Dimitry Nakhla | Babylon Capital®
$MA increased its quarterly dividend by +14% to $0.87 per share & authorized a new $14B buyback program 💳

The new repurchase plan will go into effect after the remaining $4.2B under the existing authorization is completed https://t.co/onRThbjubF
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EndGame Macro
The U.S. is an outlier because it’s built differently from almost every other advanced economy. You can see it the moment you look at income distribution. The top end lives in a completely different universe, and the bottom end lives in a system where the basics cost more and security isn’t guaranteed in the same way. That contrast is the heart of the American story, remarkable upside paired with real vulnerability.

The Power Side of the Equation

America rewards scale, ideas, and ownership like no one else.
If you create something valuable, build a company, hold equity, or land in a high productivity city, the sky is almost uncapped. The country is wired for invention with deep capital markets, a culture that tolerates risk, and a legal system that protects intellectual property. That mix produces billion dollar companies and life changing wealth. It’s why the top quintile earns so much more than its counterparts abroad. In that sense, the U.S. is still the world’s best engine for turning ambition into real economic gains.

You also can’t ignore the strategic layer where the U.S. carries an enormous share of global defense and security costs. Most of its allies spend a fraction of what America does because they rely on the U.S. military umbrella. That burden shapes federal budgets and limits how much can be redirected toward social programs. It doesn’t erase the country’s strengths, but it does define the terrain the U.S. operates on.

The Fragile Side of the Equation

The bottom half of the country doesn’t experience the same lift. Not because people aren’t working, but because the American model offloads so much onto the individual like healthcare tied to your job, education paid through debt, childcare priced like rent, and housing clustered in the places where opportunity is highest and affordability is lowest. So even when income looks okay on paper, life can feel stretched. A small setback like a medical bill, a layoff, a move can ripple through a household in a way that would be absorbed in countries with stronger social cushions.

And geography deepens the divide. Coastal tech hubs operate almost like separate countries compared to rural regions or old industrial towns. It’s one national economy with multiple economic climates, and that difference shapes everything from mobility to political attitudes.

The Real American Paradox

Put it all together and the U.S. becomes a study in contrasts, the place where global wealth gets created, and the place where everyday life can feel precarious for people not riding the upside. It’s not just inequality, it’s the structure of inequality. A spectacular ceiling. A thinner floor. And a system that asks individuals to absorb more risk while also carrying the weight of being the world’s stabilizing force.

The question going forward isn’t whether America is wealthy…it clearly is.
It’s whether that wealth keeps lifting only the top or eventually finds a way to rebuild the floor underneath everyone else.

Income distribution within the world's 15 biggest economies 📊

What do you notice? 🤔 https://t.co/92BCBBMJ5Q - Markets & Mayhem
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Quiver Quantitative
JUST IN: The odds of AI being named Time's Person of the Year are soaring on Polymarket.

There doesn't seem to be any public news that explains this.

We will see if this ends up being insiders. https://t.co/2PgFR91zCB
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EndGame Macro
The Student Loan Whiplash And How 7 Million Borrowers Can Reshape Credit and Lending Overnight

The government is basically shutting down the SAVE plan and pushing millions of borrowers back into real repayment. It’s not a small administrative move because it forces people who’ve been in a kind of suspended animation to choose a new plan and start paying again. And because the SAVE group is huge, the shift is going to hit a very wide slice of younger and lower income borrowers all at once.

How many people this touches

Somewhere between 7 and 7.7 million borrowers get pulled out of the pause and dropped back into repayment. That’s a meaningful chunk of the entire federal loan system. For a lot of them, the new plans mean higher monthly payments than what they were expecting under SAVE.

Why this matters for credit and banks

When you restart payments for that many people at once, not everyone is going to land smoothly. Some will miss payments. Some will fall behind. And student loan delinquencies hit credit files fast. Once that happens, credit scores drop, debt to income ratios worsen, and suddenly the pool of qualified borrowers shrinks. Banks don’t ignore that, they tighten lending, raise overlays, and become less willing to take chances on borderline files. It doesn’t take a crisis to change lending behavior; it just takes millions of borrowers getting squeezed at the same time.

Why Fannie Mae’s Recent Move Matters

This is the backdrop for Fannie Mae removing the hard 620 credit score floor and shifting to a full profile underwriting approach. It’s not a loosening as much as a recognition…the borrower pool is changing, credit scores alone aren’t telling the whole story, and if lenders cling to rigid cutoffs, the market will freeze. Fannie is trying to widen the funnel without pretending risk has vanished, more weight on income stability, cash flow, and payment patterns, less on one blunt number.

What ties all of this together is simple…the system is adjusting because the pressure is building. Millions reenter repayment, credit quality softens, lenders get cautious, and the agencies start rewriting the rules just to keep the gears turning.

Trump administration moves to remove millions of student loan borrowers from payment pause

#MacroEdge - MacroEdge
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Quiver Quantitative
JUST IN: Representative Shri Thanedar has introduced Articles of Impeachment against Secretary Pete Hegseth. https://t.co/xwwESbAfUo
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memenodes
crypto holders buying the dip https://t.co/kS1tIoMBva
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EndGame Macro
These Cuts Aren’t About Stimulus They’re About Survival

The simplest way to understand this moment is that policy has quietly became too tight. Once inflation cools, holding rates steady is its own form of tightening. Real borrowing costs rise, refinancing gets harder, and the system grows more sensitive to every additional month at high rates. The Fed isn’t trying to spark a boom; they’re trying to keep the slowdown from hardening into something that feeds on itself.

A Labor Market That Looks Fine From Far Away, and Tired Up Close

Job openings can bounce around, but that’s not the heart of the story. Companies can leave postings up, backfill slowly, or advertise while freezing actual hiring. The real signals like hires slipping, quits hitting multi year lows point to a market that’s losing energy. Workers aren’t jumping like they used to, and employers aren’t chasing talent the way they were.

Add the fact that youth and new graduate unemployment is at cycle highs, and you see the shape of a late cycle labor market with pockets of tightness in low wage, high churn sectors, and pockets of weakness where new workers need the most opportunity. That’s not robust demand. That’s uneven demand. And unevenness is what makes policymakers nervous, because it often precedes broader softening.

The Credit Side of the Cycle Is What Really Matters Now

This is the quieter, more important reason for cuts. The system is carrying a massive wall of refinancing…government, CRE, consumers and higher rates hit every part of it at once. Defaults creep up. Delinquencies rise. Banks tighten lending as their own balance sheets feel the strain. It’s not dramatic; it’s cumulative. A few months of being too tight can tip something over even if headline data still looks fine.

So the Fed is easing not because they think growth is strong enough to ignore the risks, but because they see how fragile the plumbing is getting underneath the surface.

The Master Key

So when you take that all into account the rate cuts make perfect sense…inflation has cooled, momentum is fading, credit stress is building, and the cost of waiting for obvious damage is too high. They’re cutting to manage the landing, not to reignite the takeoff.

With 10 Year UST yields continuing to rise on the eve of another Fed rate cut, it begs the question: Why is the Treasury pushing so hard for more cuts if the market is saying that it will only be inflationary in the long term?

Answer: Because so much of US government debt is now short term T-Bills, with every 25bp cut, annual interest expense drops by ~25 billion. Cut rates low enough, and it could slash interest expense in half within the next two years. - James Lavish
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EndGame Macro
Cuts for Stability, Not Growth And Reading the Fed’s Play

The headline labor market can look fine while the engine underneath is losing torque. Job openings can tick up and still be consistent with a no hire and no fire economy where companies keep reqs posted, but they’re not really adding bodies. In the latest JOLTS, openings are basically steady around 7.67M but hires are drifting lower and the quits rate has slid to 1.8%. That’s the tell. People don’t quit when they’re confident, and companies don’t hire when they’re uncertain. That’s a market getting quieter and more fragile at the edges.

It Comes Down To Debt Roll Over And The Systems Plumbing

The whole system has become more interest rate sensitive because so much financing is short dated and rolling. When rates stay high, it doesn’t just hit mortgages, it hits Treasury interest expense, CRE refinancing, weaker corporate balance sheets, and bank credit appetite. So a cut isn’t just that they think inflation is solved, it’s also that they don’t want the refinancing wall to turn into a credit event.

And that’s where the bill purchases come in. QT is over and the Fed is pivoting to reinvestment and reserve management, buying Treasury Bills then is less about juicing the economy and more about keeping bank reserves ample so money markets don’t seize up under heavy issuance. Fed officials have basically framed this as plumbing and not QE because the goal is market function and liquidity stability, not lighting a new demand boom.

What I Think This Is Signaling For The Market

This is a cut cycle that’s trying to extend the runway, not launch a new expansion. The front end can rally (policy path down), but the long end can stay stubborn if deficits and issuance keep term premium elevated which is why you can see 10s rise even as the Fed eases. In that world, risk assets can still catch a liquidity bid, but it tends to be choppier and more selective because good balance sheets and real cash flows do better than stories, and credit is the place you watch first for stress.

In my opinion they’re cutting because the economy is cooling in the ways that matter (hiring, quits, credit), and they’re managing reserves because the plumbing matters more when the cycle is late and the debt load is rolling fast.

FED MAY CUT RATES AND BOOST BILL PURCHASES

The Fed is expected to cut rates to 3.50%-3.75% Wednesday. Bank of America predicts an extra move: ~$45B in monthly short-term Treasury bill purchases to maintain bank reserves and prevent liquidity issues. Combined with MBS reinvestments, total bill purchases could reach ~$60B/month. These “Reserve Management Purchases” aren’t QE—they aim to keep money markets functioning, not stimulate lending. While critics may see it as money printing, the move could reassure markets amid rising Treasury issuance and concerns about tightening liquidity. - *Walter Bloomberg
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