The U.S. 30-year Treasury rate has reached 5.13%, a level last seen in October 2023. The last time this rate was at this level was in 2007, when the U.S. federal debt was about $9 trillion. Today, that debt is nearing $37 trillion.
I believe bond market participants are signaling a lack of confidence that the fiscal situation in the United States will improve during President Trump’s second administration. Like many financial professionals, I had high hopes that President Trump’s election would bring the fiscal situation in order. Unfortunately, the “Department of Government Efficiency” has not been as efficient as many had hoped, and U.S. Congress seems completely uninterested in reducing federal spending in a meaningful way.
The tax cut bill currently moving through Congress, fully backed by the White House, will exacerbate the fiscal situation. If this trend of rising long-term Treasury rates continues, the United States will soon face very tough decisions that neither Wall Street nor Main Street is ready to face.
Annapurna
Large Language Models suffer from Anterograde Amnesia
Letter to The Honourable Evan Solomon
A few months ago, I got excited about how AI is advancing science after reading a WSJ article on a recent paper that concluded, using high-quality data, that material science researchers at a leading R&D firm improved their productivity when using Artificial Intelligence tools.
I was disappointed to learn that the paper, by ex-PhD candidate at MIT Aidan Toner-Rodgers, was entirely fraudulent.
MIT Press Release: https://economics.mit.edu/news/assuring-accurate-research-record
WSJ Article covering the retraction: https://www.wsj.com/tech/ai/mit-says-it-no-longer-stands-behind-students-ai-research-paper-11434092?st=wTbfjh&reflink=desktopwebshare_permalink
Substack post with more details: https://thebsdetector.substack.com/p/ai-materials-and-fraud-oh-my
Google revealed yesterday that it has a model capable of original, novel thought in the algorithmic domain. This model has been used inside Google for the past year and only yesterday they’ve began to invite researchers to try it out.
“While AlphaEvolve is currently being applied across math and computing, its general nature means it can be applied to any problem whose solution can be described as an algorithm, and automatically verified. We believe AlphaEvolve could be transformative across many more areas such as material science, drug discovery, sustainability and wider technological and business applications.”
If you are interested in cutting edge application of frontier Artificial Intelligence models, I urge to read the post below.
Having attended some of the Toronto AI Safety events, I can confirm that the space is legit, the talks are interesting, and the attendees and hosts are serious about advancing AI knowledge, governance, and safety in Toronto.
Congrats on formalizing your organization.
Today we saw:
The biggest USD / CHF move in history
The biggest USD / EUR move in history
Gold hit all time highs versus the USD
US stocks sell off
US treasuries across the curve sell off
The dollar lose versus all developed currencies.
Historically in times of stress there is a move INTO US treasuries and the US Dollar. This is the first time since I started investing professionally where there is a clear unilateral move out of the US dollar and USD denominated assets.
This past weekend I have read several takes from prominent accounts on social media saying that because long end US treasury rates have dropped and will continue to drop in the near future, businesses will be able to borrow at a lower rate.
These people completely ignore that business borrowing rates are a component of the reference rate + a credit spread. While it is true that the reference rate has dropped in the past few days, credit spreads have materially increased.
For companies with lower credit ratings, it is more expensive to borrow today than it was last week. If the turmoil continues, the cost of borrowing will increase, meaning companies will likely slow or stop projects that require borrowing. This will have immediate negative effects on the economy.
Can you walk me through why you voted Y/Y on Joe Wiesenthal’s X poll?
Awesome! I will send you the draft when I have it done.
Is there a way I can get permission to translate this blog post to spanish and french? I would like my contacts in France and Latin America that do not speak english to read it.
Making Sense of President Trump’s Annexation Obsession
The Case for AI Optimism
The phrase ‘Feeling the AGI’ is one that I have been using for a few months to describe friends of mine who have come to the realization that in the near future, society will go through transformative change due to Artificial Intelligence. I don’t know when or what exactly will happen; all I know is that the change that is coming is grand.
I felt the AGI a few months ago. I distinctly remember having a physical reaction. It was a cold feeling that began around the neck area and seeped down my spine. My stare froze into nothingness, as if I had seen a ghost. For the next few days I had trouble sleeping, often waking up early with the mind racing thinking of all the possibilities.
There has been one other time in my life I have felt something similar. It was the night of March 4, 2020, and I had just finished reading the Report of the WHO-China Joint Mission on Coronavirus Disease 2019 (COVID-19). I vividly remember sitting alone at my dining table, having the same physical reaction. Something grand was about to happen. 12 days later, the world shut down. (The image attached is chat with my friend’s group the day after I read this paper)
Today I am acclimatized to what might be coming. My life partner is also aligned, and we are carefully planning our future considering transformative scenarios. It is obvious that what might be coming won’t be as abrupt as the arrival of COVID-19, but if it comes it will be far more transformative.
I am posting this today because ‘Feeling the AGI’ is starting to appear outside of smaller online ecosystems. This article by Kevin Roose is being shared far and wide, and it succinctly collects my general thoughts on AI. More and more people I know are Feeling the AGI. Are you?
Hot macroeconomic take:
Bessent / Trump are purposely lowering domestic demand via a combination of Doge + Psychology.
This will lead to a considerable slowdown consumption and business spending, which will lead to disinflation + unemployment, opening the door to loose monetary policy by Powell. I am talking about 5+ rate cuts plus a QT pause.
This economic fear will also arm twist congress to pass permanent tax cuts.
SPY finishes the year positive.
[Question] Sparks of Original Thought?
What is the best / most proper definition of “Feeling the AGI” there is?
Seems the perfect post to link one of the best blog posts I have ever read on the internet: How Japanese zoning works.
https://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
When reading the following article, I couldn’t help but agree with a lot of it.
Immigration is a constant subject of discussion between my wife and I. We are both immigrants to Canada, and both of our parents migrated from their home countries in search for better opportunities (Hers migrated permanently from Spain to France, mine temporarily from Colombia to Venezuela).
Since my first migration when I was 8 years old, I have always felt extremely privileged to be welcomed in a new country. When I migrated on my own to Canada, I was extremely grateful, and later when I decided I wanted to become Canadian, I made a strong effort to assimilate to Canadian culture.
Assimilation takes many forms, but at the very least I do not think it’s unreasonable to ask immigrants of three things when they immigrate:
Learn the official language of the place you are migrating to.
Follow the laws and general customs of the country you are migrating to, even if they are different that where you come from.
Do not impose your customs, culture, and religion onto others in the new country you are migrating to.
Canada is an amazing country in that it allows us the freedom to maintain our customs and practice our religions freely. I feel it is part of Canadian culture to accept and embrace the cultures of those who migrate here. However that welcoming and embracing of new cultures seems to be diminishing, and I believe this is due in part because a portion of those who have migrated here in the past decade simply have no desire to assimilate into Canadian society.
I think if we can figure out a way to encourage new immigrants to embrace assimilation into Canadian culture, Canadian society will slowly heal and go back to a place where we can all live together in harmony.
https://www.nytimes.com/2025/02/24/magazine/denmark-immigration-policy-progressives.html
Agreed. I do think we are reaching a point that the market will force the Government’s hand.
By the way, this is something many other developed nations are facing, to varying degrees. There’s been a lack of fiscal conservatism governance for decades. Watching President Milei succeed in Argentina gave us fiscal conservatives some hope that the same would happen in The US and other countries. But I have lost that faith.