𝚌𝚘𝚗𝚜𝚎𝚗𝚜𝚞𝚜 𝚑𝚊𝚕𝚕𝚞𝚌𝚒𝚗𝚊𝚝𝚒𝚘𝚗.

fourteen basis points. that’s the kind of move that gets treated like prophecy on financial television, dressed up with solemn voices and “sticky inflation” metaphors. i'm not buying it. from an apocalypse now rant delivered with a trader’s eye, i lay out a brutal macro investing filter: markets don’t move because someone “figured it out” they move because people act, react, and mis-price risk inside a chaotic system. if you want clarity, you need distance from the noise and a refusal to outsource judgement to institutions that keep revising their story after the fact.

i dig into the federal reserve meeting, the obsession with decimal points, and why wall street can’t admit when nothing has happened. the ten-year us treasury yield becomes the lie detector. if bonds barely move, the “big” data is often just theatre designed to keep trading active and fees flowing. we also pick apart inflation data like ppi, not to worship the numbers, but to show how over-zooming turns randomness into false urgency.

then i take the same lens to china. when industrial production and retail sales are labelled as beats, the narrative machine instantly declares “china is back”. my response is simpler: show me the yield. if china’s ten-year yield stays below 2%, the bond market is signalling deflationary drag and fragile confidence, not a clean growth comeback. i close with the real-world stakes of this abstraction and the one takeaway i keep coming back to: watch price, watch behaviour, ignore the rest.

if this sharpened your thinking, subscribe, share the episode with a friend who loves macro takes, and leave a review. what’s your personal “truth test” market price that you trust more than headlines?

Transcript

𝚙𝚛𝚎𝚏𝚊𝚌𝚎.

SPEAKER_01 0:00

Boom, ladies and gentlemen. The acid capitalist. It is I. It is Wendy. It is Hugh Hendry. I'm at the Ghetto. I'm in St. Bart's. And you know, I'm feeling good. Having a wonderful time. You wouldn't think so, because this is a bit of a a Grinch piece, but let's have a go. You see, I didn't. I didn't write this. I didn't write this paper to explain the market. I wrote it because I've lived. I've lived a long time and I've lived inside this thing long enough to know. To know what it isn't. You see, for decades I've sat at the crossroads with a macro narrative. Where it gets made. And I've watched I've watched a lot of numbers hit the Bloomberg screen. I've watched quite frankly, I've watched grown men attach meaning to nothing. I've watched careers built on sounding certain about things that just are not. Me, I've watched I feel like the I feel like the uh the drone, what's it called? The robot in Blade Runner 1 at the end. I've seen the I've seen the moons of Ori Ori Orion back on planet Earth. I've watched Phantom Cycles come and go. I've seen confidence rise and competence fall. But one thing never changes, and that's the markets need to pretend. So you see, this is not a forecasting guide, it's a rejection of the idea that Wall Street forecasting works. Far from it. Now call it a rant if you want. Call me a spook. I mean, call me whatever you want. I don't care. But if you do listen closely. God, I've got traffic pass. If you do listen closely, this is a macro I think this is a macro teach in. It's a trader's way of seeing. This is not meant to rhyme. Because markets markets don't move because somebody's figured them out. They move because people act, react, and they misprice risk. Inside a system that's way more chaotic than anyone cares to admit. And you know the closer you stand to the noise. The closer you stand to the noise, the more convincing the illusion it actually becomes. So believe me, when I say distance distance is clarity. So what am I saying? Don't use do not use this as a script. Use it as a kind of form of filter.

SPEAKER_00 3:59

What do I mean by that? That's a damn good question.

𝚗𝚎𝚟𝚎𝚛 𝚎𝚗𝚍𝚒𝚗𝚐 𝚖𝚊𝚌𝚛𝚘 𝚌𝚒𝚛𝚌𝚞𝚜.

𝚝𝚑𝚎𝚢 𝚌𝚊𝚕𝚕 𝚝𝚑𝚒𝚜 𝚜𝚒𝚐𝚗𝚊𝚕.

𝚏𝚘𝚞𝚛𝚝𝚎𝚎𝚗 𝚋𝚊𝚜𝚒𝚜 𝚙𝚘𝚒𝚗𝚝𝚜.

SPEAKER_01 4:02

I mean let me think this is a head scratcher. When you hear certainty, question it. When you see importance attached to decimal fucking points, step back. When they tell you something matters, ask well what actually moved? You know that dial? What moved? Ask. Ask, ask. But ask the only question that like really counts. Did did prices did bond prices change materially? Miss Miss, I've got a question. Because if they didn't nothing happened. I like that the hard way. So you don't have to. Okay. So much for a pre dust prefaces and podcasts. Let's start. Let's get rowdy. Let's do some vulgarity. Cause I want to say fuck this never-ending macro circus. You see, I I step away long enough to melt my brain. I do it once a year for my my B day, my birthday. I'm not going to talk about my birthday again. And I come back expecting revelation. I've got to say more foo me. Because nothing fucking changes. It's the same traveling theatre of I call it banality. It's the same well-paid organ grinders, the same numbers stitched together in a haphazard manner and sold as meaning. When nothing changes except the narration and the clowns narrating it. And you know what? I I feel cheap and bloody stupid for having expected anything. Anything else? So let's start with last week. God knows when last week was. Oh yeah, last week started on my birthday Monday the 16th. The street. The street. The goons insist on calling it a really fucking important week. You see, we had the Federal Open Markets Committee. We had the the the bosses. The high disciples of the financial system, the governors of the Federal Reserve. And they met last Wednesday. I was none the wiser. But they left rates unchanged at kind of let's call it 3.8%. That would be the mid-range. It was fully telegraphed. It was fully staged. Now what they did was like that's a great idea. It's all about growth and inflation. You want less inflation and more growth. There's a million definitions of inflation. The Fed, they love this thing called the P, the C, the E, the Peter, the Charlie, the Eddie. I've given up even price composite. I don't know. I'm sure you know better than me. Anyway, shock, horror. They so you know we want inflation down, we want growth up. Well, they gave us, they increased their forecast for inflation from 2.4 to 2.7. Shock, horror. And but to avail, if you will, the sense of shock and horror, they lifted their expectation for how fast the American economy, we call that GDP, gross domestic product, they now think it's going to grow a bit faster. They had originally thought 2.3, and now they're thinking 2.4. And that's it. That's it. That's the entire event. This really important event, that's it. Dressed up as insight. They call this signal. I call them wankers. Translation is it's it's not complicated. In real life, inflation is, you know what, it's not under control. And growth, you know what? It's not collapsing. Everything, everything is not under control. And the growth, the growth is just upsy downsy, come see, come sa, as my French friends say. The data is drifting. It's it's it's like my life. I'm sure it's a bit like your life. It's messy at times, it's chaotic, it's a weather system, it's the ocean currents shaped by forces. Nobody in the room can properly model or consistently model. And yet they stand there in their expansive suits with their forecast like medieval priests reading smoke circles, insisting they can see the future when they can't. When nobody fucking can. Maybe me, maybe just I get a glimpse of it sometimes. And that's the that's the only honest, honest statement in macro. I mean, not he's seeing the future. The only honest statement is nobody fucking can see the future. You've got to design a time machine, perhaps. Maybe the Chinese will. Now, as I hear my French neighbours garble something in French, are they saying 14? 14 is the French number for 14.14. 14 basis points. Remember that. What am I talking about? Well, you see, after the event of last week, the Federal Reserve meeting and how they changed you, like it's like the the Cardinals voting for a new Pope. The white smoke showed that GDP estimates had marginally been increased, and inflation estimates had taken a bit of a larger increase to the upside. The net of all that was the US 10-year government bond yield. It drifted. That's my word, drifted, it's not their word. It moved from roughly 4.25% to 4.39. Oh my god, I'm quoting numbers to two decimal points. This is what happens when you stare at your screen. Anyway, I had to use the two decimal points because that movement is 14. That number again, 14 basis points. 14, 14, 14. Do you know what? Do you know what basis point is? Anyone, anyone, anyone? It's one hundredth of one percent. So we're talking about fourteen one hundredths of one percent. I call that an eyelash. I call that a rounding error. Something you would ignore in any real enterprise though where actual capital was at risk, where grown-ups were in charge. But in this Disney matrix world, they inflate one eyelash into a revelation. Grown men, not in mouse ears, but in exp maybe they do have mouse ears in expensive suits. They lower their voice solemnly and they talk about repricing the red puff as if 14 fucking basis points carries philosophical weight. It doesn't. It's triviality dressed up as importance. I don't know. This is the trick, not the move. It's how you narrate the move. And the smaller, and this was a really a very small move, the more theatrical the explanation. Because the system quite simply cannot admit that nothing happened. If nothing happened, there's nothing to sell, there's nothing to trade, there's nothing to justify the salaries and the bonuses of the guys in the suits. And so they they take noise. It's like a can, they take noise and they elevate it into signal because they have to. Now I see it. I see what they're doing, I see the trickery, their sleight of hand. And believe me, once you see it, oh my god, you can't unsee it.

SPEAKER_00 13:34

And this is the scam.

𝚌𝚑𝚊𝚘𝚜 𝚍𝚘𝚎𝚜𝚗’𝚝 𝚘𝚋𝚎𝚢.

SPEAKER_01 13:39

Thankfully, chaos, my good friend, chaos doesn't obey what am I talking about? So there was another inflation data point, the PPI, the producer price index. And so this is the rate of change in prices in intermediate goods, like in manufactured goods, like before they transition into final goods, before they're on your shelf in the supermarket. And the producer price index, well, the headline figure, prices, again, remember this is before they hit your supermarket, rose 2.8%. Now, if you strip out things that move a lot, kind of a bit a bit crazy, like food prices, maybe the core was 2.6, up 2.6%. And if we just zoom into goods, so goods not services, it was 3.1%. And again, remember, the lesson here is not necessarily the number, but it's the behavior of the system. The more chaotic it becomes, that's what you look out for. You see, you zoom in on the tide and this turbulence, its eddies, its unpredictability is apparent. You zoom out and it appears smooth. And macro is no different. You mirror, mirror on the wall. If you ask mirror, mirror on the wall, who's the prettiest? Who's the smartest of them all? If you ask it every damn second of the day, it's gonna say, yes, no, you or some other person, yes, no, yes, no, no, no, no, yes, yes, yes, no signal. If you ask it once a year, it's gonna say yes. Or it depends on the person might say no. But do you see what I mean? Zoom out and it appears smooth.

SPEAKER_00 15:57

Smooth like a signal. But of course my dear friends on Wall Street, they stare at the damn thing.

SPEAKER_01 16:13

They and they they stare at it tick by tick by tick. I mean I look at still haven't done that chart exercise, haven't published it. We looked at the 500 companies that comprise the standard and poor standard and poor as 500. And we looked at quarterly data, data stretching back in some instances to the early 1970s. I think we were looking at we're looking at a lot of data. These people are tick, tick, tick, like every nanosecond. Decimal by decimal. Two standard deviation by two standard deviation. And then the They're surprised that their system refuses to obey linear models.

SPEAKER_00 17:08

Of course it refuses. Reality doesn't collide. It doesn't converge. Does it converge neatly to targets defined in Wall Street's lush and plush?

SPEAKER_01 17:31

A lot of onomatopea, I believe. Does it converge to targets conceived of in conference rooms? In invest banks. Nah, instead it goes, fuck you, fuck you, Jimmy. Do you hear the wind? I don't know if you hear that. Data it it lurches, it bites, it scratches, it damn ignores them all. I love the data. And because they can't accept that that they are actually in the scheme of things, they don't matter. They are insignificant. But because they can't they can't call that they resort to metaphor. I swear to god, I think it was CMBC. And the saying was, it's another what was it? It's it's another brick in the sticky inflation wall.

SPEAKER_00 18:33

Makes me angry.

SPEAKER_01 18:36

What the hell? Can can you tell me please, what the hell is a tricky brick? A tricky, not a sticky brick. Is it wet? Is it alive? Is it climbing something? And seriously, are they no?

SPEAKER_00 18:56

Are they fucking with pink flound?

𝚜𝚑𝚘𝚠 𝚖𝚎 𝚝𝚑𝚎 𝚢𝚒𝚎𝚕𝚍.

SPEAKER_01 19:01

I mean this is what passes for analysis. A child's really bad metaphor standing in for some diligent macro understanding. Cause if you need bad fucking poetry to explain your data, you just don't understand your data. Now the next section which takes us to China is entitled Just Show Me, not the money, it's kind of the same thing. Show me the yield. Let me explain. China reported. China had a big day. This is Thursday going into Friday. Monday of this week. The week after my birthday. China reported industrial production year over year up 5.1%. Retail sales year over year up 4.2%. Fixed asset investment year over year up 4.1%. All labelled as beats. And instantly the narrative machine, it flips. China is back. China's stimulus is working. And commodities, they were bent, people were buying them, they were up on the day.

SPEAKER_00 20:28

Except I have.

SPEAKER_01 20:40

Childlike in the simplicity. And the rule is show me the yield. Show me the fucking money. Forgive my vulgarity. Like, mm, the straits of hormoose with oil at a hundred bucks a barrel. If they're if their 10-year government bond yield, if it's still sitting below 2%, nobody with any ounce of intelligence believes the story. Chinese system is still trapped in deflationary sludge. They're trudging through sludge. Wilfred on from the first world war. I'm talking about China is dealing with deflationary sludge, but they're dressing it up as growth. How do I know that? I'm actually looking at a chart. Maybe will I share it with you? Will I won? Will I will I will I won? You know, about a year ago, the the authorities, the commies over there, they started lobbying like juicy bombs at the at the tape and the screens of Bloomberg saying, hey, over here. Over here, like we get it, we're sorry. We want we want our asset prices to go up. And we're gonna do everything, we're gonna stimulate. And they had to do something because the 10-year Chinese bond yield, I think, got down to about 1.6% when it was vying with Japan. Japan, it's not a good indicator, as the lowest 10-year yields. So since then, they've stopped the price of their government bonds going up. Because they don't like the price is being bit up because risk takers globally and within China are terrified. Property prices, everything's overvalued, so much leverage, very little, very lots of jobs, very little profit in the system.

SPEAKER_00 23:05

A stock market which has done nothing in yeah, like this century.

SPEAKER_01 23:18

And the credibility of this then really is what happens next with the 10-year treasury yield. And what I can tell you is it's kind of your yod? Can I say is your word? Your yod, I think I want to say. Kind of 155 low, like 190, 1.9% high yield, 160 low yield, like 190 high yield, but less than 2%. At my point, you know, when the GDP, retail sales, fixed asset investment, about four or five percent. I'm like, I'll fall asleep. I'm like, you know what, guys, call me when it tr when the yield trades through two percent. Kinda easy, right? But until then, it's all Jack and Nori, you're telling me a story at state, is call me propaganda.

SPEAKER_00 24:23

I got I got nothing to do with propaganda.

SPEAKER_01 24:34

Am I going existential when I say decay doesn't scream? Maybe. What I'm getting at, what I'm digging at is that the rest of this week was kind of f and and the the week before was it was like filler, pretending to be substance. You know, it's like that orange tangerine you get in your stocking that you hang over the Christmas fire. It's like it's a sweet tangerine, but you know, you're waiting for the big deal. Tangerines and the data we got weren't really in the the big deal. We got Empire State, which is kind of industrial activity within the New York State. It was weak. We got ADP, which is it's it's a private sector indicator on labor market employment, and it's a little bit floppish, a little bit soft. Housing data was fragile. It's okay, but it was fragile. And the unemployment claims were steady. Nothing broke, nothing healed. The system just kind of lingered. And this this is the point. This is the danger point where most people lose their their footing because we all want resolution. We want a crash, a boom, we want a reason to turn the page. Something clean, a clean cue. I always give me a clean kill. You know, give me the SP of Nasdaq down 20-25%, and then we'll buy it and we'll make new eyes.

SPEAKER_00 26:18

And of course, what we get instead with life is a mess.

SPEAKER_01 26:25

Inflation kind of hanging around as you just thought it. Growth kind of like leaking energy. Certainly no regime shift. That'd be a kill. Just a slow daily grind that defies the narrative but sustains the illusion that the story still matters when it doesn't. Soft landing. It's not a forecast. It's product that's sold to you. It's something they keep selling to you because they have to. It's expensive running a Wall Street bank. Same with disinflation is on autopilot. That's not the Microsoft AI, that's just like disinflation's coming down predictably. That's a fantasy. Prices do not drift obediently back to 2% targets. They are mad. Or boom. Did I just make funny noises that were indicating the direction of travel for inflation? Maybe. The noises or the the these stories, the Wall Street titles to grown men, of course they were never real. They just do you know what? They sounded good in a research note. Everyone went, we can make money on that. With the first call, the best call, the last call, just don't call. I like chaos. My life is chaotic. I like that. And they convince themselves that it's that that world is predictable. Like weather forecasts, like occasionally they'll get they'll be accurate, and then they're like, we control the weather.

𝚊𝚋𝚘𝚟𝚎 𝚏𝚒𝚏𝚝𝚢, 𝚋𝚎𝚕𝚘𝚠 𝚛𝚎𝚊𝚕𝚒𝚝𝚢.

SPEAKER_00 28:34

They're not scientists, they're believers. Well, I mean, there was a lot of data.

SPEAKER_01 28:45

We got purchasing manager indices for manufacturing. I'm not gonna do I'm not doing a decimal point. 52 services, 51. The composite was 51. Do you notice the commonality across those three? They were all above 50. So the surface, the narrative again, the story remains un intact. Why? Because when you go below 50, you're actually it's an indicating, it's an indicator of contraction. Nothing contracted. Cops, but nothing contracted. Service is slowing. Demand weakening. And these are kind of observations you can draw from that data. Employment. Employment actually fell for the first time in over a year. It was kind of like a red flag. Costs are rising. Did anyone say the straits are forms? Prices are rising. Did anyone say Iran's ballistic ballistic missile emissions are down 90%, maybe, but oil prices are rising. Confidence, I mean confidence has been fading over a very long time. It's called singularity. Of course, that really doesn't sound like economic strength. It sounds more like a system kind of losing momentum, but definitely refusing to kind of face plan and collapse. To that point, the Q1, fast tracking GDP, is looking at that it's going to come in 1 to 1.3. Same story. Not enough weakness to trigger a panic. Not enough strength to justify being wildly bullish. Just enough to keep everyone stuck in the middle. I'm stuck in the middle with you.

𝚗𝚘 𝚖𝚘𝚟𝚎, 𝚗𝚘 𝚖𝚎𝚊𝚗𝚒𝚗𝚐.

SPEAKER_00 30:51

I've got you know jokers to the left of me, I've got idiots to the right. And you know, the the farce completes itself.

SPEAKER_01 31:02

I think it was Tuesday. Durable goods. Durable goods didn't even bother to show up. Postponed. Even the data is embarrassed. It can't be bothered to attend its own performance travesty, if you will. It's like durable goods are there. I can't, I can't bear, I can't bear. Please don't measure me with two decimal points. Instead, again, we got fluff, we got import prices, they were up 1.3. We got export prices, they were up 1.5, 1.5. Actually, trade inflation, the pressure, quietly building, but 1.3, 1.5. It's way below headline, headline inflation. We did get the current account. Yeah, so that's principally it's trade flows and then capital flows, typically offsetting capital flows. And the deficit, America's run a deficit since it came off the gold standard in 1970. This deficit was small. It was as small as it was during COVID, the twilight years of COVID, but like when we stopped trading.

SPEAKER_00 32:25

Um the deficit, of course, would become very small.

𝚔𝚒𝚍𝚜 𝚠𝚒𝚝𝚑 𝚐𝚞𝚗𝚜.

𝚊𝚕𝚠𝚊𝚢𝚜 𝚕𝚊𝚝𝚎, 𝚊𝚕𝚠𝚊𝚢𝚜 𝚌𝚎𝚛𝚝𝚊𝚒𝚗.

𝚒 𝚠𝚊𝚝𝚌𝚑 𝚙𝚛𝚒𝚌𝚎.

𝚝𝚑𝚎 𝚘𝚞𝚝𝚛𝚘.

SPEAKER_01 32:36

So mmm, and yeah, but Marcus, by this point, Marcus will like mean like barely moving. This shit doesn't resolve anything. Just adds more inputs into a machine. It's meant to be a weighing machine, but it exists really to produce motion, not truth. Data Economic data. Are you listening? Have you fallen asleep? It's okay. I'm falling asleep, I'm going to bed. Macro data in the hands of Wall Street. It exists to keep asset prices moving. Up, down, up, down, up, down, up, down. The suits get paid. Transforming this noise into storytelling. Storytelling into fees. It's like Hollywood. That's why we need kids with guns. Are you playing that? Oh my god. Pete Tanning, wonderful friend. Artist in residence in Winwood. I was in Miami. And Steve. Steve, not Steve. Uh Pete picked me up and some friends. Sunday night. Came out of a an uber, uber black SUV. And we jumped into his. It's like a a golf cart which has been transformed into a ladybug or a love bug. He's got his big translucent lit-up um wings. And Pete plays really good music and he drives really, really fast. And I smiled. I smiled a lot. Why am I telling you that? Kids with guns. The kids. Kids, I don't know, like in your 30s. And you own nothing, you're the disenfranchised, struggling to get a um to to get an edge or a ledge to own something. To build wealth. You've got no claim on the economic system that's supposedly all these data points are coming from. And yet, as you know, you're that consumer confidence sentiment, which is not high. And it's because AI is coming for your job, your career, your sense of meaning. So imagine, and I this is for my rage. Imagine that's kind of this inevitability almost, and yet you've got well-paid financial clowns debating decimal points. Not even hundreds of one percentage points. It's this as though this is where the future is decided. What can I say to you? That is fucking criminal. And when when this market, when any market breaks, because systems systems built on this kind of abstraction, they they break. Higher, lower, I really don't think it matters. But the same people who construct this fantasy, who just defend this nonsense, they'll be bailed out. But not the kids. The kids will get the bill in the future. They always do. Disenfranchised kids need guns. We were playing as well. I was talking about Pete Pete. Pete Tunny. One of my favorite songs is Is it Paper Planes Flying Paper Planes? MIE. It has this great sequence where it has explosive guns. Enough about guns. Anyway, this is why I refuse to play along with the charade, with this invented hierarchy of importance. No move, my friends, no price move, no meaning. People will tell you the Fed matters, that their forecasts matter, that their revisions, the PCE revision from last Wednesday, that that matters. Why would I grant authority to an institution that has spent years being consistently wrong about the thing it claims to control and doesn't? They don't control inflation. They describe it after the fact. They describe it badly. And they revise their descriptions as reality. Forces them to. That's why I watch price. I don't outsource my judgment to bureaucrats. Bureaucrats guessing with less vulgar vocabulary than yours truly. So the same applies to the PCE indicator. I'm writing, I'm talking to you on his thirsty. Thirsty night. And in the morning, we're going to get PCE. And when you're listening to this, you'll know what's happened. Was it point two versus point three? Do second decimal points matter? I'm not listening. I'm sleeping in tomorrow. Because unless unless the PCE moves the only thing that matters, unless it moves the price of the treasuries, unless it takes the 10-year yield to 4.5, something would be broken, or on the way to being broke, being broken. Or if they take it to 4% the 10-year year, then something for sure has changed. Below 4.9, I would be buying. I'd be buying the treasuries. 4.54, that's signal. Everything else is commentary layered on noise. So there you go, folks. That's the acid rule. No move. No move in treasuries. No meaning in the macro data. And that's why the street, that's why Bloomberg, that's why CNBC, they hate people like me. Because I don't need their narrative. I don't need their calendars. I don't need their permission to decide what matters. I I, me, and I hope you, we watch the price. We watch behavior. And we ignore the rest. I, you Andrew, have very much enjoyed speaking to you. I am the acid capitalist. I've I've slept 20 hours, but I had such a great weekend in Miami. But I will not play Wall Street's crooked game. I'm kissing, I'm saying B zoo. I was thinking what but what music am I going to play out? But I found such great, beautiful music. Do we play the acid capitalist? Or do we play? I've got this great song with my son the raining. I'm playing bass badly, but it's kind of meant to be bad. And I've got the old intern. The old, the young. Gabe. Gabe's playing really nice electric guitar. Maybe we'll end with that anyway.

SPEAKER_00 40:44

Good night, my friends.