Fed kills forward guidance to regain surprise

Other (22)

• Grant Sanderson predicted three years ago that AI passing the International Math Olympiad (IMO) would be just another benchmark, not an AGI "aha moment," a prediction that proved true.
• AI excels at geometry problems in the IMO, solving them rapidly via brute force, but struggles with combinatorics problems, which require creative, puzzle-like approaches.
• Grant Sanderson outlines three ways AI could solve the Riemann Hypothesis: by connecting disparate fields, building new theories, or through extensive, brute-force computation.
• The Montgomery-Dyson anecdote illustrates connecting fields, where a number theorist's observations on Riemann zeta function zeros aligned with a physicist's random matrix theory.
• Fermat's Last Theorem exemplifies theory building; its simple statement required centuries of complex mathematical machinery like elliptic curves and modular forms for a solution.
• Dwarkesh suggests future AI benchmarks involve generating interesting problems and creating new definitions that unify fields, reflecting the hierarchy from theorem-provers to definition-creators.
• Evaluating AI's ability to generate conjectures or definitions will be subjective, measured by a "tone shift" among mathematicians, not a clear quantitative score, Grant Sanderson states.
• Galois's group theory, which proved the insolvability of the quintic polynomial by radicals, took around 100 years for its profound utility to be fully recognized.
• Early mathematical societies rejected Galois's incoherent papers. Liouville and Jordan decades later formalized his abstract ideas into modern group theory.
• Grant Sanderson notes that a key human goal in math is understanding, not just proving, exemplified by Timothy Chow's concept of "unsolved expository problems" like the continuum hypothesis.
• Grant Sanderson now believes AI will excel at explanation and distillation, potentially surpassing human capabilities in clearly communicating complex ideas, not just proving theorems.
• Grant Sanderson anticipates mathematicians' future role will shift towards "curation," guiding humans through a vast landscape of AI-generated ideas, akin to art curators.
• Dwarkesh attributes AI's rapid progress in math and coding to "grindability" - the ability to run parallel, deterministic training simulations that quickly resolve credit assignment problems.
• Lean formalization, while not directly driving current AI math breakthroughs, offers the unique potential for AIs to endlessly extend formalized math libraries (Mathlib) without human supervision.
• Grant Sanderson raises concerns that auto-regressive AI generation, being "a slave to its context," struggles to make unlikely, cross-field connections necessary for significant breakthroughs.
• Dwarkesh suggests AI can counter "entropy collapse" by systematically exploring negations and introducing deliberate biases in different agents to foster diverse research paths.
• AI struggles with good writing because unlike modular code or math, writing itself *is* the end product, demanding meticulous, non-sloppy quality in every word.
• AI's difficulty in building accurate mental models of people, evidenced by its poor performance on space-repetition prompts, suggests a struggle with anticipating human cognitive states.
• Google's Gemini 3.5 Live Translate automatically detects and translates over 70 different languages in near real-time, available via the Gemini Live API and AI studio.
• Grant Sanderson points out that Jane Street maintains high employee retention by fostering a culture where individuals, regardless of official role, engage broadly across research, trading, and engineering.
• Grant Sanderson likens current LLM explanations to Wikipedia: comprehensive but lacking a single author's crafted motivation, recommending them for finding high-quality human-authored resources.
• Dwarkesh advises students interested in math or other AI-impacted fields to understand the value they add and where money flows, rather than solely pursuing inherent interests.

Other (60)

• Joe Carlasare considers the recent FOMC meeting the most impactful since the Bernanke era, even more so than under Powell, due to significant policy shifts.
• Dr. Jeff Ross projects a future where three dominant currency groups emerge: the US dollar system, the China ecosystem backed by gold, and Bitcoin as the growing "dark horse" in the 2030s.
• HODL describes current market conditions as painful, feeling like a classic bear market bottom marked by widespread apathy and infighting.
• Dr. Jeff Ross sees current market sentiment as typical bear market bottom behavior, anticipating a major rotation in assets heading into the summer.
• Joe Carlasare identifies a massive paradigm shift at the Federal Reserve, noting their removal of forward guidance and complete rewriting of customary statements and market expectations.
• Joe Carlasare highlights jawboning as the Fed's most powerful policy tool, cautioning that removing forward guidance could lead markets to "throw a tantrum."
• Nathan observes a market downturn, with Bitcoin down 5%, NASDAQ down 1%, gold falling below $4,000, and silver dropping below $60.
• Joe Carlasare suggests the Fed's reduced forward guidance reflects a view that monetary authorities should play a diminished role, with the Treasury and executive branch taking primary economic influence.
• Joe Carlasare dismisses concerns about lost Fed independence, arguing the central bank has rarely been "purely independent" throughout American history.
• Dr. Jeff Ross notes a significant dollar price action, with the DXY rising from below 99.60 to 101.63, indicating market seriousness about current events.
• Dr. Jeff Ross explains that limited capital is currently flowing into AI, energy, and rare earths, creating a scarcity of dollars for assets like Bitcoin, which are left on the sidelines.
• HODL describes personal financial pain, stating he is "half as rich" and noting inflation, citing a $37 Chipotle burrito bowl as an example.
• Joe Carlasare interprets Fed Chair's comments about focusing on the "left of the decimal point" for the 2% inflation target as an openness to inflation rates of 2.7-2.9%, paving the way for lower rates.
• HODL views SpaceX and recent IPOs of the last 6-10 years as primarily liquidity events for insiders due to excessively high valuations, with typical lockups around one year.
• Dr. Jeff Ross observes that current Fed policy is reverting to Alan Greenspan's secretive, surprising style from the 1990s, which he personally prefers.
• Dr. Jeff Ross is optimistic that the Fed will use its new policy approach to improve and expand its data sets, shifting from a historically backward-looking to a more forward-looking analysis.
• Dr. Jeff Ross notes the US is reportedly allowing Iran to sell oil for dollars for the first time in decades, drawing parallels to the 1970s petrodollar agreement with Saudi Arabia.
• HODL suggests the Trump administration was misled by Israeli intelligence regarding Iran, leading to an ill-prepared military engagement without the political will for a prolonged conflict.
• HODL questions whether recent geopolitical events represent America's "Suez moment" of imperial decline, noting the US still commands the largest military force globally.
• Joe Carlasare asserts the US economy is performing well and will strengthen, driven by deregulation, tax bills, and trillions of dollars in AI-related capital expenditure over the next 10 years.
• Joe Carlasare points to strong economic indicators like three months of trending-up jobs data and an Atlanta Fed GDP projection of 3%, significantly above the 2% baseline for developed economies.
• Dr. Jeff Ross confirms the US economy is doing well, specifically highlighting a robust manufacturing sector with new orders at a strong and accelerating 56.8.
• Dr. Jeff Ross believes the US is shifting away from excessive financialization since the GFC, rotating back towards manufacturing and physical building, which he sees as beneficial for America.
• Dr. Jeff Ross predicts a market rotation from overvalued AI and semiconductor companies into industrial sectors and base metals like steel, aluminum, and copper, which have been neglected for the last 10 years but could become "sexy" for the next five.
• Dr. Jeff Ross draws parallels between the current economic environment and the 1970s, expecting hard assets to outperform financial assets.
• HODL argues AI will create more jobs, not fewer, due to Jevons paradox; insecure AI-generated code necessitates new software engineers and has set cybersecurity standards back to 1998.
• Joe Carlasare maintains a 40-0 record against GPT-drafted legal complaints, noting AI tools handle initial grunt work but never produce file-ready documents, thus reducing demand for entry-level legal positions.
• Joe Carlasare argues that AI's impact on jobs and unprecedented medical advancements extending Boomer and Gen X lifespans over the next 10 years will exacerbate generational divides, requiring a societal restructuring of the social contract.
• Joe Carlasare contends that future societal "revolutions" will stem from political issues rather than economic ones, contrary to many macro predictions.
• Dr. Jeff Ross compares AI's potential impact on entry-level jobs to the challenging post-2008 Great Financial Crisis job market for millennials.
• Joe Carlasare states that life expectancy hit a record high this year and is projected to increase, with more people living to 90 based on advancements observed over the last five years.
• Dr. Jeff Ross attributes the success of GLP-1 drugs to their effect of inducing low-carb diets, arguing they are not miracle drugs but rather combat a "chronic carb toxicity culture" prevalent since the early 1980s.
• HODL maintains that Bitcoin cycles are dead, arguing that if Bitcoin is merely a trading asset without long-term holding, it lacks a fundamental reason to exist.
• HODL distinguishes the current gradual Bitcoin bull and bear markets from the dramatic "fab bam" cycle of 2017.
• Dr. Jeff Ross notes market bitterness over the absence of an exponential move in Q4 2025, observing that the cycle ended in October and may not restart until October 2026.
• Dr. Jeff Ross likens the current Bitcoin market downturn, driven by treasury companies' poor financial decisions, to the 2018 ICO bust and the 2022 centralized exchange bankruptcies.
• Joe Carlasare contrasts the relentless 2018 Bitcoin sell-off, which broke below $6K, with the current market, noting prices are at the same level as February.
• Joe Carlasare states that past Bitcoin bear markets experienced significantly deeper drawdowns, citing a 72% drop from November to June in 2022, which would equate to a $35,000 Bitcoin if repeated from October's peak.
• Dr. Jeff Ross attributes the current less painful Bitcoin drawdown to a "wimpy blowoff top" experienced in Q4 2025.
• Joe Carlasare emphasizes the difficulty of timing both the top and bottom of the market, questioning hypothetical buy points at $60K, $40K, or $30K.
• HODL, a long-term Bitcoin holder, observes that Bitcoin often moves contrary to collective expectations; he believes a Q4 drawdown is unlikely given the amount of sidelined capital.
• Joe Carlasare reports a "conspiracy theory" on Twitter claiming Michael Saylor's aggressive Bitcoin acquisition and financial engineering decisions are responsible for depressing Bitcoin's price action.
• Dr. Jeff Ross believes the current market has bottomed, citing classic bear market sentiment indicators like widespread apathy, infighting, and general negativity observed in YouTube analytics.
• Dr. Jeff Ross advises that historically, since 2015, buying Bitcoin at or below its 200-week moving average has proven to be a reliable, unregrettable decision.
• Dr. Jeff Ross, initially a supporter of Michael Saylor's Bitcoin treasury strategy for "milking Wall Street," now believes Saylor overextended, encouraging irresponsible behavior in other companies.
• HODL theorizes that MicroStrategy's recent Bitcoin sale was a "narrative violation" to break Michael Saylor's four-five year "never sell" stance, aiming to gain flexibility with lenders who otherwise held leverage over them.
• Joe Carlasare clarifies that MicroStrategy sold 3,200 Bitcoin for tax benefits, not 32 Bitcoin as the host suggested.
• HODL notes that MicroStrategy's "narrative violation" sale fueled speculation of a large Bitcoin dump, reminiscent of 2022 Grayscale conspiracy theories about missing coins.
• Nathan points out that MicroStrategy's $2.5 million Bitcoin sale on June 1st preceded a 20% drop in Bitcoin price, suggesting it likely didn't help their leverage with lenders.
• Nathan notes MicroStrategy's operating business generates $40-42 million monthly, but faces over $100 million in dividend obligations, indicating a need to transition beyond their Bitcoin-focused audience.
• HODL admits to violating his own "never sell" narrative by selling some Bitcoin to take time off from work, but asserts his commitment to the asset remains unchanged.
• Joe Carlasare states that since Trump's election in November 2024, MSDR has underperformed Bitcoin by 60%, unequivocally disproving the idea of it being a superior leveraged play.
• Dr. Jeff Ross emphasizes that leverage is not a shortcut to Bitcoin wealth, asserting that $60K is already an amazing accumulation opportunity if Bitcoin eventually reaches millions of dollars.
• Joe Carlasare highlights the volatility of leveraged products, noting that the Defiance Daily 2x Long MSTR ETF (MSTX) fell from approximately $7,800 in December 2024 to $9.
• Nathan states Bitcoin is currently trading around $59,682, which is $2,000 to $3,000 below its 200-week moving average.
• Dr. Jeff Ross anticipates a market rotation from semiconductor dominance in Q2 towards hard assets like gold and Bitcoin after summer, aligning with a renewed focus on the real economy.
• HODL optimistically predicts a bullish Q4 for Bitcoin, projecting a return to all-time highs and rejecting prevailing bearish narratives.
• Joe Carlasare announces his book "Unconfiscatable" will be released on Amazon on September 1st, 2026, predicting it will trigger an epic Bitcoin bull run.
• Joe Carlasare recalls that the brutal 2018 Bitcoin market was followed by a 3x-4x rally from $4K to $13K in 2019, suggesting a similar FOMO catch-up rally could occur.
• Joe Carlasare stresses that periods of depressed Bitcoin prices are optimal for accumulation, recalling past missed opportunities at $3,200-$6K and projecting future values of $200K-$300K within two years.

Macro (4)

• Bob Sheehan founded Lighthouse Macro in January, drawing on his career experience managing a $1-1.2 billion macro equity strategy at Bank of America and working in data science and short-sale data analysis.
• Bob Sheehan's macro framework emphasizes grounding views in data and probabilities, acknowledging historical trends, but crucially, being 'falsifiable' to recognize when assumptions are incorrect.
• The US faces a 'fiscal doom loop' where rising interest expenses on debt, exacerbated by government spending exceeding tax receipts, necessitate further bond issuance, pressuring the long end of the yield curve.
• Macro analysis must consider everything relatively, not in absolutes; while fiscal issues cause stress, the dollar's strength and treasury demand are relative to other global conditions.

Markets (2)

• Bob Sheehan identifies two distinct market trades: a near-term bare flattener on the short end of the yield curve, and a longer-term supply-driven move higher for the long end.
• The market is witnessing a dislocation of risk, with both Bitcoin and gold selling off, which is unique and does not correlate with historical patterns for some traders.