Weekly PROPHET NOTES 9/23/24
Global Outlook: pager incident, big cut and another M&A market
To start, I think it is fitting to do a bit of hearth to heart here. Last week I was surprisingly silent on both X and here. While I do my best to devote a lot of time to content here and on X, sometimes life situation needs outmost attention. I am currently in the process of resolving a few matters in my home country to move out on a more permanent basis. A week and a half ago I was forced to change my short term apartment and between this, my W-2 and prediction markets, the last two needed to suffer a bit. While the main work is done now, I expect that in the next two weeks my X presence will still be minimal, but Substack content (both the weekly global outlook and deep dives) should go back on track.
Thanks for hearing me out, I appreciate your support!
Now back to regular programming. I think that the revamp of the global outlook hit all the right spots with both views and engagement higher. I am going for the startup approach here - incremental changes with occasional pivots and some testing based on your feedback. So for now I am glad that the new format is to your liking and I will be on the lookout for your suggestions.
Continuing with the new format, let’s first look at what happened this week.
Weekly Recap
Last week was pretty eventful with the aftermath of another Trump assassination attempt and a pager attack on Hezbollah. But from my perspective these major headlines did not carry much weight. The assassination attempt, as the potential shooter did not manage to fire any shot, was quickly dismissed and the aftermath of the pager attack will only unfold in the following weeks.
US Politics
Besides the attempt on Trump there was nothing really substantial in US politics this week. With focus on pop culture drama (more on that later) and the Middle East we had a fairly slow week. As usual there were some mentions markets, but I missed these.
I think I owe you a few words on the Kamala Harris interview with Oprah. Or I should rather say a rally with Oprah - because it was essentially Oprah and friends for Harris meeting. Predictable, boring and a rather bleak performance from Kamala. Funny though were moments where Meryl Streep and Julia Roberts were a bit dumbfounded when asked for a short speech and spewed some emotional word salads.
Maybe I am just having a to manly perspective as this campaign is clearly feminine. That is a bit of a change since Hillary Clinton and maybe it works… any women in my audience would care to comment? Anyway, doubling down on women voters is quite clever considering how many people in general do not vote at all. Plus the feminine campaign is clearly better suited for a woman candidate than a typical masculine campaign. Will this tip the scale? Maybe.
All of the above (plus of course new polling data) resulted in Kamala solidifying her small lead over Trump.
Not a lot of difference here vs last week, but it is a bit surprising that another assassination attempt failed to move the needle. with 48/51 odds we are still in the toss-up territory. I doubt that anything now will move the needle to heavily favor one candidate or the other. Even eventual invasion of Lebanon (high chances it will happen post election; initial prediction from the Middle East deep dive still stands at October / November) may have minimal effect, contrary to 13 keys believers. The tensions there are already high, actual event will have little impact, amplified by Kamala’s strategy of distancing herself from current administration (however funny that sounds, this is the reality we live in and supposedly many voters actually believe).
Finance
The rates, the rates, the rates. JPow surprised many (including me) and went in with 50bps cut. Such cut indicates:
either admission of mistake in monetary policy (keeping the rates too high for too long),
or / and panic about the mistake overcooling the economy and inducing a recession.
We will live to see what will be the outcome of that. Markets reacted rather timidly with 1.56% rise over the course of the week for S&P500.
Discount rates have dropped so a small move upwards is expected, but mid-term the perspective is way more blurry. The only previous times the Fed has begun the cutting cycle with a 50bps move was in 2001 and 2007, pretty telling.
I feel strange about my prediction - 25bps was the move, even if the economy is in a bit worse shape than what we see in the data. The only justification to cut by 50bps is if the shape of economy is looking really bad. I do not want to be another account predicting recessions that did not happen, but this is a bit worrisome.
Wars
I think the last time pagers got so much attention was in the early 2000s. Now thanks to Israeli covert operation they are on the lips of every war pundit. Celebrities say that any press coverage is good, pager manufacturers may disagree.
A few thousand pagers blowing up and killing a few dozen of Hezbollah members / next of kin and injuring hundreds is impressive. Arabs call it terrorism, Israeli call it a success, I think it was a bit too early as it should go in tandem with invasion. One can wonder what other aces up their sleeve Israel have.
Pop Culture
“America is so woke that it has both white Epstein and black Epstein” ~ someone from X (DM for credit). I found this joke quite funny in the context of recent drama around Diddy. For those of you living under a rock, the rapper was indicted for sex trafficking and racketeering.
Conspiracy theorists are having another moment while I will be looking closer into the case (if there is any by the Epstein comparison) once it is on the books.
That is all major news from last week, let’s look ahead.
Global Outlook
Despite having a busy week, most of the short predictions hit from last week. I did not get any new positions, but let’s go through some markets on the hot topics.
Markets ending this week
US Politics
First up we have yet another mentions market:
In this one, nothing particular has strike me as value. If I were to chose one bet there I would go for No on this one:
Did not really hear him say McDonald’s that much. I also think that Kamala’s story with this is a bit washed up, there are other issues at play, maybe a comment on her Oprah appearance. I could even see him mentioning Oprah, pitty there is no market on her.
On to another one:
I see big value here - it is not like there is some grave emergency there and Ohio is currently priced at 93c for Trump:
There is zero need for him to go specifically there and with busy campaign trail. Punting some No there.
And that is a wrap on US elections, pretty silent week overall.
Pop culture
We have got the big one coming here- Caroline Ellison. I am looking to publish an analysis on this so will keep it short here. Looking at my timing it will probably be a short one on X, but still better than nothing.
Other markets
Besides these ones, I do not see anything other that peaked my interest. As usual there are a lot of sports, pop culture and crypto markets, but I do not see the edge there and will not comment on them.
It is the end of a months so many markets are near deadline, most are bonds though priced at 99/1 so you can look at them for a short term deposit.
New markets from last week
US Politics
First on, a quite interesting market on Trump x Zelensky meeting:
As far as I know Zelensky is in the US, so the meeting should happen. That being said with this pricing I do not see this as EV+ play.
Other than that we have surprisingly little interesting politics markets. There are a few endorsements markets (eg. Mitt Romney), but I find them to be more of a gambling exercise than EV+ play.
Middle East
We have one new market on the war front considering recent pager incident:
Seeing value in No here as these things take time. Proper war in Lebanon is coming, but only in October / November. Punting here a bit.
Pop Culture
Lots of Diddy markets here, most of them looking like almost bonds considering the accusation:
If you are looking for a mid-term deposit, that should be a good bet.
Another interesting market that popped up is on TikTok:
After signing the ban bill in April, ByteDance sued as they believe that the ban is unconstitutional. If you live under a rock - ByteDance is forced to divest TikTok if they want to operate in the US. I do not have a prediction now, but I may look closer into this case.
Finance
Another M&A market. Awesome:
Did not read much about the topic, but in general Intel is not in a good shape. They missed a few innovations and overall picture for the future looks rather bleak. At the same time a pretty short timeframe and not that big of a size difference make it a difficult deal.
I think I got my next deep dive here.
Wrap up
That’s all for the coming week. I tried my best to compile this edition for you even with very limited time. Looking for a longer article next week and we will see each other mid-week for the next deep dive.
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.