The WACO kid
February 4, 2026
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–Interest rate futures ended exactly unchanged across the board on Tuesday. Well, not exactly, the SOFR strip was -1.0 to +1.5. TYH6 unch’d at 111-19 with 10y yield 4.271%. 30y yield unch’d at 4.903%.
–Gold vaulted higher, with GCJ6 now 5084, about halfway back from last week’s high print (5627) to Monday’s low (4423). US House passed a funding bill, ending the gov’t shutdown. Not sure if that means payrolls are back on the schedule for Friday, but I think a delay is still likely. A US warship shot down an Iranian drone. Crude oil is currently maintaining a solid bid subject to the vagaries of geopolitics and missiles.
–I had previously read that AI meant the end of software, and apparently the market took that idea to heart yesterday with even MSFT down 2.9%. Over the past six months MSFT is down 23%. Alphabet reports today. Another sector under pressure is private credit/equity: Apollo (APO) -4.8%, Ares -10.1%, Blue Owl Capital -9.8%. The nice thing about private deals is that prices aren’t marked to market, they’re kept private. Like the Epstein files. But there are clues. The story posted yesterday by Crain’s is a case in point. The Chicago Board of Trade address is 141 W Jackson. The building next door is 175 W Jackson (we know it as The Insurance Building, and EVERYONE knows that premium is cheap). Anyway, it sold for just $41 million or $29 sq ft, down from a $306m trade in 2018, an 87% discount. Crain’s calls it “…one of the most staggering losses of value ever for a Chicago office property.”
It’s just possible that I had a beer in that building when the lobby housed the Excelsior. Or later, when the space became Poag Mahone (translation: kiss my arse). And of course from there it was a mere jump to Alcock’s…
–The first FOMC that Warsh is likely to preside over is June 17. I had thought it was premature to read too much into policy changes. However, the nagging thought of large portfolios has to be that the safety net of QE and the Fed’s balance sheet is no longer there. On March 7, 2025, Bessent said on CNBC, “There’s no put”. “The Trump call on the upside is, if we have good policies, then the markets will go up.” Post-Liberation Day in April? Trump put. However, I feel Warsh might be different. No WACO. On the other hand, Powell tried to play tough in Q4 2018 when SPX cratered by 20%. By early 2019 every trade was predicated on easing. Last hike, Dec 2018. First ease, July 2019 to 2.0-2.25%.
