Slender Slim

25% of the US are now subprime, as Apollo reported yesterday.

Powell indicated b/s runoff will discontinue (~early next year most likely), which is bullish for markets.

There is a divergence in market pricing and street consensus for rates. The street thinks rates will be higher for longer compared to cuts implied by the market.

Everyone is talking about Gold rising because of USD weakness, but what's not being talked about is a China's relatively weak economy (citizens want somewhere to put their money) and central bank reserve reallocations buying up gold.

There's lots of alpha to be found in small caps. Market of stocks, not a single stock market.

Berkshire Hathaway now owns more treasuries than the Fed itself. It could conduct its own monetary policy if it chose. #FunFact

# of investors in USA that see ESG as a fiduciary responsibility has fallen over 30% from 2024 to 2025!

China is a whopping 23%! Think about that - a quarter of every home is vacant.

People say the US has a chronic housing shortage but the housing vacancy rate is 10%, higher than some other western countries, such as France, Germany, UK ( 5% vacancy!!), & even CANADA! Canada is bigger than the US yet ~the same population as California.

US government job growth YoY is now higher than the private sector. Largely due to base effects, however.

2nd wave of inflation appears to be coming, while GDP running at close to 3%.

Fed will have to change course and market will tank. Buy some downside insurance or reallocate more to bonds.

Apollo says economists were wrong, Trump was right.

Everyone's been expecting an economic slowdown from tariffs (& fear of), but 2Q real GDP was 3.8% (6% nominal), Atlanta Fed expects Q3 to be 3.9%.

Job losses have been to slowing immigration. These are strong growth numbers.

This graph always skews up, especially the Shiller index, as it is current price over earnings from prior quarters. Price reflects the earnings in the future and when they eventually release the ratio in prior data points are adjusted down.

Ex: Current P/E is off Q1 earnings.

Apollo thinks the USD deprecating this year was overdone and is recommending short EURUSD.

www.apolloacademy.com/wp-content/u...

Powell reiterates views on inflation above target and unemployment rising. Tough spot to be in.
#Stagflation

US government will likely shut down Oct 1

Shutdown means government data releases like CPI cease.

Less data between now and next FOMC meeting means they are more likely follow dot plot. So can be bullish in a sense.

Market pricing in most dovish scenario. If Powell says anything that communicates hesitancy towards further three cuts or dot plot shows anything different, market will react harshely. Also already at ATHs.

Buying a put is cheap insurance today.

Current business conditions survey -8.7 against consenus of 4.9. Stocks have been up premarket but may retract some of their gains.

Over 70% of Wall St think the Indonesian demonstrations are over.

Buy IDRUSD pair.

Q2 GDP revised up 30bps.

Consumption, capex were revised up (+70bps for real private domestic final sales, +50bps real domestic final sales).

Housing, government spending, & inventories revised down.

Good areas revised up, irrelevant areas revised down. #Bullish

US IG bonds are yielding more than the S&P (even on a forward earnings basis).

Why take equity risk when you can get a higher yield and be senior on the cap stack? Then also benefit from bond price appreciation when cuts do eventually happen.

Chinese stocks are rallying HARD.

Majority of Wall Street thinks Trump will oust Fed Governor Lisa Cook, and it will make the DXY (U.S.-dollar index) weaker.

The 13% vs the 50%.

13% of HY bonds are over 500bps, roughly half are under 200bps, indicating massive divergence within the industry.

The 300bps average doesn't tell the full story.

FOMC internal divergence is associated with negative stock price performance, further reinforcing that now is a good time to invest in some downside insurance:
www.apolloacademy.com/the-impact-o...

This is a SHOCKING amount of corporate business applications in such a short amount of time.

Market pricing in goldilocks scenario.

Transitioning SPY / SPXL positions to SPD (S&P with downside (put) protection).

When a correction happens, I will reallocate back to SPY/SPXL and ride the eventual recovery.

Trade idea:

Find implied price differences in payouts between fed fund futures on the CME (can be traded through interactive brokers) and on Polymarket or similar sites.

Initial jobless claims are starting to trend lower than 2023 and 2024.

This is as unemployment begins to stabilize in the low 4% range.

The ~14% increase in oil prices since the start of the year should put around 40bp upward pressure on year-over-year headline inflation, but only boost core inflation by 7bp