The Great Unwinding Wall Street Isn’t Pricing In with Matt Dines

— The post-World War II global order is undergoing a reset, with energy supply chains and capital flows being reconfigured away from Asia (primarily China) toward Europe and North America.

— The Kuwait pipeline infrastructure deal with Blackstone, KKR, and Brookfield represents a strategic shift to move Middle Eastern oil overland through Iraq and Syria to European markets, bypassing the Strait of Hormuz and Red Sea chokepoints.

— U.S.-China relations are deteriorating; a 12-month truce on rare earths access expires in Q4 2025, and energy blockades (via Iranian strait closure and Houthi Red Sea attacks) constrain Chinese growth while the U.S. tightens monetary conditions.

— The Paramount-Warner Brothers M&A proxy battle, opposed by 12 blue-state attorneys general, is a proxy for control of AI infrastructure, media content libraries, and cloud platforms; Oracle bond spreads are widening as uncertainty lingers.

— Rising real yields, a flattening yield curve, and dollar strength reflect exogenous tightening driven by executive branch geopolitical actions, not endogenous credit stress; money market pressure may force Fed rate hikes in late 2026 or early 2027.

— November 2024 U.S. elections will likely resolve the Paramount-Warner Bros. merger and clarify the direction of capital allocation, energy policy, and U.S.-China competition for decades.

— Real yields are rising (observed via TIPS market), not inflation breakevens; TBL liquidity is declining, signaling a tightening liquidity backdrop.

— Yield curve is flattening, mirroring a drive for safety; the benchmark risk-free rate has shifted structurally higher.

— Dollar strength is rising in tandem with higher yields and flight-to-safety positioning.

— Korean stock market has crashed; U.S. tech valuations are normalizing, though the AI boom is far from over.

— Oracle long-end bonds (2040 maturity) trading at 7.5% yield; Oracle spreads have widened to ~250 basis points over U.S. Treasuries in recent weeks.

— Tech sector long-end debt (SpaceX, Meta, Amazon) is selling off; spreads widening across the sector as pressure mounts on long-end corporate bonds competing for capital with sovereign debt.

— SOFR futures show market expectations for rate hikes in Q4 2026 and Q1 2027; leverage longs are shorting SOFR futures, reflecting hedging activity from levered credit positions accumulated over two decades of low rates.

— Monitor election outcomes and their effect on credit spreads: The November elections (House, Senate, governorships) will likely resolve the Paramount-Warner Bros. merger and trigger a repricing of long-end corporate debt. Blue-state dominance of attorneys general and blue-state control of strategic tech mergers are at stake; winners will shape AI infrastructure and capital allocation for years.

— Watch for Fed rate hikes despite official policy hold: Money market tightness and hedging demand (via SOFR shorts from levered credit positions) are creating upward pressure on short rates regardless of Fed rhetoric. Rising real yields and geopolitical disruption of energy supply chains are exogenous drivers; the Fed cannot ignore sustained pressure from the bond market.

— Track energy and capital flow reconfiguration: The shift in oil routes (Kuwait pipeline to Europe, away from Asia) and the buildup of AI/tech equity and debt issuance in H1 2025 signal that large players front-ran the next phase of tightening. If energy flows to Europe succeed and China's growth slows, relative U.S. asset performance may diverge sharply post-November, triggering a repricing of long-duration assets.