Mandelbrot retweeted
I know fintwit idolizes him, but I’m starting to think dude is a little too full of himself
“I am the house” … *10yr blows up 70 bps over the next month*
Now these comments… ego issues to work through? Fine if he could back it up
Textbook halo effect from working with Druck
FT: Treasury secretary Scott Bessent told investors in a private meeting that he did not see a “systemic problem” with the AI boom, downplaying concerns that the industry is in a bubble like the one that preceded the dotcom bust.
“I’m good at figuring out when there are problems in systems,” Bessent, said when asked about AI in an interview with Bridgewater chief executive Nir Bar Dea, according to three people who were present at the event. “I don’t see a systemic problem.”
Mandelbrot retweeted
Superforecasting
By Philip Tetlock
Read this ~4 years ago, and I think it’s worth coming back to a second time.
At a high level the book reveals that forecasting is a trainable skill, not an innate talent. Average people can consistently beat professional intelligence analysts and prediction markets by adopting mindsets rooted in probabilistic thinking and active open-mindedness.
It emphasizes the necessity of tracking your forecasts and the subsequent outcomes. This is imperative for successful trading too— it’s really your only hope imo. Might be a burden but that just means you’re overtrading and you should probably delete your brokerage from your phone… let’s be honest. I’ve drifted away from this practice but have gotten back to it over the past 6 weeks or so. Highly recommend it and will write a separate thread on it (i think).
Mandelbrot retweeted
GCR’s Reads
Planning for this to be an ongoing series sharing books that GCR read during his ascent into Superforecaster status (sarcasm).
We’re now firmly in the age of the smartphone. At this point, anyone whose first cellphone wasn’t “smart” is considered an unc in ThreadGuy’s book (my first phone was an LG Rumour).
These devices are now turbo-charged with AI models, fine-tuned social media algorithms, and casino-like exchange apps… we joke about it on this site, but it’s clear we are all being slowly microwaved: attention spans and critical thinking abilities shrinking… screen time increasing… I’m not a Luddite who thinks you shouldn’t embrace and leverage the benefits of AI and technology at a broader level, but its worthwhile asking ourselves what differentiates humans from AI and keep pressing/protect those sacred areas.
One manifestation of this view (and the point of this series) is that I think it’s becoming increasingly important to (be able to) sit back and crack a book for extended periods (at this point let’s call it over 30 minutes?). Slow down and use your imagination (applies to non-fiction as well). And no, no grindset goals targeting X or Y pages per hour / books per year. I used to read 25 books a year, but that was purely a vanity metric; don’t get caught up in that. AI is always going to be able to scan and ingest surface level information orders of magnitude faster than humans.
And physical books only, no audiobooks, no e-books… essentially slow the fk down. There are latent consequences to trying to hyper-optimize every corner of your life.
(Disclaimers 1. AI provided no help writing this)
Mandelbrot retweeted
Yeah if this hiking cycle is happening I’d expect a miniature version of 2022… probably draw down into 2H Q1…
ofc I am playing the contrarian longs here but this is like a 3-4 week view max
Mandelbrot retweeted
Start of a hiking cycle? Let’s see how the SPY performed after the first hike in 2022 shall we?
+11% in a straight line in two weeks
Oh…
Mandelbrot retweeted
Utilities are saying this rates move is wrapping up.
How cute do you want to get here?
Up to you…
Mandelbrot retweeted
$QQQ
Decided to pick up some calls again during the NY session…
Not playing short term expiries like I am with SPX
Selected Jan 2027 $800 calls (will size harder if we can break ATHs)
Idk— if you hid the price (lack of drawdown) on weighted indices from me, and told me yields were blowing out, breadth was reaching lows in line with liberation day, Bessent was progressively ramping up treasury buybacks, four hikes were priced in by mid 2027, and OAI/ANT was firing on all cylinders with Meta making a leap on AI as well… that would be a shut up and bid moment…. No?
The only thing that is missing is the lack of equity volatility spike and “sufficient” drawdowns on a weighted index level…
But what if tech/AI related earnings (and fundamentals) are still strong, inflation is 3-4% (sweet spot for nominal earnings, but not too hot either), there is marginal (if any) job loss expected over the next several years (per the Fed) = continued max flows into weighted indices via 401Ks, and everyone is going to make +30% more on their cash over the next few quarters and beyond (3.625% to 4.7% as per current pricing).
Mandelbrot retweeted
Today I am reminded of the SpaceX top for equities…
As we kept melting up the Consensus shifted from 1. Sell the obvious top before SpaceX ipo, to 2. No way it can be that easy, not selling… despite the continued meltup making 1. more likely (noted in original post)
Well, the initial consensus was correct as it’s been a choppy hell hole ever since… and a lot of money could have been saved if people didn’t pivot out of boredom / an unwillingness to crystallize gains.
I do wonder if we are witnessing the same phenomenon today. A month ago, it was fairly consensus to avoid September and risk on in October as “obviously” Trump was going to TACO/ de-escalate ahead of mid term elections.
Now as yields blow out and Iran headlines pick up into the month of October the consensus seems to have shifted to “he can’t TACO out of this”; there is a general lack of risk appetite contrary to many plans from a month ago. On a seasonal basis we are supposed to be entering the best performing 3 quarters of the presidential cycle. Perhaps we are all too concerned with what equities are going to do over the next 3 days/weeks, while the real money is made focusing on the next 3 months/quarters?
To me, the weighted indices resiliency is partially what has turned these people off as the Guaranteed Bottom may have already passed.
I’m just not sure if the pivot out of prior consensus is correct here (again, like SpaceX), the wall of worry just seems pretty large.
Equities are currently moving in complete lock step with oil now… maybe that’s exactly what Trump’s objectives were ahead of the mid terms?
Dunk away if wrong, just putting out my thoughts in this moment.
$SPCX $SPX
Pretty incredible treatment Elon is getting regarding the index inclusion rules (currently making the rounds here); gotta giver him credit, the world does bend on his will…
1. Buy twitter for a stupid price. Doesn’t matter as Twitter debt got rolled into SpaceX and refi'd at half the rate.
2. Twitter on the margin wins Trumps presidency, gets him special access / treatment and even Trump’s support for Tesla stock price when it was $230 in early 25. Special access ensures the IPO / index inclusion rules fall in SpaceX’s favour.
3. Twitter debt now will be paid off with a 100X's sales IPO that everyone is fast-tracked forced to buy.
Essentially, he will be the first trillionaire and to big credit of his Twitter acquisition (which was essentially free).
Anyway— kudos to him, what I really want to discuss is the following:
There is lots of chatter (flip-flopping) with respect to implications of the impending mega IPOs this year… we have gone from:
1: “SpaceX IPO will be the most obvious market topping event”…
and as equities march higher many have recently shifted to:
2. “SpaceX IPO would be way too obvious of a top, that’s too easy”…
I think you just play somewhere in the middle of those two conclusions.
I think over the next two months sentiment will shift between 1. And 2. Three times over.
It’s somewhat ironic that the IPOs (and Iran & Mid terms) were a good reason to sit back and take it easy for 2026, and now everyone is forced to stop back in, chase, and lever up in the IPO.
It’s this behaviour that will result in the oscillating behaviour between 1. And 2. IMO
We’re pretty much blowing out every record possible during this historic rally, COR1M, skew, put-call ratio, etc.
One scenario I have in mind is a repeat of July 2024 (Yen Carry Trade Unwind). We ended up seeing a -10% drawdown over 20 days, and we weren’t making new ATHs until the Fall when Trump won the election. What draws me to this is implied correlation is lowest it’s ever been on record, only July 24 has been lower.
It could look like this:
1. Profit taking days in advance of the June IPO, and initial continuation post-IPO (“holy shit maybe it’s actually the top, time to sell”).
2. We start marching back higher again into July, making new highs and the chase continues (“nvm that wasn’t the top, too obvious of course, time to rebuy!”).
3. Everyone feels like a genius for a week, then index inclusion hits (which is fast tracked into July), among likely unrelated catalyst(s) and we put in our first real drawdown (7-10%) of this rally out of March 30th (“ok that was stupid of me to chase and rebuy on an obvious market topping event”).
4. The correction wraps up, positioning (the leveraged, extreme chase /speculative type) is cleaned up and we begin marching higher.
Who really knows… I think the big takeaway is to expect our first real bout of volatility over the next two months, and risk of getting chopped up is high, but it also doesn’t mean it’s the intergalactic top either.
Mandelbrot retweeted
$IWM
This was pretty much the mood I was expecting when we got here
NFP tomorrow, let’s see
Mandelbrot retweeted
$LIT
Might be one of those times the news was in the charts…
Picking some back up here as planned
Don’t really love the change in fundamental picture so would be treating it like a potential reversion bounce for now.
Mandelbrot retweeted
$QQQ
If we’re still running the post-FOMC playbook…
Turnaround on Tuesday at the latest.
Mandelbrot retweeted
Some names I like outside of the usual suspects this site talks about: SITM, SMTC, CLS, and FLEX
Obviously they’ll be red tomorrow but let’s watch how the week develops
Mandelbrot retweeted
$QQQ
Finally entering box
Doesn’t make sense to try it but would be an entertaining outcome
Wouldn’t it?
$QQQ
Not like I’m anywhere near max long but the more whining about how every single scenario tomorrow financial assets die, the more some semblance of this is a real possibility…
During the prior two HTF “rollovers” anyone who was paying attention knew the end was near, and yet both instances the Qs went on to test ATHs (+5% in a very short period).
Just something to keep in mind, nothing is outside of the realm of possibilities, and it’s times like these when the outcome seems preordained you should be considering the exact opposite scenario playing out.
Not here to tell you why or how, just talking price action. Topping is a process (if that’s what we’re in fact doing).
I’d just say if we trade down tomorrow into the guaranteed rate hike and we knee-jerk down, pay special attention for any strength from there— it may be our best long opportunity since…. the last FOMC…
