sweeney in shrek ??? 🍿 https://t.co/EP8qYx50GW tweet
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EndGame Macro
Where Market Liquidity Really Comes From
This is showing that hedge funds have been leaning harder on borrowed money and the borrowing is coming mostly through prime brokerage, which is mostly equity financing and repo, which is mostly fixed income financing. Other secured borrowing…which is a lot of securities lending is up too, but it’s the repo and prime brokerage lines doing the real heavy lifting. What matters isn’t the existence of hedge funds, but how heavily market liquidity now depends on short term, secured borrowing.
What’s Actually Happening Here
Hedge funds don’t just take investor capital and buy things. They layer financing on top with margin loans, repos, and synthetic leverage through derivatives to amplify positions. And this isn’t small. Hedge fund gross notional exposures is above $33T, up nearly 2.5x since 2013, with a lot of that growth concentrated in U.S. Treasuries and interest rate derivatives, the kind of terrain where leverage and basis trades thrive. It also notes leverage is about 2.5x for the industry overall, but it’s dramatically higher where it matters most with the largest funds running leverage north of 18x, with the next tier closer to 10x.
Why This Matters For The Real Economy
In calm markets, this can look like a feature where hedge funds can help tighten mispricings, add liquidity, and deepen markets. The problem is the same thing that makes it efficient also makes it fragile because short term funding can disappear fast. When repo terms tighten, when margins jump, when volatility spikes, this isn’t let’s think it through. It’s sell what you can, cut risk, meet the call. And because hedge funds are major participants in the Treasury and dollar repo markets, that stress can leak straight into the price of money for everyone else in yields, spreads, credit conditions, and confidence.
My View
This chart is about where the system’s sensitivity lives right now. When leverage is increasingly financed through repo and prime brokerage, the weak point becomes the plumbing…funding terms, haircuts, counterparty risk, and forced deleveraging. Banks sit right in the middle of that as prime brokers and counterparties and they can get hit when things go wrong, Archegos is a clean example of how quickly losses can appear. That’s how a Wall Street leverage chart turns into a Main Street issue…through asset fire sales, counterparty stress, and pullbacks in intermediation that tighten financial conditions when the economy can least afford it.
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Where Market Liquidity Really Comes From
This is showing that hedge funds have been leaning harder on borrowed money and the borrowing is coming mostly through prime brokerage, which is mostly equity financing and repo, which is mostly fixed income financing. Other secured borrowing…which is a lot of securities lending is up too, but it’s the repo and prime brokerage lines doing the real heavy lifting. What matters isn’t the existence of hedge funds, but how heavily market liquidity now depends on short term, secured borrowing.
What’s Actually Happening Here
Hedge funds don’t just take investor capital and buy things. They layer financing on top with margin loans, repos, and synthetic leverage through derivatives to amplify positions. And this isn’t small. Hedge fund gross notional exposures is above $33T, up nearly 2.5x since 2013, with a lot of that growth concentrated in U.S. Treasuries and interest rate derivatives, the kind of terrain where leverage and basis trades thrive. It also notes leverage is about 2.5x for the industry overall, but it’s dramatically higher where it matters most with the largest funds running leverage north of 18x, with the next tier closer to 10x.
Why This Matters For The Real Economy
In calm markets, this can look like a feature where hedge funds can help tighten mispricings, add liquidity, and deepen markets. The problem is the same thing that makes it efficient also makes it fragile because short term funding can disappear fast. When repo terms tighten, when margins jump, when volatility spikes, this isn’t let’s think it through. It’s sell what you can, cut risk, meet the call. And because hedge funds are major participants in the Treasury and dollar repo markets, that stress can leak straight into the price of money for everyone else in yields, spreads, credit conditions, and confidence.
My View
This chart is about where the system’s sensitivity lives right now. When leverage is increasingly financed through repo and prime brokerage, the weak point becomes the plumbing…funding terms, haircuts, counterparty risk, and forced deleveraging. Banks sit right in the middle of that as prime brokers and counterparties and they can get hit when things go wrong, Archegos is a clean example of how quickly losses can appear. That’s how a Wall Street leverage chart turns into a Main Street issue…through asset fire sales, counterparty stress, and pullbacks in intermediation that tighten financial conditions when the economy can least afford it.
Hedge funds often augment their investment positions using leverage. The leverage sources can be divided into three categories: prime brokerage, repo, and other secured borrowing. Prime brokerage and repo borrowing have increased rapidly over the past few years, as shown in this chart. https://t.co/ep6ItQTBlh tweet
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EndGame Macro
The S&P Is Priced for Stability And Gold Isn’t
At first glance, the chart feels almost absurd. In an era defined by AI, software, and exponential technology, a metal has outperformed the S&P 500 by a wide margin. But this isn’t really about gold beating stocks. Everything here is normalized to 2000 right when equities were priced for perfection and gold was deeply out of favor. What matters is what happened after. Over a full cycle that included the dot com bust, the financial crisis, repeated policy rescues, and an explosion in debt, the S&P needed ever lower rates and ever looser conditions just to keep compounding. Gold didn’t. When confidence broke, gold held its ground. When confidence returned, equities ran. This latest surge especially with silver joining in isn’t a vote against innovation or growth. It’s a signal that the market is questioning how durable equity returns are when they depend so heavily on policy support.
Why This Divergence Matters Now
The S&P sitting near highs while gold and silver rip isn’t a contradiction, it’s a tension. Stocks are pricing continued stability, earnings resilience, and policy backstops. Metals are pricing fragility. That gap usually shows up late in cycles, not early ones. Layer in what’s happening globally and it starts to make sense…China’s real estate market once the backbone of household wealth is still deflating, pushing private savings into gold. The seizure of Russia’s FX reserves permanently changed how many countries view dollar assets, driving sustained central bank buying and pulling physical supply off the market. Add silver’s role as both money and an industrial input, and you get a broader signal: the world isn’t rotating out of stocks yet, but it is quietly hedging against a future where balance sheets, geopolitics, and policy credibility matter more than index level optimism. You don’t need an imminent crash for this to be meaningful. You just need to recognize that when metals outperform equities over long stretches, it usually means confidence, not growth is what’s being repriced.
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The S&P Is Priced for Stability And Gold Isn’t
At first glance, the chart feels almost absurd. In an era defined by AI, software, and exponential technology, a metal has outperformed the S&P 500 by a wide margin. But this isn’t really about gold beating stocks. Everything here is normalized to 2000 right when equities were priced for perfection and gold was deeply out of favor. What matters is what happened after. Over a full cycle that included the dot com bust, the financial crisis, repeated policy rescues, and an explosion in debt, the S&P needed ever lower rates and ever looser conditions just to keep compounding. Gold didn’t. When confidence broke, gold held its ground. When confidence returned, equities ran. This latest surge especially with silver joining in isn’t a vote against innovation or growth. It’s a signal that the market is questioning how durable equity returns are when they depend so heavily on policy support.
Why This Divergence Matters Now
The S&P sitting near highs while gold and silver rip isn’t a contradiction, it’s a tension. Stocks are pricing continued stability, earnings resilience, and policy backstops. Metals are pricing fragility. That gap usually shows up late in cycles, not early ones. Layer in what’s happening globally and it starts to make sense…China’s real estate market once the backbone of household wealth is still deflating, pushing private savings into gold. The seizure of Russia’s FX reserves permanently changed how many countries view dollar assets, driving sustained central bank buying and pulling physical supply off the market. Add silver’s role as both money and an industrial input, and you get a broader signal: the world isn’t rotating out of stocks yet, but it is quietly hedging against a future where balance sheets, geopolitics, and policy credibility matter more than index level optimism. You don’t need an imminent crash for this to be meaningful. You just need to recognize that when metals outperform equities over long stretches, it usually means confidence, not growth is what’s being repriced.
In the greatest century for technological advancement in the history of humanity, the world's best performing stock market has been outperformed by a mineral.... three-fold tweet
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memenodes
Me when I say “Internet capital markets” instead of meme coins https://t.co/XR9tdmGBds
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Me when I say “Internet capital markets” instead of meme coins https://t.co/XR9tdmGBds
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EndGame Macro
The Curve Has Turned And The Clock Is Running
At its core, this is the yield curve…the gap between long term and short term borrowing costs. Most of the time, longer money pays more. When it doesn’t and when short term rates rise above long term ones the bond market is signaling something fundamental: policy is tight, credit is under pressure, and the economy can’t live like that indefinitely.
That inversion isn’t a timing tool. It’s a pressure gauge. It tends to show up when borrowing costs bite, lending standards tighten, and growth starts to strain. Historically, recessions don’t begin the moment the curve inverts, they usually follow 6–18 months later, with about a year as a rough midpoint. That’s why the gray recession bars almost always show up after the curve flips, not at the moment it does.
Why The Resteepening Isn’t A Victory Lap
This is where people often misread the signal. The 10Y–3M curve turned positive again in late December 2024, after being inverted since late 2022. To some, that looks like confirmation that the danger has passed. Historically, it’s often the opposite.
Before the 2008 financial crisis, the curve inverted in 2006, then began to resteepen as the Fed started easing. Stocks didn’t collapse at inversion. They cracked later when the underlying economic damage showed up in jobs, housing, and credit. The curve didn’t prevent the downturn. It warned that the stress phase had already done its work.
That’s usually what an exit from inversion means. The pressure period has already happened. The lagged effects are now in play.
There isn’t a clean, universally cited uninversion hit rate the way there is for inversion. It depends on which spread you use, how you define the exit, and whether you look at monthly or daily data. Still, the record is clear that many recessions begin during or after the resteepening phase, because that phase typically reflects the Fed easing into weakening growth. A simple way to put it is that it works more often than not, but it’s not flawless or guaranteed. Conceptually, something like 70% probability with wide error bars is reasonable. The mechanism matters more than the exact number.
Why COVID Complicates The Stats
COVID muddies the clean math because it was a non economic shock that caused an instant recession and forced policy to move faster than any normal cycle. The downturn didn’t arrive after a long credit grind, it arrived via a shutdown. At the same time, the Fed responded immediately and aggressively, compressing the usual lag between inversion, uninversion, and recession. That makes 2019–2020 harder to use as a textbook example, even though the underlying signal still worked.
Where That Leaves Us Now
This isn’t a future risk anymore, it’s the phase we’re in now. Historically, when the yield curve exits inversion, the economy doesn’t reset; it absorbs the damage with a lag. The stress doesn’t vanish, it shifts forward, and from here the risk tilts into 2026 rather than back toward 2024.
Using the late 2024 uninversion as the reference point, we’re already in the historical risk window. With the front end of that lag behind us as 2025 ends, a longer cycle would shift the stress into 2026.
My Takeaway
The curve is telling you the system has shifted from restriction toward relief and relief usually arrives for a reason. If this were a truly healthy expansion, the curve would be steepening because long term growth expectations were rising, not because short term rates are expected to fall.
So when people point to this chart and say, “see, things are improving,” I’d push back gently. What it’s really saying is that tight policy has already done its job, stress has built beneath the surface, and the economy is now moving through the lagged phase. Historically, that phase doesn’t arrive because everything is fine, it arrives because something is starting to bend.
tweet
The Curve Has Turned And The Clock Is Running
At its core, this is the yield curve…the gap between long term and short term borrowing costs. Most of the time, longer money pays more. When it doesn’t and when short term rates rise above long term ones the bond market is signaling something fundamental: policy is tight, credit is under pressure, and the economy can’t live like that indefinitely.
That inversion isn’t a timing tool. It’s a pressure gauge. It tends to show up when borrowing costs bite, lending standards tighten, and growth starts to strain. Historically, recessions don’t begin the moment the curve inverts, they usually follow 6–18 months later, with about a year as a rough midpoint. That’s why the gray recession bars almost always show up after the curve flips, not at the moment it does.
Why The Resteepening Isn’t A Victory Lap
This is where people often misread the signal. The 10Y–3M curve turned positive again in late December 2024, after being inverted since late 2022. To some, that looks like confirmation that the danger has passed. Historically, it’s often the opposite.
Before the 2008 financial crisis, the curve inverted in 2006, then began to resteepen as the Fed started easing. Stocks didn’t collapse at inversion. They cracked later when the underlying economic damage showed up in jobs, housing, and credit. The curve didn’t prevent the downturn. It warned that the stress phase had already done its work.
That’s usually what an exit from inversion means. The pressure period has already happened. The lagged effects are now in play.
There isn’t a clean, universally cited uninversion hit rate the way there is for inversion. It depends on which spread you use, how you define the exit, and whether you look at monthly or daily data. Still, the record is clear that many recessions begin during or after the resteepening phase, because that phase typically reflects the Fed easing into weakening growth. A simple way to put it is that it works more often than not, but it’s not flawless or guaranteed. Conceptually, something like 70% probability with wide error bars is reasonable. The mechanism matters more than the exact number.
Why COVID Complicates The Stats
COVID muddies the clean math because it was a non economic shock that caused an instant recession and forced policy to move faster than any normal cycle. The downturn didn’t arrive after a long credit grind, it arrived via a shutdown. At the same time, the Fed responded immediately and aggressively, compressing the usual lag between inversion, uninversion, and recession. That makes 2019–2020 harder to use as a textbook example, even though the underlying signal still worked.
Where That Leaves Us Now
This isn’t a future risk anymore, it’s the phase we’re in now. Historically, when the yield curve exits inversion, the economy doesn’t reset; it absorbs the damage with a lag. The stress doesn’t vanish, it shifts forward, and from here the risk tilts into 2026 rather than back toward 2024.
Using the late 2024 uninversion as the reference point, we’re already in the historical risk window. With the front end of that lag behind us as 2025 ends, a longer cycle would shift the stress into 2026.
My Takeaway
The curve is telling you the system has shifted from restriction toward relief and relief usually arrives for a reason. If this were a truly healthy expansion, the curve would be steepening because long term growth expectations were rising, not because short term rates are expected to fall.
So when people point to this chart and say, “see, things are improving,” I’d push back gently. What it’s really saying is that tight policy has already done its job, stress has built beneath the surface, and the economy is now moving through the lagged phase. Historically, that phase doesn’t arrive because everything is fine, it arrives because something is starting to bend.
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