Esprit de l’escalier
October 26, 2025 – Weekly comment
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L’esprit de l’escalier refers to the idea of the perfect retort at a cocktail party conversation coming to mind too late, when one is already descending the staircase from the party.
I happen to be reading the book The Art Thief by Michael Finkel, just as the Louvre theft of Napoleonic jewels occurred. Certainly, the crime is outrageous, another blot on the increasingly tattered fabric of civilization. But somehow, I find the old school tactics refreshingly satisfying. Did they hack into the security system and disable all the cameras and lasers? Not that I read. The thieves went in through a second floor window. They used a ladder truck, grinders and fled on motorbikes. No one was hurt. In my mind, I see the thieves synchronizing their mechanical Swiss watches just before the crime is committed. Just like in the movies.
The Art Thief is a true-life book about Stephane Breitweiser, a lover of fine art who committed an astonishing 200 museum thefts in Europe and never sold a single piece. “Stealing art for money, he says, is disgraceful.” He kept all the paintings, small sculptures and artifacts on display in pristine condition in the cramped upstairs apartment he shared with his girlfriend in his mother’s house. He was drawn to the exquisite beauty of certain pieces. The total haul was estimated at an astonishing $2 billion! “Breitweiser’s notion is that stealing artwork should be a daytime affair of refined stealth in which no one so much as senses fear.” An excerpt from the dust jacket summary relates the story back to markets: “Yet these unusual talents bred a growing disregard for risk and an addict’s need to score, leading Breitweiser to ignore his girlfriend’s pleas to stop – until one final act of hubris brought everything crashing down.”
This reminds me of yet another related conversation: At a billionaire’s party the authors Kurt Vonnegut and Joseph Heller were in attendance, and Vonnegut says, “How does it feel to know that our host only yesterday may have made more money than Catch 22 will ever make for you?” Heller responds, “Yes. But I have something he will never have… enough.”
“Breitweiser does not react to every artwork, but when he is transported the response is instinctual and rapid, and often hypnotically strong. ‘Art is my drug’.” The sensation of being overwhelmed to the point of heart palpitations and near loss of consciousness when viewing art is known as Stendhal syndrome. Breitweiser spills into that category.
Every market needs a narrative to propel the price action. AI productivity gains. Inflationary impulses arising from China’s shutdown of rare earth supplies. Debasement of fiat currencies. In the early part of the year, the story was that budget deficits and related supply would contribute to price pressures, making bonds untouchable. Sponsors of that view included Druckenmiller and PTJ. (The 30y yield ended the week on Friday at 4.59%, down 50 bps from May’s high of 5.09%).
Often, a picture helps crystallize a story. I absolutely love the photo taken by Thibault Camus in the aftermath of the Louvre heist, and the description on X by Melissa Chen strikes me as viscerally true.
Actual shot (not AI!) of a French detective working the case of the French Crown Jewels that were stolen from the Louvre in a brazen daylight robbery. Somehow he looks like he’s smoking even without a cigarette in his hand, but surely everything you know about life is screaming at you: this case is officially screwed! To solve it, we need an unshaven, overweight, washed-out detective who’s in the middle of divorce. A functioning alcoholic who the rest of the department hates. Never gonna crack it with a detective who wears an actual fedora unironically.
It’s often said that we don’t let facts get in the way of a good story, but Melissa is apparently wrong about the dapper tourist being the detective. The photographer in the New York Times article says “…he was merely a passerby unconnected to the investigation.” I would note that Breitweiser was fashionably well-dressed, having acquired designer clothes from second-hand stores. In any case this single image and its imaginative description has, for me at least, brought the event completely to life. Others have obviously had similar reactions as noted by this FT opinion piece: ‘The lo-fi charm of the audacious Louvre heist.”
I like to think that in the picture, the closest policeman DOES hate the dapper detective. Fists clenched. Sullen look. Magnifique.
In the financial world we dress our narratives in fancy names. Portfolio Insurance. Relative Value Strategies. Debasement. The ‘final act of hubris which brings everything crashing down’ is often a series uncomfortable suspicions which become realizations. Typically, it’s taking a good idea and overdoing it, like AI or fiber optic cables. Or, what’s more likely to lead to the southbound exit ramp: heavily funding questionable enterprises with debt. If it’s all funded with cash, it simply evaporates, but gusts of bad debt have a way of blowing swirling embers across firebreaks into forests of fresh tinder.
Without the intention of irony, this is the first story I saw on my BBG Sunday morning: ‘Crypto Miner Evokes ‘Barbarians at the gate’ with Huge Junk Deal’. TeraWulf completed a $3.2b debt deal led by Morgan Stanley to expand a data center. From BBG: “investors were compelled by an untested structure: a so-called ‘backstop’ from Alphabet. [one might call it a ‘firebreak’] The company is set to guarantee the debt once the facility is up and running.” …Fellow crypto miner Cipher Mining is next…The company is expected to raise billions in junk bonds that will also be backed by Google and an undisclosed Nigerian Prince.” OK…I added the Nigerian Price part. But it almost fits, doesn’t it?
The Louvre theft and Breitweiser’s exploits are deceptively simple in hindsight. We SEE the guys on the ladder going to the second floor. Probably maintenance guys. If there was a picture with an AI caption, it would likely say: An image of two repairmen with tools climbing a ladder. It wouldn’t say: ‘suspected criminals attempting to plunder one of the world’s great art museums’.
The narrative on the Fed is that the goal is 2% inflation. We SEE that the Fed’s going to cut another 25 this week with CPI at 3.0%. Reports say that China/US talks went well and that the Trump/Xi meeting this week could result in a positive framework. But the suspicion is that China does NOT want to export rare earth magnets to the US that are critical to rebuilding US military systems. We SEE that the NY Fed’s Global Supply Chain Pressure Index is comfortingly at zero. But we KNOW that the Dutch have just taken over Chinese-owned chipmaker Nexperia. Tomshardware.com reports Japan’s Auto Manufacturers Assn has issued a statement that Nexperia may be unable to maintain chip supplies. VW may halt production of two models next week. If the supply of Nexperia chips is not resumed, the ripple effect will cause automakers to halt output. (Nexperia’s chips are essential for electronic control systems in cars).
I’m stumbling down the staircase now, drink still in hand. And it comes to me: “Your investments are going to dissolve like sugar in water because debt that has been layered on crypto and AI is unsustainable.” Pithy, delivered with just the right amount of panache. That, now THAT, would have quieted them down in awed respect.
Although, now that I think about it the next morning as I am rubbing my temples, maybe I DID actually say something like that. Oh, and I might have added a couple of other somewhat less pithy remarks. Maybe that’s why I was asked to leave.
OTHER THOUGHTS/ TRADES
One interesting trade that occurred Friday was +0QZ5 9706.25c vs -2QZ5 9693.75c pay 0.25 to 0.5. Settles: SFRZ6 9702.5, 9706.25c 11.25 (45d). SFRZ7 9691.5. 9693.25c 10.75 (47d). 12.5 bp difference between strikes, 47 dte.
This is synthetic long Z6/Z7 which settled 11.0 and has been in a tight 8.5 to 12 range this month. On unexpectedly aggressive easing this spread should steepen. However, recent history isn’t too encouraging…high in first red/green in April was only 17. And we’re already expecting a 25 bp cut and possible end to QT this week. I would note however, that when they started to ease in late 2007 to early 2008, the first red/green spread went from 40 to 80 in a month.
[I am NOT recommending this trade, just noting that it occurred]
| 10/17/2025 | 10/24/2025 | chg | ||
| UST 2Y | 346.2 | 348.4 | 2.2 | wi 347.5 |
| UST 5Y | 359.2 | 360.4 | 1.2 | wi 360.7 |
| UST 10Y | 400.7 | 400.1 | -0.6 | |
| UST 30Y | 460.2 | 458.8 | -1.4 | |
| GERM 2Y | 190.6 | 196.6 | 6.0 | |
| GERM 10Y | 258.0 | 262.5 | 4.5 | |
| JPN 20Y | 262.9 | 259.4 | -3.5 | |
| CHINA 10Y | 182.3 | 184.5 | 2.2 | |
| SOFR Z5/Z6 | -68.0 | -64.5 | 3.5 | |
| SOFR Z6/Z7 | 12.0 | 11.0 | -1.0 | |
| SOFR Z7/Z8 | 20.0 | 20.0 | 0.0 | |
| EUR | 116.63 | 116.27 | -0.36 | |
| CRUDE (CLZ5) | 57.15 | 61.50 | 4.35 | |
| SPX | 6664.01 | 6791.69 | 127.68 | 1.9% |
| VIX | 20.78 | 16.37 | -4.41 | |
| MOVE | 78.62 | 68.94 | -9.68 | |
