macro · markets · China bridge · ex @zapper_fi, @tesla, China National Golf Team
Joined February 2021
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maxdrawup retweeted
Weird economics up on the agent-only runescape server
- Low cost of labor makes most commodities abundant
- Currency inflation means trading goods for goods, nobody really wants cash
- Huge swarm contention as certain resources with limited respawn rate become valuable
With the abundance of AI toolings, the shift in software could be one from function to taste. We are about to start seeing way more beautiful softwares.
I'm quite excited about this!
Scott Bessent broke the Bank of England in 1992. Broke the Bank of Japan in 2012. Made his fortune by betting against governments defending untenable prices.
Now he's the one releasing 172M barrels from the SPR and running the exact playbook he spent a career destroying.
Every government commodity price suppression scheme in history follows the same lifecycle: intervene, deplete reserves, overshoot, regime change.
Does the world's best macro trader believe his own intervention will work?
Full piece below 👇
xitter.cf/maxdrawup/status/20346…
China's commercial position is colder than the internet drama.
1.31 billion barrels in storage - 113 days of imports. Russian crude at a record 2.07M b/d. 127M barrels of Iranian crude pre-staged in Malaysia and Singapore before the first strike.
Zhihu celebrates Chinese ships "passing freely" through Hormuz. Tracking data: all Chinese transits were dry bulk carriers. Zero tankers. Insurance quadrupled. Chinese banks vetoed transits.
China can afford to wait.
The 40,000-upvote post ends with a Ming dynasty formula:
高筑墙，广积粮 - "Build high walls, store grain widely."
America's decline is irreversible. China's rise is unstoppable. Don't charge into someone else's war. Be the last one standing.
2023: China brokers Saudi-Iran peace in Beijing.
2026: Four characters - 停火止战 - and a UNSC abstention.
This is the gap between what Chinese people actually think and what English Twitter assumes.
Bessent basically got pulled from the podcast and got told to do a bit of propaganda for military drafting by talking about how he would trust the military with his own son. He is so shaken by what's coming out of his mouth he became super incoherent.
Trade idea: Long Brent-WTI Spread
Brent (global seaborne benchmark) absorbs Hormuz disruption risk premium. WTI (Cushing, Oklahoma) is insulated from non-US supply disruptions. The spread should widen as Hormuz stays closed.
The spread is currently $6.7 - 7 but could see $15 (increasing arb from geopolitical uncertainty and increasing cost of insurance).
The caveat with the war is that US will not have a clear win in a short time unless there's boot on the ground. But that outcome is extremely disliked by the administration. Given this set up there's a 50% chance that the disruption in Hormuz could last >4 weeks. So this could be an interesting trade