The latest episode of DH Unplugged, titled 'I Am the House,' arrives as markets grapple with a post-Labor Day selloff that saw the Dow plummet by more than 600 points. The episode, hosted by Andrew Horowitz and JC Dvorak, centers on Treasury Secretary Bessent's startling declaration that he holds inside information regarding the Japanese yen, a statement that the hosts interpret as a watershed acknowledgment that policymakers now act as 'the house' in financial markets. This comes ahead of Friday's CPI print, which many strategists view as the ultimate test of the Federal Reserve's credibility.
Horowitz recounts Bessent's remarks, noting that Bessent claimed, 'I have the edge... because I have the information, I have the inside information about what Japan is doing, therefore when I say something, it's not going to be speculative. It's going to be absolute.' Dvorak contextualizes this by arguing that since 2008, the government has increasingly resembled the Roman Senate before Caesar, and the Trump era has made this dynamic impossible to ignore. The episode suggests that such overt market manipulation by policymakers could have profound implications for market fairness and investor confidence.
The discussion also delves into a series of market-moving events. The Strait of Hormuz is unusually quiet on AIS trackers, raising concerns about potential supply disruptions, while Goldman Sachs maintains a $120 per barrel oil target. Meanwhile, 10-year and 30-year Treasury yields are climbing against a backdrop of a $40 trillion national debt, prompting Horowitz to reveal that his firm is buying only short-duration Treasuries. He attributes the yield pressure to the crush of new issuance from Washington and global data center operators tapping capital markets. This connects to the addition of Bloom Energy to the S&P 500, sympathy rallies in Oklo and SMR, and strength in semiconductor stocks like Intel, AMD, and SK Hynix ahead of Broadcom earnings.
Other topics include Meta's approximately $18 billion multi-state settlement over youth safety guardrails, and NVIDIA's reported $13 billion acquisition of Hugging Face, which Dvorak had called a week early. The hosts also touch on Shein's downsized Hong Kong IPO, the backlash against Good Good Golf's Callaway ad, Nike's removal from the S&P 500, Argentina beef imports, a 162,000 payrolls print, and a partial proof of the Navier-Stokes equation by Astra.
The episode's skeptical tone highlights the growing intersection of government policy and market dynamics. As Bessent's comments suggest, the line between policymaker and market participant is blurring, raising questions about the integrity of financial markets. With the CPI report on the horizon, investors are bracing for potential volatility, and the Fed's next move will be scrutinized more than ever. This episode of DH Unplugged offers a comprehensive look at the forces shaping the current market environment, from geopolitical tensions to fiscal policy and technological shifts.
