Offshore
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EndGame Macro
When Interest Becomes the Budget And The Line Washington Can’t Ignore
The blue line is telling you how much of the federal budget is now going toward interest payments. Not the debt in theory, the actual cash going out the door. And because the government rolls its debt over time, there’s a built in delay. Higher rates don’t hurt instantly; they seep in. What we’re seeing now is simply the consequence of the last few years finally catching up.
That’s why the blue line feels so ominous. It’s not reacting to today’s yields, it’s reacting to the entire rate cycle that already happened.
The Last Time We Were Here
The early to mid 1990s is the closest historical echo. Interest costs were eating a similar share of the budget, and Washington felt the squeeze. But the way out wasn’t some clever policy trick. It was a mix of luck, timing, and a little bit of global intervention.
Inflation fell. The Fed eased. Growth picked up. Tax revenues rose. And for a brief moment, there was real political willingness to tighten the belt. All of that helped but there’s a detail people forget…
The Plaza Accord. In 1985, the major economic powers of the time coordinated to push down an overvalued dollar because it was suffocating U.S. competitiveness. The weaker dollar helped set the stage for easier financial conditions and the long 1990s expansion that followed.
The blue line eventually collapsed. But it did so because everything lined up at once: disinflation, lower rates, strong growth, better budgets and crucially, a world willing to cooperate with U.S. needs.
That world doesn’t exist today.
What It Means If the Blue Line Keeps Rising
If interest keeps taking a bigger bite out of the budget, it stops being just a fiscal issue and starts becoming a political and strategic one. At some point, interest payments behave like an unplanned tax, money you can’t spend on defense, healthcare, or anything voters actually notice.
And then the choices narrow fast.
You either do the painful stuff…spending cuts, tax hikes, entitlement changes or you slide into the quieter, more familiar option of financial repression. Keep rates lower than they should be. Manage the curve. Encourage institutions to hold Treasuries. Use policy tools to make the debt easier to carry over time.
That’s the path countries choose when math corners them.
And even if the Fed cuts aggressively, the blue line doesn’t fall right away. We’ve lived through that playbook. In 2008–09 the Fed went to zero, launched QE, and markets still fell while unemployment rose. Liquidity hits the pipes immediately; the real economy moves on its own timetable.
Where This Likely Goes
If the blue line keeps rising, we shift from a world where policy is about optimizing the economy to a world where policy is about managing the financing of the government itself. That usually means more volatility, louder fights over budgets, and a steady gravitational pull toward easier money not because anyone prefers it, but because the alternative is facing the pain head on.
The 1990s had an escape hatch with a global accord that weakened the dollar and gave the U.S. breathing room.
Today, the U.S. is operating in a far more fractured world with far fewer allies willing to coordinate in the same way.
And that’s what makes this version of the blue line feel heavier. It’s not just about interest costs rising, it’s about the shrinking list of ways to bring them back down.
tweet
When Interest Becomes the Budget And The Line Washington Can’t Ignore
The blue line is telling you how much of the federal budget is now going toward interest payments. Not the debt in theory, the actual cash going out the door. And because the government rolls its debt over time, there’s a built in delay. Higher rates don’t hurt instantly; they seep in. What we’re seeing now is simply the consequence of the last few years finally catching up.
That’s why the blue line feels so ominous. It’s not reacting to today’s yields, it’s reacting to the entire rate cycle that already happened.
The Last Time We Were Here
The early to mid 1990s is the closest historical echo. Interest costs were eating a similar share of the budget, and Washington felt the squeeze. But the way out wasn’t some clever policy trick. It was a mix of luck, timing, and a little bit of global intervention.
Inflation fell. The Fed eased. Growth picked up. Tax revenues rose. And for a brief moment, there was real political willingness to tighten the belt. All of that helped but there’s a detail people forget…
The Plaza Accord. In 1985, the major economic powers of the time coordinated to push down an overvalued dollar because it was suffocating U.S. competitiveness. The weaker dollar helped set the stage for easier financial conditions and the long 1990s expansion that followed.
The blue line eventually collapsed. But it did so because everything lined up at once: disinflation, lower rates, strong growth, better budgets and crucially, a world willing to cooperate with U.S. needs.
That world doesn’t exist today.
What It Means If the Blue Line Keeps Rising
If interest keeps taking a bigger bite out of the budget, it stops being just a fiscal issue and starts becoming a political and strategic one. At some point, interest payments behave like an unplanned tax, money you can’t spend on defense, healthcare, or anything voters actually notice.
And then the choices narrow fast.
You either do the painful stuff…spending cuts, tax hikes, entitlement changes or you slide into the quieter, more familiar option of financial repression. Keep rates lower than they should be. Manage the curve. Encourage institutions to hold Treasuries. Use policy tools to make the debt easier to carry over time.
That’s the path countries choose when math corners them.
And even if the Fed cuts aggressively, the blue line doesn’t fall right away. We’ve lived through that playbook. In 2008–09 the Fed went to zero, launched QE, and markets still fell while unemployment rose. Liquidity hits the pipes immediately; the real economy moves on its own timetable.
Where This Likely Goes
If the blue line keeps rising, we shift from a world where policy is about optimizing the economy to a world where policy is about managing the financing of the government itself. That usually means more volatility, louder fights over budgets, and a steady gravitational pull toward easier money not because anyone prefers it, but because the alternative is facing the pain head on.
The 1990s had an escape hatch with a global accord that weakened the dollar and gave the U.S. breathing room.
Today, the U.S. is operating in a far more fractured world with far fewer allies willing to coordinate in the same way.
And that’s what makes this version of the blue line feel heavier. It’s not just about interest costs rising, it’s about the shrinking list of ways to bring them back down.
Treasury can’t afford a rise in financing costs: interest already consumes ~14% of federal outlays.
https://t.co/BV8OiX9foY https://t.co/j7j9wvrmz4 tweet
Offshore
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Clark Square Capital
I wrote up a review of the alt-data software @tickerplus TickerTrends. You can check it out here:
https://t.co/NAy15kcBSD
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I wrote up a review of the alt-data software @tickerplus TickerTrends. You can check it out here:
https://t.co/NAy15kcBSD
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Offshore
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EndGame Macro
Low Claims, Slow Cracks And The Labor Market’s Most Misleading Signal
This chart only measures one thing…how many people got laid off this week and immediately filed for unemployment insurance. And on that narrow metric, the number is undeniably low, the lowest since late 2022. If you look at it in isolation, it doesn’t give you the feeling of an economy unraveling.
But initial claims are a late cycle indicator. They stay quiet right up until companies stop trying to hold on to workers. A low print doesn’t mean the labor market is strong; it just means layoffs haven’t gone broad yet.
Why Claims Can Stay Low Even When the Labor Market Feels Tight
The most realistic explanation is that we’re in the slow adjustment phase of the cycle, the part where firms soften everything except the payroll count. Instead of cutting people outright, companies freeze hiring, trim hours, cancel open roles, and shift more work toward contractors or gig arrangements. That creates real stress for workers, but it doesn’t show up as new claims.
Claims also miss large parts of the workforce. Gig workers, many contractors, and anyone without traditional W-2 earnings aren’t eligible for unemployment benefits, so they never appear in this data. If these groups are the first to feel the downturn and they often are then initial claims will stay artificially calm.
And then there’s the reporting element. Weekly claims are noisy by nature. Holidays, seasonal adjustments, and administrative timing can all produce one off declines that don’t reflect the broader trend.
The More Honest Read
A low claims number doesn’t mean the economy is fine. It means layoffs aren’t widespread yet. If the slowdown is real and plenty of other indicators are pointing that direction then the weakness usually shows up first in slower hiring, longer job searches, and quiet reductions in hours. Claims are the last shoe to drop.
So this chart isn’t telling you there is no distress. It’s telling you we’re still early in the adjustment phase, where the pain is real but still hidden in places this metric isn’t built to capture.
tweet
Low Claims, Slow Cracks And The Labor Market’s Most Misleading Signal
This chart only measures one thing…how many people got laid off this week and immediately filed for unemployment insurance. And on that narrow metric, the number is undeniably low, the lowest since late 2022. If you look at it in isolation, it doesn’t give you the feeling of an economy unraveling.
But initial claims are a late cycle indicator. They stay quiet right up until companies stop trying to hold on to workers. A low print doesn’t mean the labor market is strong; it just means layoffs haven’t gone broad yet.
Why Claims Can Stay Low Even When the Labor Market Feels Tight
The most realistic explanation is that we’re in the slow adjustment phase of the cycle, the part where firms soften everything except the payroll count. Instead of cutting people outright, companies freeze hiring, trim hours, cancel open roles, and shift more work toward contractors or gig arrangements. That creates real stress for workers, but it doesn’t show up as new claims.
Claims also miss large parts of the workforce. Gig workers, many contractors, and anyone without traditional W-2 earnings aren’t eligible for unemployment benefits, so they never appear in this data. If these groups are the first to feel the downturn and they often are then initial claims will stay artificially calm.
And then there’s the reporting element. Weekly claims are noisy by nature. Holidays, seasonal adjustments, and administrative timing can all produce one off declines that don’t reflect the broader trend.
The More Honest Read
A low claims number doesn’t mean the economy is fine. It means layoffs aren’t widespread yet. If the slowdown is real and plenty of other indicators are pointing that direction then the weakness usually shows up first in slower hiring, longer job searches, and quiet reductions in hours. Claims are the last shoe to drop.
So this chart isn’t telling you there is no distress. It’s telling you we’re still early in the adjustment phase, where the pain is real but still hidden in places this metric isn’t built to capture.
Initial jobless claims just fell to the lowest since Sept. 2022. Not screaming distress. https://t.co/guxioKpVLx tweet
AkhenOsiris
$GOOGL OpenAI Anthropic
Prince specifically highlighted concerns about Google’s policies around its search and AI crawlers. As a major AI player jostling for dominance, Google combined its search and AI crawlers into one, so blocking its AI scraper also blocks a site’s ability to be indexed in Google search.
Prince cites stats that Cloudflare has not previously shared publicly about how much more of the internet Google can see compared to other companies like OpenAI and Anthropic or even Meta and Microsoft. Prince says Cloudflare found that Google currently sees 3.2 times more pages on the internet than OpenAI, 4.6 times more than Microsoft, and 4.8 times more than Anthropic or Meta does. Put simply, “they have this incredibly privileged access,” Prince says.
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$GOOGL OpenAI Anthropic
Prince specifically highlighted concerns about Google’s policies around its search and AI crawlers. As a major AI player jostling for dominance, Google combined its search and AI crawlers into one, so blocking its AI scraper also blocks a site’s ability to be indexed in Google search.
Prince cites stats that Cloudflare has not previously shared publicly about how much more of the internet Google can see compared to other companies like OpenAI and Anthropic or even Meta and Microsoft. Prince says Cloudflare found that Google currently sees 3.2 times more pages on the internet than OpenAI, 4.6 times more than Microsoft, and 4.8 times more than Anthropic or Meta does. Put simply, “they have this incredibly privileged access,” Prince says.
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Offshore
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Clark Square Capital
Henry Ellenbogen makes a compelling case for investing in small caps... https://t.co/KufOLkLRQH
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Henry Ellenbogen makes a compelling case for investing in small caps... https://t.co/KufOLkLRQH
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EndGame Macro
You’re Watching the Wrong Number…The Stress Is Hidden in the Plumbing
This week’s H.4.1 doesn’t deliver a dramatic headline. The Fed’s balance sheet barely moved, down about $16B, still sitting near $6.5T. But the details beneath that surface are far more revealing. The Fed isn’t tightening anymore, but it also isn’t easing in the way markets often imagine. It’s managing a system that’s getting more delicate to steer.
And now that QT is officially over and another rate cut is expected in a few days, the story becomes less about size and more about how liquidity is shifting inside the system.
What Actually Changed This Week
Securities Are Slowly Eroding
Outright holdings fell about $2.5B, mostly Treasuries. Weekly averages show a larger decline for both Treasuries and MBS. This isn’t a new policy move, it’s just runoff and amortization. But it underscores one thing: the Fed is done adding duration, and the portfolio’s income power will only recover slowly.
Reserves Dropped Again
Bank reserves fell almost $20B on the Wednesday reading and more than $38B on the weekly average. That’s a meaningful drain especially considering QT just ended. It’s a reminder that flows, not policy settings, drive liquidity now.
The TGA Jumped
Treasury’s account at the Fed climbed more than $33B on the weekly average. Every dollar that moves into the TGA drains reserves. That’s one of the cleanest ways liquidity evaporates, and it explains much of the reserve decline.
RRP Is Still Sticky
Reverse repo balances are holding around $330B. Money funds still prefer parking cash with the Fed rather than lending in the private market. When RRP refuses to fall, it’s a sign of lingering caution.
Repo Usage Flared And Then Disappeared
On the Wednesday snapshot, repo looks like zero. But the weekly average shows meaningful activity earlier in the week. That’s the Fed smoothing funding conditions and quietly stepping in when things tighten, stepping back when they stabilize. The tape notices even if the headlines don’t.
How the Fed’s Policy Pivot Fits In
QT ended on December 1, maturing securities are now reinvested, and another rate cut is widely expected. The Fed has clearly shifted from draining liquidity to trying to stabilize it. But ending QT doesn’t automatically ease conditions. With TGA rising and RRP still attracting cash, reserves can still fall even in an easing environment.
This is the new regime with a balance sheet that’s held steady, while liquidity inside it keeps shifting.
What Actually Worries Me
A Massive Deferred Loss Still Hangs Over Everything
The Fed is carrying roughly -$243B in deferred remittances. It doesn’t affect operations, but it matters politically and optically and it quietly creates an incentive structure where lower short term rates help repair the hole faster.
The Duration Trap
The Fed holds a huge amount of long dated securities. Most of the MBS book and $1.6T in Treasuries mature in more than 10 years. That means asset yields adjust painfully slowly. Even with cuts, the Fed’s income recovery is glacial.
Liquidity Is Becoming Uneven
This week shows a pattern of…
• reserves falling
• TGA rising
• RRP refusing to drain
• repo flickering in the background
Not signs of crisis, signs of a system that’s operating with less slack.
My Read
The balance sheet isn’t giving a big, dramatic warning. It’s giving a quiet, structural one.
We’re entering a period where…
• the size of the balance sheet matters less
• the distribution of liquidity matters more
• reserves will be the pressure point
• and the Fed will use tactical tools (repos, lending, reinvestments) to prevent small cracks from turning into bigger ones
Rate cuts won’t automatically fix these pressures if TGA and RRP keep absorbing cash that banks need.
The message underneath the numbers is simple…
Watch the plumbing. That’s where the next shift will show up first.
Interactive guide to our weekly [...]
You’re Watching the Wrong Number…The Stress Is Hidden in the Plumbing
This week’s H.4.1 doesn’t deliver a dramatic headline. The Fed’s balance sheet barely moved, down about $16B, still sitting near $6.5T. But the details beneath that surface are far more revealing. The Fed isn’t tightening anymore, but it also isn’t easing in the way markets often imagine. It’s managing a system that’s getting more delicate to steer.
And now that QT is officially over and another rate cut is expected in a few days, the story becomes less about size and more about how liquidity is shifting inside the system.
What Actually Changed This Week
Securities Are Slowly Eroding
Outright holdings fell about $2.5B, mostly Treasuries. Weekly averages show a larger decline for both Treasuries and MBS. This isn’t a new policy move, it’s just runoff and amortization. But it underscores one thing: the Fed is done adding duration, and the portfolio’s income power will only recover slowly.
Reserves Dropped Again
Bank reserves fell almost $20B on the Wednesday reading and more than $38B on the weekly average. That’s a meaningful drain especially considering QT just ended. It’s a reminder that flows, not policy settings, drive liquidity now.
The TGA Jumped
Treasury’s account at the Fed climbed more than $33B on the weekly average. Every dollar that moves into the TGA drains reserves. That’s one of the cleanest ways liquidity evaporates, and it explains much of the reserve decline.
RRP Is Still Sticky
Reverse repo balances are holding around $330B. Money funds still prefer parking cash with the Fed rather than lending in the private market. When RRP refuses to fall, it’s a sign of lingering caution.
Repo Usage Flared And Then Disappeared
On the Wednesday snapshot, repo looks like zero. But the weekly average shows meaningful activity earlier in the week. That’s the Fed smoothing funding conditions and quietly stepping in when things tighten, stepping back when they stabilize. The tape notices even if the headlines don’t.
How the Fed’s Policy Pivot Fits In
QT ended on December 1, maturing securities are now reinvested, and another rate cut is widely expected. The Fed has clearly shifted from draining liquidity to trying to stabilize it. But ending QT doesn’t automatically ease conditions. With TGA rising and RRP still attracting cash, reserves can still fall even in an easing environment.
This is the new regime with a balance sheet that’s held steady, while liquidity inside it keeps shifting.
What Actually Worries Me
A Massive Deferred Loss Still Hangs Over Everything
The Fed is carrying roughly -$243B in deferred remittances. It doesn’t affect operations, but it matters politically and optically and it quietly creates an incentive structure where lower short term rates help repair the hole faster.
The Duration Trap
The Fed holds a huge amount of long dated securities. Most of the MBS book and $1.6T in Treasuries mature in more than 10 years. That means asset yields adjust painfully slowly. Even with cuts, the Fed’s income recovery is glacial.
Liquidity Is Becoming Uneven
This week shows a pattern of…
• reserves falling
• TGA rising
• RRP refusing to drain
• repo flickering in the background
Not signs of crisis, signs of a system that’s operating with less slack.
My Read
The balance sheet isn’t giving a big, dramatic warning. It’s giving a quiet, structural one.
We’re entering a period where…
• the size of the balance sheet matters less
• the distribution of liquidity matters more
• reserves will be the pressure point
• and the Fed will use tactical tools (repos, lending, reinvestments) to prevent small cracks from turning into bigger ones
Rate cuts won’t automatically fix these pressures if TGA and RRP keep absorbing cash that banks need.
The message underneath the numbers is simple…
Watch the plumbing. That’s where the next shift will show up first.
Interactive guide to our weekly [...]
Offshore
EndGame Macro You’re Watching the Wrong Number…The Stress Is Hidden in the Plumbing This week’s H.4.1 doesn’t deliver a dramatic headline. The Fed’s balance sheet barely moved, down about $16B, still sitting near $6.5T. But the details beneath that surface…
www.federalreserve.gov
Fed's balance sheet
The Federal Reserve Board of Governors in Washington DC.
Offshore
Video
EndGame Macro
This video was sent to me, I’m not even sure who made it, but the claim is that Trump’s new Strategic Bitcoin Reserve order is basically the modern version of the 1933 gold play, setting up a future revaluation of Bitcoin and gold while the dollar weakens. I’m not totally convinced, but it’s an interesting angle.
What do you all think?
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This video was sent to me, I’m not even sure who made it, but the claim is that Trump’s new Strategic Bitcoin Reserve order is basically the modern version of the 1933 gold play, setting up a future revaluation of Bitcoin and gold while the dollar weakens. I’m not totally convinced, but it’s an interesting angle.
What do you all think?
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Offshore
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EndGame Macro
When a Company Stops Moving, It’s Sending a Message
Meta spent the first half of the year reshuffling aggressively with people coming in, people going out, teams getting rebuilt. Then sometime after August, everything just… stops. Hiring falls off, exits fall off, and the chart goes quiet.
That silence is the tell. Companies don’t flatline like this unless they’ve moved into a hold your ground posture.
Which Teams Are Moving And What That Says About Meta’s Priorities
Engineering is clearly the center of gravity here. It dominates the chart in every month, both on the hiring side and the exit side. That’s classic we’re tightening the perimeter but still investing in the core. Everything else like HR, operations, sales, program management gets much lighter as the year goes on.
The April spike looks like a deliberate cleanup…wider exits across multiple functions, followed by a mid year rebuild where Meta selectively backfilled high priority roles. But after that, especially heading into the fall, almost every function goes quiet at the same time. That’s usually not randomness, it’s a signal of caution.
They’re not cutting deep. They’re not expanding either. They’re stabilizing.
What This Usually Means in a Broader Economic Cycle
Different parts of a company react to the economy at different speeds.
Early Movers And The Leading Indicators
• HR and recruiting slow first
• Sales and support teams lose backfills
• Marketing budgets get trimmed
• Program and consulting layers get paused
These are the roles companies flex when they’re unsure about demand.
Late Movers And The Lagging Indicators
• Engineering
• Product
• Finance
• Legal and compliance
These stay protected until a company truly believes the cycle has turned.
And right now, Meta is behaving exactly like a company that’s preparing for a slower environment without calling it a downturn. They’ve tightened non core areas, protected engineering, and pulled their hiring and exiting activity down to a low simmer.
My Read
This is what it looks like when a big firm braces quietly. Not panicking, not signaling recession, but acting like the next year is going to reward discipline more than growth.
tweet
When a Company Stops Moving, It’s Sending a Message
Meta spent the first half of the year reshuffling aggressively with people coming in, people going out, teams getting rebuilt. Then sometime after August, everything just… stops. Hiring falls off, exits fall off, and the chart goes quiet.
That silence is the tell. Companies don’t flatline like this unless they’ve moved into a hold your ground posture.
Which Teams Are Moving And What That Says About Meta’s Priorities
Engineering is clearly the center of gravity here. It dominates the chart in every month, both on the hiring side and the exit side. That’s classic we’re tightening the perimeter but still investing in the core. Everything else like HR, operations, sales, program management gets much lighter as the year goes on.
The April spike looks like a deliberate cleanup…wider exits across multiple functions, followed by a mid year rebuild where Meta selectively backfilled high priority roles. But after that, especially heading into the fall, almost every function goes quiet at the same time. That’s usually not randomness, it’s a signal of caution.
They’re not cutting deep. They’re not expanding either. They’re stabilizing.
What This Usually Means in a Broader Economic Cycle
Different parts of a company react to the economy at different speeds.
Early Movers And The Leading Indicators
• HR and recruiting slow first
• Sales and support teams lose backfills
• Marketing budgets get trimmed
• Program and consulting layers get paused
These are the roles companies flex when they’re unsure about demand.
Late Movers And The Lagging Indicators
• Engineering
• Product
• Finance
• Legal and compliance
These stay protected until a company truly believes the cycle has turned.
And right now, Meta is behaving exactly like a company that’s preparing for a slower environment without calling it a downturn. They’ve tightened non core areas, protected engineering, and pulled their hiring and exiting activity down to a low simmer.
My Read
This is what it looks like when a big firm braces quietly. Not panicking, not signaling recession, but acting like the next year is going to reward discipline more than growth.
The further interesting point with overall Meta hiring/exit trends is that it is ALL on the floor the last few months.
BTW... this is a standard trend for most companies across the board seeing a Sept forward downtrend. https://t.co/lluoeX66Iy tweet