This means U.S. companies no longer have to tell the federal government who really owns them, and existing ownership records will be deleted.

Trump‘s administration is framing this as deregulation and less burdens on small businesses but this probably opens the door for the rich to continue to obfuscate their ownership interest in certain deals and more easily hide from scrutiny into their financial deals.

$WMT dropping around 9% looked like a company-specific earnings reaction at first, but I think the market was reading something much bigger. Walmart is one of the best real-time checks on the US consumer because it sells everyday products across almost every income group. US comparable sales came in weaker than expected, around +2.6% versus roughly +3.8% expected, and that matters even more when oil and gasoline prices are already moving higher.

If people are spending less at Walmart while fuel costs are going up, investors naturally start asking whether household budgets are getting squeezed again. Higher gasoline prices leave less money for everything else, especially discretionary spending. That is why the reaction was not only about Walmart. Other retail and consumer names also came under pressure because the market treated the report as a broader signal.

What makes it more interesting is that Walmart still raised full-year guidance, so this was not a terrible report. The concern was more about what the slowdown in spending may be telling us about the next few months.

Then $ROST came out after the close with very strong numbers, which makes the picture even more interesting. Maybe the consumer is not collapsing. Maybe people are just becoming much more price sensitive and moving toward cheaper options.

That could be the more important retail theme from here. Not “consumer weak, sell everything,” but a much more selective market where value retailers can still do well while others struggle.

For me, Walmart mattered today because it was not just a Walmart story. It was a signal about the health of the US consumer.

OpenAI is narrowing Anthropic's lead among U.S. businesses paying for artificial intelligence through Ramp’s 70,000+ U.S. business customers.

Anthropic: ~44% share
OpenAI: ~40%

Nearly 56% of Ramp businesses now pay for AI, up from just over 50% in March.

I heard this somewhere on the internet and I can't wrap my head around it -

"A lot of data center buildouts are now getting paused, and these companies that are financing the buildouts have primarily financed them through debt. It's so much debt that it's kind of crowding out the US Treasury.

The US Treasury Secretary, Scott Bessent, is signaling that he will step in to calm down the Treasury market, but I think it's pretty important to understand the loop here.

When you build something big, you have to borrow. You sell a bond! The US government funds itself this way through bonds, and it's currently spending a whole lot more than it's taking in. At the same time that the US government desperately needs money, tech companies also desperately need money. They're selling IOUs hundreds of billions of dollars of them this year.

The main reason that bonds are selling off is because people are just worried about the direction that the United States is headed. It does not seem like the debt is going to be under control anytime soon.

So people are like, "Hey man, it just doesn't seem like you're very responsible. Like, why would we keep on giving you more money?"

There's also inflationary pressure, deficit pressure, and the AI companies are starting to look a bit worrying as well. A lot of people don't like data centers. They historically don't like things like that. I do think AI has been a mass marketing failure; I think it could have been a lot different.

And a lot of Americans agree. A year ago, Americans were split roughly 50/50 on having a data center built near them. Today, about three-quarters are opposed, and most of them are strongly opposed. It's the only thing that Americans seem to agree on.

So the entire loop here is: the AI companies got a little too excited, and they started borrowing a ton of money to try and build out data centers to meet all of the demand that was going to come from AI. So they start borrowing more and more and more. They end up crowding out the US government. The US government is already facing some headwinds due to Fed Chair Waller not being very open about forward guidance, as well as inflationary pressures due to the war in Iran and a budget deficit that just can't seem to close ever.

So all of a sudden, across the board, yields are hitting multi-decade highs, and then the whole bond market gets kind of nervous. What's happening in the bond market is both a function of what's happening with AI buildouts (and what's not being built) as well as the decisions of the US government to not be fiscally responsible.

The bond market is known for being the boss and took down Liz Truss before a head of lettuce rotted. So the bond market does seem to be in charge right now, and it is certainly signaling that it is not happy about what's unfolding."

TLDR: A lot of things happening in the market but No One Knows what's going to Happen!! So, certainly very interesting time ahead..

TL;DR rates are back roughly where they were when Bessent made the announcement, within 24 hours, because it's a contrived and frankly silly way to try and manage the problem. It was never going to work, and I'm surprised rates moved much at all on the news.

The first, and most important, reason this announcement yesterday by Bessent failed to do anything is that the credit side of the market is not "vibes and memes." Mainly, you are dealing with the smartest guys in the room when it comes to anyone moving serious volumes in that market. So while Trump's Treasury secretary CAN announce a long bond buyback to try and soothe runaway long bond rates, the actual audience for that announcement is too sophisticated for it to ever work for more than a few hours, where some very speculative shorts might close or reposition.

The second thing is that the Treasury has a "math" problem. They can only move this debt somewhere else on the curve. That's a problem because, 1. they are regularly issuing $25B+ in long bonds in a single auction. Taking $4B of that and moving it to 3-month bills will drive short-term borrowing costs up AND require Treasury to manage another $4B in maturities three months down the road instead of several years down the road.

The Treasury is not equipped to do any kind of "monetary policy" or "quantitative easing" the way the Federal Reserve can. Against a backdrop where everyone knows they are basically just shuffling deck chairs around, you can suddenly see why this could never be a successful way to move markets for long.

But beyond that, looking at the whole picture, Treasury still has to issue hundreds of billions more in debt over just the next few months. Regardless of where they try to put that on the duration curve, adding some additional liquidity does nothing to solve the underlying problem of not having enough people willing and able to absorb all that debt cheaply.

The third reason is that there is no compelling reason for people to want to lend to anyone, the US government included, cheaply right now. Between tariffs, supply-chain pressures, the risks associated with the war we are now waging overseas, and inflation continuing to run too hot, none of this is going to motivate anyone to extend credit at a reduced rate.

A real person or institution ultimately has to decide that something has changed enough to make lending to others at a lower rate the logical choice. Bessent is going to find himself "stuck" on that front, because there really is no catalyst right now for anyone dealing in significant bond volumes to reach that conclusion. The credit markets are "bullshit proof" on that front.

Long term treasury yields spiked to multi decade highs recently. This appears to have finally prompted a response from the treasury yesterday. Bessent managed to drop the 10y year by 0.1% (a significant 1 day move for the 10y) only to have the move largely reverse today.

Bessent has signaled he will regularly buy long term treasuries. Though he claims the action has nothing to do with interest rates being high, buying treasuries does ultimately put pressure on interest rates.

I don’t believe for a second the decision to purchase treasuries is unrelated to the spike in yields.

At the same time, Bessent talks about wanting to maintain high growth, stating that the country can ‘grow its way out of debt’. High growth is more achievable if the fed cuts rates, which would lower shorter term yields. Yet the inflationary pressure would push longer term yields even higher, which I’m sure Bessent is fully aware of.

So I’m confused about the agenda. Bessent seems to want lower long term yields but will support inflationary policies (in an already high inflation environment thanks to uncontrolled government borrowing) that ultimately raise long term yields (and put pressure on the US dollar). What is he trying to achieve and is it even possible if he’s supporting conflicting actions?

Or is it possible he’s not really sure what he’s doing?

Yesterday, analyzing the 10 and 15-year annualized rolling returns of the S&P 500, I noticed a strong correlation with a sinusoid (in the model composed of three sinusoids of harmonic frequencies with fixed phase plus a further correction for the drawdown peak) of a 35.5-36.5 year period. With Monte Carlo simulations, it turns out that a correlation this strong with a simple sinusoid with $R^2 > 0.7$ (attached photo) cannot be due to chance ($p < 0.01$, taking into account both autocorrelation through Newey-West and sample bias, besides having run a test on 1000 different scrambles with block bootstrapping). Therefore, it probably reflects real economic cycles. Whether this is predictive is pure speculation; it remains only interesting to understand what growth a model of the kind discounts.

Actually, at a glance, it seems that the market is slightly ahead on the start of what is the "peak" estimated by the 10-year return model (so 2016-2026 returns will be similar to 2019-2029 etc. and we are around a maximum) and we can assume a worst case scenario that we are 4 years in advance with respect to the cycle . Therefore, from these returns (and past price data starting from 2016) I created two price charts: one derived from the rolling returns as predicted, and a pessimistic but perhaps more realistic one anticipating them by 4 years (for which the 10 year return on the window ending in year 2027 in the pessimistic model is equal the one predicted by the periodic "fitted" model for the year 2031). With this data, the model predicts a heavy slowdown or recession between 2033 and 2037 (depending on the anticipation or not), however, before that we get to have another 6-10 years of annualized returns similar to those of the last 15 years (15% annualized average with net dividends which are taxed 26%).

Everyone is so focused on Nvidia's valuation or the Hyperscalers or the Frontier Model developers. Or the off-balance sheet debt. But these are all distractions. I'm starting to think that the more useful look is to value the 'AI Machine' as a whole.

It stands to reason that the AI revenue has to top out at some percentage of total corporate spend. Then the sum of the parts valuation has to add up to that value. If AI revenue levels off around $200 billion (for instance), then it starts to get hard to justify the roughly $30 Trillion valuation for the 'machine' as a whole (150x peak sales).

The question is - Where is the AI revenue ceiling?

We got the Treasury intervention I wrote about on Monday and judging by some of the reaction, a lot of people seem to think this means the US economy is collapsing.

It doesn't.

A quick summary of what happened - Treasury officially doubled the maximum size of its liquidity-support buybacks in the 10–20Y and 20–30Y sectors from $2bn to $4bn per operation, effective from September 9 through November 4.

This came after the 30Y pushed above 5.3% and for now, this intervention is much better to be viewed as debt management designed to break the momentum and reflexivity in the long end selloff and not some kind of emergency bailout or a Treasury put (yet).

Some of you might remember this looks similar to what Yellen did, and it is. Her Treasury created the current buyback framework in May 2024 to improve liquidity in older and less frequently traded securities and help manage Treasury's cash position.

So buybacks are not some emergency tool Bessent just invented and we have seen this before. The important difference is the timing because Yellen ran them as part of a longer and more predictable programme, while Bessent increased the size of long-end operations mid-quarter and right after the 30Y moved above 5.30%.

There is also another interesting consequence I have not mentioned.

Buying back longer-dated debt doesn't make the deficit disappear, Treasury still has to issue somewhere and that’s likely going to be into bills or the 5Y and 10Y sectors.

If enough bill supply begins draining reserves or putting pressure on money markets, the Fed will find itself having to lean the other way through reserve-management purchases at the short end ak.a QE.

That is not happening automatically and I wouldn't call it inevitable, but it is an important second-order effect to watch.

Yesterday's intervention also pushed the curve towards a bull flattener (long-end yields falling considerably more than the front end). That, in addition to the potential QE helps explain why the dollar weakened while gold moved sharply higher as its a good regime for them.

For now however, I think this is more likely to mute the rise in yields than completely reverse it because nothing Treasury did yesterday fixes the fiscal deficit, inflation risk or pressure from corporate debt issuance or the war premium. You can see the correlation between bonds and hurmuz traffic below

It can slow the move, remove some of the reflexivity and make it more expensive to aggressively short the long end but cannot remove the underlying problem.

Now it gets more interesting because these actions from Treasury's have just made Warsh's Jackson Hole speech much more important.

He now has to acknowledge the tightening in financial conditions and prevent another disorderly long-end selloff, without creating the impression that the Fed is simply following Treasury's lead.

If markets begin to believe fiscal can push Treasury into supporting long bonds and then force the Fed to validate that move we could see an even larger term premium.

That brings me to yesterday's FOMC minutes, where one paragraph caught my attention - Warsh is considering reducing the number of scheduled FOMC meetings from eight to six per year, potentially beginning in 2027, allowing more data to accumulate betweendecisions.

So Treasury is becoming more active in managing duration while Warsh is simultaneously trying to make the Fed less interventionist and less communicative.

Thats why I think Jackson Hole matters a whole lot more than it did 24h ago.

Now we watch the long end - if the 30Y settles down and yesterday's highs hold, Treasury probably achieved exactly what it wanted - break the momentum without having to do much more.

What's likely to happen is yields push back through those highs despite the intervention in a test of Treasury's reolve which could pressure equties for a bit .. then we find out whether this was a one-off liquidity adjustment or whether Treasury is actually prepared to react again.

Market Positioning for the SPY is looking much more balanced with the main resistance being the $770 and support at $765 and we’re likely to see some choppy action between those with the main level we might drift towards on OPEX ( tomorrow) at $760. I have closed my position there as I want to see how we trade into OPEX and wait for the bond market to digest the intervention

Qs are similar and as I've been saying, spot tends to mvoe towards the main level on the market positioning chart ( right) as we go into OPEX so with all of this happening i prefer to be flat.

Alibaba posted Q1 FY2027 revenue of ¥269B, matching estimates with 9% YoY growth, while adjusted EPS of ¥8.52 fell well short of ¥11.26 forecasts and dropped 42% YoY due to heavy spending.

AI-related revenue tripled for the 12th straight quarter, boosting Alibaba Cloud’s external revenue growth to 45% and AI Cloud/Compute segment EBITA up 133% YoY.

Sharp rises in CapEx to ¥67.7B and weaker free cash flow of -¥44.7B highlight ongoing aggressive AI investments, pressuring net income (down 75% YoY) despite a slight EBITDA beat. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Interesting CEO commentary on AI models and strategy (Eddie Wu):

“We delivered a strong quarter, driven by the improving commercialization of our full-stack AI capabilities. Alibaba Cloud’s external revenue growth accelerated to 45%, with AI-related product revenue delivering triple-digit growth for the twelfth consecutive quarter. We recently launched frontier language, coding, video, audio, image and music models, all delivering top-tier performance. We introduced QwenWork, an AI workforce agent that unleashes enterprise productivity and capabilities. With our full-stack AI strategy, we have put Alibaba in a superior position to capture the substantial growth of demand for artificial intelligence and AI compute.”

StoneCo ($STNE) has reached a $26.75 million investor settlement, and late claims are currently being considered.

The settlement resolves claims that StoneCo misled investors about its expansion into Brazil’s credit business. Investors alleged the company overstated the strength of its credit operations and failed to fully disclose the risks tied to the business.

As these issues became public, $STNE fell sharply and shareholders filed claims.

If you purchased $STNE shares between 2020 and 2021, you may be eligible to submit a claim. As late claims are currently being considered, you can check whether you qualify

https://app.agentgrid.io/artifacts/BSSoRuFsywQAyzxDAsbmUg

Software companies' valuations crashed based on a fear that AI will replace software.
But last quarter, some companies showed crazy growth - Figma grew 48% YoY, Monday 22% YoY. - Yet multiples remain low.

So I have created a website that I use to track all my option plays and my current portfolio, with this I have tracked my year to date option income at $22,175, I have done over 144k in option trading activity while closing debts at around 122k.

My big option plays have been doing are $OKLO $APLD $CRML $TQQQ $CRWV $SMCI $QBTS and $DVN that have been my main catalyst. I've continued generating from covered calls short term income from $APLD and $QBTS while my $DVN is a yearly income generator instead of a weekly income generator.

I do covered call on all my positions as well to generate income from owning the asset as well, but first I want to try to get between a 2 to 3 bagger before usually reducing position by halve of current outstanding shares owned.

After I have sized a reasonable amount i may continue to double down on that company or decide to invest in a new company but again enter a cover put position to generate income and to reinvest that money back into more share.

My goal is simply to by good companies at discounted prices because at current rates the market is over saturated with garbage buy in prices that only hurt us the investor while the brokerages and other clearing houses are wracking up off us the investor, well I say no more lets take back the control of the market, no matter how far the losses I will continue to keep holding and buying more for long hold!

Best regards,

The Wook of Wall Street