Despite recent run-ups in long-end treasury yields, inflation is working its way lower and both the long end and short end of the yield curve will follow, based on what history has taught for decades.

AI spending is currently supporting GDP growth, but the real benefit of AI (like the Hoover Dam) will only materialize once productivity benefits actually accrue to the economy, which could take years or even decades and is currently uncertain.

AI companies currently lack a coherent economic model for monetizing AI services due to open-ended token-based pricing structures, making it difficult for corporate customers to predict costs and plan budgets, which is hindering adoption and productivity gains.

The unemployment rate staying low while monthly job growth is weak (50-100K vs. the 150-200K needed to keep up with population) creates a false picture of labor market health because the gap is filled by people leaving the workforce, gradually creating a weaker labor market not yet visible in unemployment data.

A K-shaped economy is evident both in consumption (top 10-15% consume driven by stock gains, bottom 80%+ weakens) and in GDP growth (top-line GDP ~1% without AI spending; AI capex is the primary driver of current growth), indicating fragile growth concentrated in asset-holder spending and corporate capex.

Shelter inflation in the CPI has lagged real-world rent and housing price movements by quarters to years, meaning the CPI shelter component (40% of the index) continues to show 3-4% inflation even though rents are flat to declining and house prices are range-bound, creating a measurement lag that will take time to correct downward.

Central bank balance sheet reduction is difficult to execute in practice because reducing liquidity in financial markets creates unintended consequences and stress, even though reducing the balance sheet may be theoretically sound policy.

The correlation between crude oil prices and 5-year bond yields is currently over 50%, the highest it has been except for a brief moment in March 2020 when oil was trading negative and bond yields were plummeting, indicating oil is the primary driver of near-term bond price action rather than inflation or economic factors.

The bond market's current state appears transitory rather than structural, meaning whatever is driving elevated yields will eventually normalize once the geopolitical shock resolves, though the timeline is uncertain.

If oil were to reach $150 per barrel, it would likely drive down stocks, raise bond yields further, create temporary inflation spikes, and cause meaningful GDP contraction, but the ultimate market impact would depend critically on how oil reached $150 and whether it would be temporary or sustained.

Michael Lebowitz holds a significant quantity of physical gold and silver (described humorously as between a 'chunk' and a 'buttload') stored in his basement, treating it as insurance policy never to be touched, so permanent it hasn't even been checked for value since peak prices hit.

Kevin Warsh as Fed Chair is currently 'doing the right things' by maintaining restrictive real rates (over 2%) and inflation-hawk policy, similar to Draghi's 'whatever it takes' stance but inverted toward restrictive ends; however, history suggests that when real policy gets tested by market stress ('punched in the face'), Fed chairs often revert to accommodative QE and stimulus.

Credit spreads (the yield premium corporate bonds pay over Treasury bonds) are currently extremely tight at the 2nd percentile of their 20-year range, indicating market complacency and very strong sentiment, but they have not spiked and liquidity remains good, so this is a warning sign to monitor rather than a current crisis indicator.

Real interest rates (rates minus inflation expectations) have spiked to over 2% for the first time since 2008 and a couple minor instances, which creates an unfavorable environment for gold because the Fed is correctly pursuing restrictive policy to combat inflation.

Gold and silver experienced a blow-off top / mania peak in January 2024 driven by momentum rather than fundamentals, and subsequent declines are attributable to three factors: (1) froth/fever breaking from excess, (2) war forcing net gold-buying countries to sell gold reserves to afford higher oil prices, and (3) Fed Chair Warsh signaling inflation-hawk policy that keeps real rates elevated.

Lebowitz would take the 'under' on bond yields by year-end, predicting they will be lower than current levels, with the major caveat that the Iranian situation does not escalate out of control.

5-year inflation expectations, as measured by TIPS breakeven rates, have actually declined from 2.46% at the start of the Iranian conflict to 2.28%, while 5-year bond yields have risen from 3.62% to 4.30%, creating a divergence where real yields (rates minus inflation) have risen nearly 1% despite declining inflation expectations.

The market appears to be complacent about oil prices staying in a range-bound equilibrium where whenever oil gets too high, Iran and the US come to the negotiating table, and whenever it gets too low, both parties feel empowered to escalate—creating a self-correcting mechanism that should cap oil prices and keep yields contained until this equilibrium breaks.

The best approach to market forecasting is hurricane-style scenario planning with a 'cone of uncertainty' rather than point forecasts, where investors prepare playbooks for multiple outcomes (e.g., $150 oil, $50 oil, or equilibrium continuation) and adjust probabilities as new information arrives.

TIPS (Treasury Inflation-Protected Securities) inflation expectations are a more reliable real-time indicator of market inflation fears than CPI surveys because they represent actual money being put to work via investment decisions, whereas surveys depend on subjective opinion calls.