“Be less curious about people and more curious about ideas.” — Marie Curie
“This Dream Sports-Betting Job Comes With One Little Catch”
(WSJ)‘Susquehanna already has around 60 traders focused on prediction markets. It wants to hire more.’
The dominant story is escalating US-Denmark/NATO tensions over President Trump’s renewed push to “acquire” Greenland, framed in diplomatic and economic terms during Davos engagements. Key reports include Trump’s claims and texts from leaders vowing no reversal, constitutional limits on presidential territorial purchases without Congress, European leaders’ backlash at Davos, Danish dismissal as “irrelevant” by US Treasury pick Scott Bessent, and Russia publicly welcoming the NATO rift as an exploitable weakness. Trump's speech won't help, although he said he doesn't plan on using force; he couched it more as appropriate recompense for all the US support of Europe.
Trust in the US from allies continues to be be questioned; a lot of attention will be paid to Pres trump speech to WEF this morning.
PM Carney speech to Davos this morning- worth the listen
“A Look Back at the War That Is About to Begin”
(WSJ)“The Rupture Mark Carney nails it. We have to “stop pretending””
(Substack))“Bessent Says Powell is ‘Politicizing’ the Fed”
(Bbrg)“Bessent changes tone on Fed Chief-WSJ”
(Bbrg)‘The Treasury secretary who previously urged Trump not to fire the Fed chair is now publicly building the case against him.’
What would be the implications of drop in global trust in US reliability? Would we see unwind in foreign CB holdings? This is one explanation for surge in gold prices, with CBs adding for the last year. Note that USD-pegged Stablecoin is one expressed idea to increase US TSY demand ( amongst other things), but as Luke Gromen (always worth paying attention to), the recent US heavy-handed ‘taking what it wants will raise concerns about the safety and viability of that product
Ray Dalio in Davos- ‘monetary order is breaking down’
Positioning crowded
Reflecting risk-ff sentiment, Bitcoin under pressure. 87,500 important support, piercing of that level would target move down towards 80,000
10y yield - this is the spot. Does it stay or does it go now? Looking longer term, on the weekly, a move thru 430bps targets 457 minimum, more likely closer to 500bps. Can that be tolerated by economy or markets?
Global yields moving higher
Some concerns growing in hyperscaler space, and ORCL continues to flounder in both equities and CDS spaces.
SPX is back in negative gamma, indicating the conditions for higher volatility are now in place. In this environment, market makers are skewed towards positions that carry negative gamma exposure, which must be delta hedged in the same direction as the market. Tangentially, this was only the fifth time in history the VIX has jumped from the mid-15s (anywhere between 15 and 16) to above 20 in a single day since the index was introduced over 30 years ago.
FOMO, TINA, and Retail enthusiasm continue apace, currently at extreme bullish levels. When the cue starts to tip, the risk/reward for a reversal becomes much more likely.
This despite the widening wealth gap:
