Helping people learn finance, become thoughtful investors & avoid costly narratives. Author: Escape the Wealth Illusion. 25+ years in markets, investing & macro
Scotland, United Kingdom
Joined December 2011
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The state pension increased under the Triple Lock today.
Almost no one understands how the system behind it actually works, why it’s failing, or why politicians refuse to do anything about it.
I’ve written a full white paper on it, published today in the hope it finds some grounding.
open.substack.com/pub/wossca…
🤖 Made with AI
From Sunday's report.
The AI trade has been a significant risk I've raised for months. Maybe that's not so stupid after all......
#47 out now.
We got the hold we were expecting, and the yield dropped further below 5%. But oil jumped again and PCE confirmed the pipeline is still in play.
December remains live for a US hike, with the UK in similar position.
And we saw the biggest hack in financial history on Binance. “Not customer funds” is a neat accounting trick, but what does a crypto company promise really oblige them to do, legally?
Enjoy and share.
--WoSS
wosscapital.substack.com/p/4…
Hard to believe we've gone backwards on the currency issue, but here we are.
When I raised questions on the initial report I was told to "read the final report".
I'll let you decide, now that final report is available, if that was partisan dismissal of fair challenge or not.
Rather disappointingly, now that I've seen the final Laurentjoye report, it hasn't meaningfully updated the proposals to address the commercial and risk concerns I (and others) raised.
The core elements remain: the forced 20% SNIB stake, mandatory at par conversion of property loans, resident deposits and consumer loans. Sure, they come with more operational detail, but no material mitigation of the risks or incentives problems many of us have raised.
It also discusses directly one of the main risks raised at accurate, without offering any workable mitigation: the likelihood of depreciation after the short par period given the external position (including a possible significant initial fall under an "industrial overshoot" scenario).
That doesn't resolve the FX and mismatch risks for banks or households. At all.
I'm hugely disappointed.
There's been no real progress on these issues since 2014, and the concerns raised by people who support independence in principle have been treated as secondary. Again.
Retaining sterling in 2014 looked more workable then than this does now.
In my opinion, this proposal is so weakly designed against the obvious risks (dilution plus FX exposure encouraging banks to exit or wind down Scottish books, limited ability to absorb outflows, and household exposure after conversion) that it risks serious damage to public and private finances.
If this were the offer at the next referendum from any serious party, without those issues being properly addressed, I'd have to move from Yes to No. This is one of the few areas that could make me do such.
As much as I'd know how to position myself for huge potential profit at the expense of my fellow Scot, I couldn't accept that likely impact on everyone else to do so.
The 10-year closed under 5% this week, but that doesn't mark the model cut finished on its own. Wednesday's US rate hold is already in the pricing and December remains the meeting I'm watching for the next hike. Bitcoin high is set assumin no higher high today, giving us our new trading range.
#46 is up now.
Enjoy and share, as always.
—WoSS
wosscapital.substack.com/p/4…
#45 available now.
The model call for inflation plays out in this week's data, as both CPI and PPI come in hot while Brent jumps again to more than $109 a barrel.
This week's focus is on the mechanics of risk when choosing between fixed or tracker mortgages.
Enjoy.
wosscapital.substack.com/p/4…
Looks like that model flip from growth to inflation and the cut of 50% in risk assets as a result might not have been a bad read....
Reminder. #44 shipped yesterday (Sunday). 👍
#44 out now!
S&P made a new high, the first after the model flipped to inflation and a 25% equity position.
Nothing changed in the scores. Time will tell.
And having written almost every week about the Strait of Hormuz, today I dipped my toes into it, literally, for the first time.
Another two weeks of on the road reporting.
As always, enjoy and share. It helps spread the word.
--WoSS
wosscapital.substack.com/p/4…
#44 out now!
S&P made a new high, the first after the model flipped to inflation and a 25% equity position.
Nothing changed in the scores. Time will tell.
And having written almost every week about the Strait of Hormuz, today I dipped my toes into it, literally, for the first time.
Another two weeks of on the road reporting.
As always, enjoy and share. It helps spread the word.
--WoSS
wosscapital.substack.com/p/4…
This week's out. The model cut equities to a quarter of baseline, Bitcoin to 50%, and the Nasdaq rose 0.65% anyway. Oman rose to $109.29 and the spread flipped back.
Enjoy and share.
Article: wosscapital.substack.com/p/4…
YouTube Summary: youtube.com/watch?v=PwcugkyM…
Lot of focus on Anthropic's $42B loss in their (reported) IPO numbers. Having read the highlights on the train this morning that's not the key number for me.
~$8B operating loss and ~$4B in revenue on a $2T valuation with ~$518B in forward commitments and 2 customers ~25% of sale sis the "WTF" for me.
For anyone stuck on the $42B: most of that is a non cash mark on financing instruments because the valuation went up. The operating number is the one that matters.
My initial thoughts:
1. That's around x430 price to revenue. Mature mega caps generally sit around x8-15, a "hyper grower" x20-40. x430 is a narrative price. "We're destined to become a utility for cognition, not a software company". Which is a bold bet, and a risk for us (look at how utility companies price)
2. That $8B operating loss on $4.6B of sales means the blended cost of training, capacity and serving still swamps revenue. Whether each API token is a loss leader isn't in the highlights specifically, but t does suggest the company as a whole is still paying up for volume and the next model. The bet is hook-in now, pricing power later, once enough products, services and enterprises rely on them.
3. 25% of revenue in two customers? Well, for all us small builders creating around the pace of change Claude supports, with the trade off being we're reliant on the model to manage the codebase, that's a helluva risk. When the prices go up, or the rate limiting comes, that's directional.
4. $518B of forward commitments over the coming years only works if the IPO pricing/follow ons show up, or revenue scales into the 10s/100s of billions. If it doesn't, that's a problem. $20B in cash doesn't fund that commitment, so it looks a bit circular: the IPO is the funding plan.
5. At this stage, with a Capex bubble the likes of which the world has never seen, if that begins to cool a x400+ valuation starts to crack pretty quickly, along with the willingness of hyperscalers (AWS/GCP etc.) to continue to keep stretching receivable shaped compute.
I've been looking forward to seeing these numbers for a while. And they're as entertaining as I thought they might be.
One of the most interesting thought experiments surrounds the AI productivity boom. Something lots of enterprise level orgs are now down the road with. These numbers support, as I mentioned above, a view that resource may be cheap now, but the business model is that it won't be cheap always. Food for thought.
New paradigm or old risk? Pick your poison.
The 10-year finished at 5.184%, the highest close since 2007, and the indices didn't crack. The MOVE rose 19.06%. The VIX didn't.
#42 is up.
Enjoy and share.
wosscapital.substack.com/p/4…
Technical Analysis: A Lesson in Structure.
I’m a classic Dow technician, with a small, back-tested overlay of my own. This is a clean example of structure building the narrative.
For the first time since the peak, Bitcoin has taken out a labelled W1 major swing high. Can it hold and confirm on the weekly close? If it does, that’s only Point 1 of a 3-point recovery. Next we want a higher-low retest that stays inside the current range. Only then do we consider a primary trend reversal.
Process first. The close does the work.
Positive for the bulls, not so much for the bears.
What do you think?
Quick reminder, this week's report was published yesterday:
wosscapital.substack.com/p/4…
Wednesday was the vote that would maintain or question Warsh’s credibility post Jackson Hole.
I think safe to say it maintained it.
A committee that can hike 25 basis points against the preference of the fiscal authority hasn’t lost the last word on the funds rate and monetary dominance, for now, seemingly remains.
wosscapital.substack.com/p/4…
The hold I said was under threat last week, but was still live on Thursday, is now a residual risk.
The market's calling hike. With oil heading north and Oman $17.28 above Brent, it's hard to argue. Warsh's Jackson Hole words backed him into a corner?
wosscapital.substack.com/p/4…
