Tony Greer: The Bond Market Is Calling Washington’s Bluff

Trevor Hall (0:16)

Oh, man, it's always a special week when I get a kick off the week with a market update from my brother, Mr. Tony Greer. TG, how are you, man?

Tony Greer (0:26)

I'm good. I'm good, Trev dog. How are you doing, man?

Trevor Hall (0:29)

Yeah, I'm good.

It feels like after the summer doldrums, things are feeling a little bit weird, but looking for some direction, some clarity, I don't know if that happens this week, Tony. Honestly, it's hard to decide what is going to move the big markets one way or the other. I think we're a no man's land, to be quite honest with you.

Tony Greer (0:55)

I see a couple of things that could happen. You know, they might take a catalyst, and but I think that there are some things that are set up to happen that will shake this tape up massively. We can get into that however direction you want.

Trevor Hall (1:08)

Yeah. Let's do it. You actually published a fantastic note, which is saying something because I read everything you publish.

Tony Greer (1:18)

Right?

Trevor Hall (1:19)

And this today's was well, listen, today's note was special, but it also I think kind of just it triggered me a little bit. Not only your note, I'm in the middle of Andrew Sorkin's 1929 book, and so I'm taking all this information of what happened in like, in currently like 1931

Tony Greer (1:37)

Wow.

Trevor Hall (1:38)

And then I've also our friend Barry Knapp, who we're going to see in a couple of weeks in Nashville at JD's conference, at the Dirt Knapp conference. He put out an interesting note again this morning. But let's start kind of where I want to take this, because you are a house amongst yourself, TG., but Scott Besson's walking back of I Am the House was some sort of sentiment indicator if it wasn't in itself. Man, today you compared Scott Besson to Dick Fold. Some people may not know who Dick Fold is. Lehman Brothers days.

Is that a proper comparison? Tell me what the thoughts going through your head right now.

Tony Greer (2:25)

You know, Trevor, you know what's wild is that it's the season of bat shit crazy things happening on Wall Street, right? Where it's settling into September, October, and you have traitor brain memory from seasonal things no matter what. And when Scott Besson said, I'm the house now, it just reminded me like my gut says immediately, oh, they're going to come after him for that, right? You know that because that's how markets work. And I was like, this is Dick Fould five days before Lehman went under saying that we're pretty well capitalized, you know what I mean? And just, you know, keeping a strong, trying to play a strong hand when he doesn't have one, right? That was another case of what Scott, that is a definite, that's the kind of metaphor for me is that we have two massive mega, highly public leaders playing a lousy hand with strong rhetoric, right? Lehman is totally capitalized. I am the house now.

We got Scott Besson comes back on, and I saw it tweeted by Nick Timmeros, or if I'm saying his name correctly or not, but he's the messenger, right? So if he's getting it out, that's what they want the markets to hear. And he had to walk it back and say, no, that was just, you know, I have some inside information. I can see more than you, right? And I think that he was trying to be like, okay, let's get the I'm the house target off my back, right? Because what's happening in the markets is 10-year and 30-year yields don't want to hear it. They do not care that he's the house. They don't care who the house is. They are on a trajectory path higher, and people can feel bond longs getting long squeezed. People can feel the range break, and rates are clearly headed to another zip code, and we don't know where yet. And people are starting to feel that around the next 10 basis points higher in yields, we're going to hear from Scott Pessent. You know what I mean? And it's not just going to be a passive thing. It's going to be, we're going to have to do this in the markets. And so that's kind of what I'm trying to be on the lookout for.

And if I had to find a catalyst, I don't look much further than the oil market. If you look at crack spreads and the diesel price, I feel personally like it's the diesel price that's wagging this whole inflation scare.