Ladies and gentlemen, Brazil. -19.8%

Meta seeking to raise up to $95b through common and preferred equity. Another piece of the equity supply puzzle building in the background. More and more equity financing to come. Debt issuance was just the start.

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*LULA WINS BRAZIL PRESIDENTIAL ELECTION, DATAFOLHA PROJECTS

For the market voyeurs, here’s where the damage is being done. Some notable z-scores.

If history is any precedent, every first-round presidential leader since Brazil returned to direct presidential elections has gone on to win the run-off.

*BOLSONARO AND LULA TIED AT 50% IN BRAZIL RUNOFF POLL

Central banks are about to take centre stage, but the forces driving the dollar, euro, and pound extend well beyond interest rates. alphapicks.co.uk/p/the-price…

Feels like oil is the catalyst and AI spending is the narrative for tech selloff.

From French sovereign debt to US tech, CDS is finding its way into plenty of market conversations right now. A good time to understand how the market for credit risk actually works. Our evergreen primer is below.

*FRANCE’S 10-YEAR BOND RISK PREMIUM RISES TO 175 BASIS POINTS Have to admit, I didn’t see OAT-Bund widening quite this far. France looked to be in a difficult spot when we put the trade on at 87bps, but the deterioration has been considerably worse than we anticipated.

Hedge funds have been selling global equities this month, with short leverage now in the 99th percentile over five years, per Goldman. Plenty of fuel for a squeeze if equities find a reason to rally.

Call premium is emerging in January Brent options. Markets turning their attention to post-midterm escalation risks in the Middle East.

One thing I’ve been thinking about since reading this is the Outsider Advantage. Expertise isn’t the entry requirement for solving complex problems. AI likely opens this up even more. One illustration of this came from the oil industry, which had spent years struggling with a problem involving the extraction of thick, viscous oil from storage barges. The eventual solution came from someone with no particular expertise in oil recovery. A chemist recalled how vibrations were used to help concrete flow during construction and realised the same principle could work with oil. Eli Lilly also solved a problem with a similar approach, and thus idea became the foundation of InnoCentive, a platform where companies could post problems that had stumped their experts and invite outsiders to solve them. Many successful solutions came from people working in entirely different disciplines. Expertise can sometimes narrow the way we approach a problem. Outsiders bring different mental models, experiences, and analogies that specialists might never consider. This is all very well explained in David Epstein’s book “Range”, where I first read about it. Bring this back to Anthropic and Citrini’s experiment, AI could fundamentally change the InnoCentive model. Previously, outsiders needed to possess some transferable knowledge that happened to be useful. They could contribute an unexpected idea, but turning that idea into a technically viable solution often still required substantial specialist expertise. AI lowers that barrier, giving outsiders access to technical knowledge, scientific literature, and tools that previously required years of training to use effectively. I think it has become an interesting possibility that more of the breakouts in the next decade will come from people who were never formally trained in the fields they’re advancing, once again because they see something the experts don’t. The Outsider Advantage.