masenko retweeted
🎯🎯🎯🎯🎯🎯🎯🎯🎯🎯🎯Wooow… now the FT is saying what I was saying in March about Hormuz, and what I said last year about Greenland — then repeated when I linked Greenland and Panama Canal and the Red Sea to Hormuz. @ErikSTownsend might recall all those discussions we had on @MacroVoices. My subscribers and all those attended my keynote speeches would remember all the details.
What I said then was extremely unpopular. Now it is mainstream.
Rana Foroohar argues in the FT article that Washington and Beijing are in a modern “Great Game,” like Britain and Russia in the 19th century. Both sides prefer to get to a territory, chokepoint or alliance first rather than fight each other directly. She calls this a “forward strategy”: it avoids outright war between the two powers, but it produces intrigues, minor battles and proxy fights.
In that frame she groups three flashpoints together: “The war in Ukraine, the weaponisation of the Strait of Hormuz and the simmering tensions over Taiwan are all part and parcel of the new Great Game.” Hormuz is treated as one of those peripheral contests — a chokepoint being used as leverage — not as a direct US–China battlefield.
As for Greenland, the map below is from the same article. I said Greenland’s resources are not worth the effort, but the trade routes are. Control of the Panama Canal, the Red Sea, Hormuz, and Greenland are all related.
masenko retweeted
🚨 Japan Just Broke The French Bond Market
One Tokyo fund (Sumitomo Mitsui DS) didn’t trim exposure. It dumped every French government bond it held and rotated into German Bunds and short-term Japanese paper.
Not a reduction. Full exit. Something that even shocked the Financial Street.
The France-Germany 10-year spread blew past 140 basis points, the widest gap since the euro crisis.
France's 5-year CDS has spiked up to 81 basis points, the highest since 2013. The higher the number, the greater the risk of national bankruptcy.
French domestic holders are now facing a deeper mark-to-market loss and a less liquid exit to sell into the same one-way market.
Japanese investors still sit on roughly ¥25 trillion of French debt, second only to American holders and this was a single manager’s book.
Carry trades that funded higher-yielding global debt market with cheap yen just got a live demo of how fast the unwind can hit.
When the bid from Japan disappears, the largest European sovereign market has to find new buyers at the same time its own government is arguing over a deficit plan that markets already distrust.
If more Japanese money follows the same exit, the same flow that once compressed euro spreads can reprice them in the other direction.
We now understand what @yutokanzakireal meant by saying “Japan is bringing the entire house down” in response to Scott Bessent’s “I am the house now” statement:
Ending cheap-yen funding is forcing a margin call on the leveraged global debt system built on the carry trade and not just the U.S. leverage.
France just got the first real look at what Japan’s wealth returning to the homeland looks like.
masenko retweeted
Isn’t it cute that Canada wants to become an EU associate member, and the current UK government keeps talking about rejoining? Let’s look at where the main European countries stand. Shall we?
1. People are slowly realizing France today is Greece in 2011. French debt/GDP is 119%, Greece’s was 126% just before the first euro crisis. Even the smallest reform attempts trigger fierce French union resistance and strikes. French communists poll well, their program would bankrupt a solid country, let alone one heading into a debt crisis. Le Pen’s Front National seriously talks of lowering France’s retirement age, already among the lowest in the developed world. France is a train wreck in slow motion.
2. Germany is a case study in self-sabotaging a manufacturing powerhouse. Hardly a week passes without a major layoff or bankruptcy. The left-green ideology decision to close perfectly fine nuclear plants choked German industry, and will enter the history books. Chinese competition is wiping out one traditional German company after another. Grotesque regulations, bureaucracy, reforms resistance and overtaxation finish the job.
3. Spain looks more or less stable at first glance, tourism helps float the boat. Letting in hundreds of thousands of illegal immigrants yearly will eventually sink it. The foreign-born population is 20% but accounts for about 80% of new unemployment-benefit registrations. Watch what this does to Spanish finances.
4. Italy under Meloni is fine for now, but she faces pressure from populists to her right. France’s fiscal debacle also lifts Italian bond yields, with Italian debt/GDP at 138%, the implications are clear.
Otherwise, Europe is fine. Clearly time to rejoin.
masenko retweeted
Rates trading like it is 2022.
Credit trading like it is 2007.
Equities trading like it is 1999.
interesting.
masenko retweeted
There's your signal.
[RTRS] - RBA GOV BULLOCK: UNEMPLOYMENT OF 4.5% TO 5.0% WOULD PROBABLY EASE PRESSURE ON INFLATION
1:2 on EUR/GBP. Still some time before EUR goes back to neutral & GBP still weak even though fiscal sentiment is improving on oil and long yields dropping simultaneously
“The ECB's hawkish hold-the-door-open stance is being tested by accelerating producer prices and resilient-
manufacturing, but French fiscal risk is now the dominant concern as the 2027 budget faces parliamentary gridlock and rating downgrade threats. September PMI data on 23 September and ECB speakers this week will determine whether the inflation repricing narrative holds or whether-
masenko retweeted
🚨 🇫🇷 🇩🇪 The France-Germany 10-year spread is now close to 100 basis points, its highest level since 2012. Not a sovereign debt crisis yet but markets are starting to treat French risk as a structural issue.
🇫🇷 Back on 2012, investors were questioning whether some countries could leave the euro or restructure their debt. Today, markets are not pricing a French default but a deficit higher than 5% of GDP, a debt that keeps rising, and a political system struggling to credibly correct the fiscal trajectory.
📈 The problem is not only the spread but also the absolute level of rates. When the German Bund was around 0%, a French spread of 50 or 80 basis points was relatively painless. Today, France is borrowing at more than 4.5% over 10 years. Debt previously issued at 0%, 1% or 2% will gradually have to be refinanced at much higher rates. Not an immediate shock because the average maturity of French debt is long (around 8 years) but it creates a form of progressive fiscal suffocation with more interest payments, less room for everything else, so more taxes or spending cuts are required.
🛢️ The current rise in oil prices is accelerating the French problem. Higher energy prices mean more inflation, a more restrictive ECB, higher long-term yields and weaker growth. For France, this means slower growth, weaker tax revenues and higher financing costs.
🗳️ Then there is the 2027 election. Who will actually have the political capacity to reduce the deficit ? Raising taxes significantly looks difficult, cutting spending materially is politically uneasy, and political instability makes the adjustment even harder. As long as markets do not see a credible fiscal path, the French risk premium can remain elevated and even rise further.
France is not in a debt crisis today but markets have started making it pay for its fiscal imbalances.
*Bloomberg link: bloomberg.com/news/articles/…
masenko retweeted
France is bust. Anyone not acknowledging this is kidding himself, especially the Japanese sitting on a pile of toxic waste. Deficit is drifting higher structurally in the absence of an inversion to the demographic dynamic (impossible) or a pension overhaul (equally impossible)
masenko retweeted
“We get influencers to sell bonds”
Great to welcome @jakepaul to the Treasury Department today.
Jake’s path from content creator to entrepreneur and professional boxer is a distinctly American story. 🇺🇸🇺🇸🇺🇸
masenko retweeted
Saudis Tell European Refiners They’ll Get No Crude Next Month
Saudi Aramco told at least two oil refining customers in Europe that they will be allocated no crude oil next month after the kingdom’s key pipeline to the Red Sea was attacked, people informed of the decision said.
European customers normally receive Saudi Arabian crude on so-called term contracts, ensuring a steady flow of supply every month. Those deliveries will not take place next month, the people said, asking not to be identified because the information isn’t public. The decision applies to all European buyers, they said. (Bloomberg)
