The latest episode of the podcast DH Unplugged, titled 'I Am the House,' arrives as markets grapple with a post-Labor Day selloff that sent the Dow down more than 600 points. The hosts, Andrew Horowitz and JC Dvorak, focus on Treasury Secretary Bessent's controversial comment that he holds inside information on the Japanese yen, framing it as an admission that policymakers now play markets as 'the house.' This revelation comes ahead of Friday's Consumer Price Index (CPI) print, which many strategists view as the ultimate credibility test for the Federal Reserve.
Horowitz recounts Bessent's remarks on the yen trade, noting his assertion of having an edge due to inside information about Japan's actions. Dvorak places this in historical context, arguing that since 2008 the government has increasingly behaved like the Roman Senate before Caesar, and the Trump era made the dynamic impossible to ignore. This sentiment echoes a broader concern about the blurring lines between policy and market speculation.
The episode also covers a range of consequential stories. AIS trackers show a dead-quiet Strait of Hormuz, aligning with Goldman Sachs' $120 per barrel oil target. Rising 10-year and 30-year Treasury yields against a $40 trillion debt backdrop are analyzed, with Horowitz explaining his firm's strategy of buying only short-duration Treasuries due to the crush of new issuance from Washington and global data center operators. This connects to Bloom Energy's addition to the S&P 500 and sympathy rallies in Oklo and SMR, as well as strength in Intel, AMD, and SK Hynix ahead of Broadcom earnings.
Other threads include Meta's roughly $18 billion multi-state settlement over youth safety guardrails, NVIDIA's reported $13 billion acquisition of Hugging Face, which JC called a week early, Shein's downsized Hong Kong IPO, Good Good Golf's Callaway ad backlash, Nike's exit from the S&P 500, Argentina beef imports, a 162,000 payrolls print, and Astra's partial Navier-Stokes proof.
The hosts' skeptical tone is evident as they dissect Bessent's comments. Horowitz emphasizes the significance of Bessent's statement, saying, 'His way of putting this is, I have an edge. And he even said, 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 responds by linking this to a historical trend of government overreach, suggesting that since 2008, the government has increasingly acted like the Roman Senate before Caesar, and the Trump era made this dynamic unavoidable.
As bond yields climb despite a hot economy, the discussion turns to the implications for investors. Horowitz notes that his firm is avoiding long-duration Treasuries, citing the massive supply from Washington and data center operators. He connects this to the broader market movements, including the rally in nuclear-related stocks like Bloom Energy and Oklo, and the anticipation around Broadcom's earnings.
The episode underscores a growing unease about the intersection of policy and markets, with Bessent's remark serving as a flashpoint. As Friday's CPI report approaches, the hosts question whether the Fed can maintain credibility in an environment where the 'house' seems to have all the information. The conversation reflects a broader anxiety about market manipulation and the integrity of financial systems.
