My Life Is a Lie: How a Broken Benchmark Broke America

Summary

We’re going to largely skip markets again, because the sweater is rapidly unraveling in other areas as I pull on threads. Suffice it to say that the market is LARGELY unfolding as I had expected — credit stress is rising, particularly in the tech sector. Many are now pointing to the rising CDS for Oracle as the deterioration in “AI” balance sheets accelerates. CDS was also JUST introduced for META — it traded at 56, slightly worse than the aggregate IG CDS at 54.5 (itself up from 46 since I began discussing this topic):Correlations are spiking as MOST stocks move in the same direction each day even as megacap tech continues to define the market aggregates:Market pricing of correlation is beginning to pick up… remember this is the “real” fear index and the moving averages are trending upwards:And, as I predicted, inflation concerns, notably absent from any market-based indication, are again freezing the Fed. The pilots are frozen, understanding that they are in Zugzwang — every choice has unfavorable options.And so now, let’s tug on that loose thread… I’m sure many of my left-leaning readers will say, “This is obvious, we have been talking about it for YEARS!” Yes, many of you have; but you were using language of emotion (“Pay a living wage!”) rather than showing the math. My bad for not paying closer attention; your bad for not showing your work or coming up with workable solutions. Let’s rectify it rather than cast blame.I have spent my career distrusting the obvious.Markets, liquidity, factor models—none of these ever felt self-evident to me. Markets are mechanisms of price clearing. Mechanisms have parameters. Parameters distort outcomes. This is the lens through which I learned to see everything: find the parameter, find the distortion, find the opportunity.But there was one number I had somehow never interrogated. One number that I simply accepted, the way a child accepts gravity.The poverty line.I don’t know why. It seemed apolitical, an actuarial fact calcula...