Paulo Macro — Ramblings & Ruminations: Mid-Year 2026 Overview
"Markets are highly unstable and have achieved a state of criticality." A mid-year sweep across jobs, inflation, the dollar, positioning, platinum and oil — arguing the tape is "among the most dangerous I have ever seen," with a private Carry-Unwind-Risk gauge at Jan-2018/Jan-2020 levels — plus a new, self-loathing tactical trade he can barely admit to: long bitcoin upside.
One-line take: The core of this note is a positioning/derivatives-topology warning — the USD is a "consensus the market is not confirming" (Vanda: DXY positioning 92nd percentile, most bullish since Apr-2022, yet price nowhere near the 105-110 that level would imply → a Kovner-signal dollar bear market); he expects a Risk Off / Bonds Off / USD Off stress moment before Labor Day (the SVB / Liberation-Day / 1Q26-Iran correlation-flip precedent), with a "Summer 2024 Yenmaggeddon" yen at 162 and compressed FX vol as the trigger. Margin debt has peaked and rolled over (precedes every bear market this century); dispersion is at record highs vs correlation; single-stock vol at an all-time high vs index vol; S&P put/call skew 0.71 (lowest on record); his private Carry Unwind Risk indicator sits at Jan-2018/Jan-2020 levels into July-August crisis seasonality (LTCM '98, Quant Quake '07, Taper Tantrum '13). Macro: jobs rolling over into a possible late-summer negative payroll print (→ the classic 4Q midterm-year easy-liquidity rally); classic stagflation with supercore stuck 3-4% vs Warsh's 2% ambition. The named securities are few and mostly illustrative: the new bitcoin trade (BTC — a trade, sized as such), MSTR ("a disaster… will end in bankruptcy"), PPLT (platinum ETFs draining >500koz, borrow rate spiked to ~12%), and a passing HOOD behavioral read. Oil section (written pre-Tuesday) mocks the Street's herd "Superglut" 2027 balances rhyming with the December-2025 consensus his January "Big Corner" call faded.
1. Stocks & names mentioned
| Ticker | Name | Research | View | What's said | Source |
|---|
| BTC | Bitcoin | STK | Positive | "I started buying bitcoin upside on Monday" — an explicit trade, sized as such (not a long-term holding): "only the chart matters," selling looks exhausted, BTC held up while the Nasdaq fell -1.8% and even as Saylor sold, with a possible weak-USD/dovish-Fed rolldown tailwind. Sized small — "do the hard trade"; still "an accident waiting to happen." | post ↗ |
| PPLT | abrdn Physical Platinum Shares ETF | QT · SA · STK | Positive | The largest platinum ETF (~1.1Moz of 2.8Moz total). Its borrow rate to short spiked to ~12% annualized over two weeks — exceeding last year's spikes — evidence redemptions/ounce-withdrawals have run deep enough to create a borrow issue. Getting "closer to a significant move higher in platinum and copper," though "probably early — the tape is a mess." | post ↗ |
| HOOD | Robinhood Markets | QT · SA · STK · FA | Neutral | Passing behavioral read, not a stance: per Vanda the "Robinhood degen" cohort has been shedding exposure into strength "like they need the money to pay bills," a "soft echo of its former glory" — which is why retail participation "feels" lackluster even as Schwab/BofA clients pour in. | post ↗ |
| MSTR | MicroStrategy (Strategy) | QT · SA · STK · FA | Negative | "Michael Saylor and MicroStrategy is a disaster and will end in a bankruptcy or other restructuring… he will take BTC down to extreme levels with him." Saylor's "bitcoin physics" unwind will "be pretty epic"; notes Saylor sold some BTC on Monday (yet BTC still closed up). | post ↗ |
This is a broad macro/positioning note; the named securities are few. BTC is the one active position — an explicitly tactical trade (long upside, sized small), not an investment. MSTR is a strong Negative (bankruptcy/restructuring call). PPLT is the platinum expression he's watching for a move higher (the ~12% borrow-rate spike is the tell). HOOD is a passing behavioral observation (Neutral). Named-in-passing and intentionally not tabled: forecaster banks (GS / JPM / Citi / Morgan Stanley / Deutsche / Rystad / Energy Aspects), data vendors (Vanda, Schwab STAX, Citadel/Rubner, Simon White/Bloomberg, Goldman skew), OpenAI / Anthropic (a passing hyperscaler-stake markup note), Wendy's (WEN, a one-line meme aside), Saylor as a person, and the macro instruments (DXY, yen/USD-JPY, platinum/copper/oil, MOVE, VIX/VIXEQ).
2. Talking points
Jobs — the NFP "cartoon," economy rolling over
- NFP is "a cartoon of surveys, revisions, and narratives"; Warsh wants to modernize it but task forces "take a while," so the lagging NFP is what the Fed is still left with. Payrolls came in "soft," leaving open how hawkish the split committee proves.
- He sees the economy rolling over after inflecting into Run It Hot late last year — deeper than gasoline squeezing the bottom of the "K." Large employers are shedding openings; ISM new-orders:inventories is rolling over after a May peak (leads PMI by 4 months).
- Construction is "all about data centers"; real estate stays weak — he's warming to the Boomer-ageing → residential-to-nursing-home shift flooding housing supply over the coming decade (affordability + sticky long-end yields the near-term story).
Jobs — NFIB hiring plans → a possible negative print → the 4Q midterm rally
- NFIB small-business hiring plans point to private payrolls cycling either side of zero for months, with a possible notable negative print late summer.
- Bad data = easy liquidity: that could touch off the classic 4Q rally in the 4-year election-seasonality calendar. 2026's contour is "all wrong" for the usual midterm 2Q-3Q weakness, but 4Q Year-2 → mid Year-3 is the "sweet spot." Watching September opex / quarter-end for a firm flip to easing by October.
Inflation — classic stagflation, biased higher into autumn
- Core services (which should ignore fuel) is now the key issue. Warsh's preferred Dallas Fed Trimmed Mean trails CPI YoY by ~6 months at big amplitudes — a "joke" that flatters the read.
- NFIB comp/pricing plans lead wages and supercore by ~8 months, biased higher into autumn; supercore could sit 3-4% vs Warsh's 2.0% ambition. Wage growth sticky for stayers and switchers; manufacturing prices-paid (9-month lead) cycling higher through summer.
- Classic stagflation — consensus but a view that had relaxed earlier this year (BAML FMS); room to adjust higher vs the 2022/2025 episodes.
USD — a Kovner-signal dollar bear market
- Long-held view (shared with Gundlach): the next slowdown / inflationary recession sees the dollar go down, not up — "inflationary recessions create monetary illusions." Fiscal dominance has put monetary policy "in the passenger seat."
- Per Vanda, DXY positioning is 92nd percentile — most bullish since Apr-2022 — yet DXY isn't above 101, let alone the 105-110 that positioning historically implied. "Price is not confirming a bullish positioning consensus" (Kovner) → a dollar bear market. Compressed FX vol suggests whatever breaks "has a likelihood of being a rip."
The correlation-flip stress tell + "Yenmaggeddon" yen
- Expects a Risk Off / Bonds Off / USD Off stress moment between now and Labor Day. The 2022-present regime is "bond yields up, USD up," but at each stress episode — spring 2023 (SVB), Mar-Apr 2025 (Liberation Day), 1Q26 (Iran War) — the correlation flipped negative (bonds down, USD down). Since May the USD-vs-30Y correlation has already cratered, with the yen grinding through 162.
- "Summer 2024 Yenmaggeddon" vibes: USDJPY diverging from US real yields (compressed) vs Japan's (sticky); broken yen correlations and absurdly compressed vol. A rallying yen could be the transmission mechanism that touches off chaos while quant factors are "all over the road" (quants were destroyed the last week of June on Momentum and Beta).
Positioning — margin debt rolling over; the Rubner-vs-Vanda retail split
- Counter to the mania narrative, US-equity investors have been shifting defensive for 9+ months (successive peaks in equal-weight discretionary vs. staples), "broadening out" notwithstanding. "This tape is a mess, and among the most dangerous I have ever seen."
- Margin debt has peaked and started rolling over — a signal that precedes every major bear market this century. Schwab STAX net-buyers at the highest since Feb-2022, but Vanda shows the narrow "Robinhood degen" retail cohort selling into strength since late March (they bought the Q1 war dip, then sold the rally) — which is why participation "feels" lackluster (HOOD "like they need the money").
Positioning — retail into 0DTE + leveraged ETFs; the funding "backside of the mountain"
- Retail shifted out of cash equities into 0DTE options + leveraged ETF products (exploded since March), concentrated in semis/tech — products with heavy vol drag that "eventually return to zero," creating enormous rebalance flow.
- Equity funding tightened from late May (dealer demand to fund leverage + IPO/unlock paper) and has now eased — but "this is not a good thing… the backside of the mountain" (the late-2024 precedent: funding exhaled, leverage demand vanished into a distributive tape). The risk: dealers going from charging high rates to actually cutting risk → wholesale deleveraging as a contagion mechanism.
Derivatives topology — dispersion, skew, and the gamma → vanna/charm trap
- Compression setup: single-stock implied vol at an all-time high vs index vol; dispersion at near-record highs vs correlation (and never so high relative to correlation); correlation back at Yenmaggeddon-2024 / 2018-Volmaggeddon lows (the XIV blow-up precedent). Call-chasing in AI names pushed single-stock vol up while put demand stayed negligible — S&P put/call skew collapsed to 0.71, the lowest on record.
- Gamma-squeeze risk: VIXEQ-vs-S&P correlation never more positive while VIX-vs-index hovers near lows — a squeeze can lift stocks short-term, but once dealer hedging completes, vanna and charm "can quickly take the market lower with no catalyst."
Carry Unwind Risk at Jan-2018/2020 levels + July-August seasonality
- Dealers' repressed bond vol is the "substrate collateral" for leverage; MOVE and realized correlation move together, and the 30Y blew through 5% again. Rising bond vol → haircuts, collateral calls, forced deleveraging → rising correlation, rising index vol, falling dispersion. "We've seen this Acapulco Cliff Dive movie before — never from such heights."
- His private Carry Unwind Risk indicator is at January-2018 and January-2020 levels, into July-August crisis seasonality (LTCM 1998, Global Alpha "Quant Quake" 2007, Taper Tantrum 2013). "See the criticality now? Stay frosty."
New Trade — long bitcoin upside (a trade, not an investment)
- "I started buying bitcoin upside on Monday" — a position that "makes me want to throw up," so "it must be decent." BTC "has no fundamentals… only the chart matters"; the ultimate flow asset (money in → price up). Selling looks exhausted; BTC held up while Nasdaq fell -1.8% and even as Saylor sold.
- Rationale is agnostic: maybe capital-flight/laundering on Iran, maybe the USD rolldown + dovish Fed — "it really doesn't matter." Large-spec futures net long is at a record, but in BTC large specs tend to get very long at low extremes (Sept-2023, Mar-2025). "This is a trade and sized as such" — still "an accident waiting to happen." NOT financial advice.
Platinum — ETFs draining, borrow rate spiking (the palladium-2016-19 analog)
- Platinum collapsed since the January bonanza and positioning has "really cleaned up," but fundamentals haven't changed — he's getting closer to a significant move higher in platinum and copper (probably early). Lease rates low vs the past year but above the pre-Covid zero.
- Global platinum ETFs have quietly drained >500koz since late January (probably to China, "never coming out in pure metal form") — the palladium-2016-18 pattern before the 2019 wake-up. London platinum still in backwardation (physical tightness); COMEX OI collapsed; small specs near capitulation. PPLT's ~12% borrow-rate spike suggests redemptions have run deep enough to create a borrow issue. Watching for a final spec liquidation.
Oil — the herd "Superglut" balances (written pre-Tuesday events)
- Caveat: written Monday, before Iran attacked vessels in the Oman southern passage, the US bombing response Tuesday, and China's overnight lifting of its product-export ban ("extremely important!").
- Positioning is washed out: WTI non-commercial long %OI below the 2023-24 troughs (only Liberation Day and 4Q25 "Superglut" lower since 2011); Brent managed-money short notional the highest in history, net long 4th percentile, long/short ratio ~zero, combined WTI+Brent net long ~$10B ("truly nuts"). The Economist cover as the contrarian tell.
- The Street's herd 2027 "Superglut" balances (EA/GS +3.2, JPM +3.8, Citi +4.1, Morgan Stanley +4.4, Rystad 4-6 mmbpd) rhyme exactly with the December-2025 consensus his Jan-28 "Oil Has Turned a Very Big Corner" faded: "over one billion barrels of production gone, but now it's +3.8mmbpd instead of +2.7 — how exactly??" "I felt like I was watching the 22 Jump Street remake sequel."
3. In plain English
A jargon-free summary of why each name appears — what it is and why that view. (Plain-language companion to the table above; renders on each ticker's consolidated page.)
BTC — Bitcoin Positive
This is a trade, not an investment — Paulo goes out of his way to say so, twice. He normally has no time for bitcoin's various stories (digital gold, debasement hedge, ponzi — "it can be any or all of those"); to him it's purely a flow asset: money flows in, the price goes up, and that's it, so "only the chart matters." He shorted it last September; now he's buying upside because selling looks exhausted and, tellingly, bitcoin stopped going down even on days when risk assets (the Nasdaq) were hit and even when Michael Saylor was selling. He sized it small ("do the hard trade") and expects it ultimately to "not work" — this is a short-leash tactical bet on a possible weaker-dollar, easier-Fed tailwind, explicitly not a long-term holding and not financial advice.
MSTR — MicroStrategy (Strategy) Negative
MicroStrategy (now "Strategy") is the company that turned itself into a leveraged bitcoin-holding vehicle — it borrows money to buy and hold bitcoin. Paulo's view here is blunt and negative: he thinks it "is a disaster and will end in a bankruptcy or other restructuring," and that when the forced unwind of Saylor's leverage ("bitcoin physics") comes, it will drag bitcoin itself down "to extreme levels." In other words, even though he's tactically long bitcoin for a trade right now, he sees MSTR as the fuse for the eventual blow-up. A notable tell in the note: Saylor sold some bitcoin on Monday, yet bitcoin still closed up — which Paulo reads as underlying demand absorbing the selling.
PPLT — abrdn Physical Platinum Shares ETF Positive
PPLT is an ETF that holds physical platinum bars; buying it is a clean way to own the metal. It's the biggest such fund, holding about 1.1 million of the roughly 2.8 million ounces sitting in all platinum ETFs. Two clues make Paulo constructive. First, these ETFs have quietly lost more than 500,000 ounces since January — real metal leaving the vaults (probably heading to China, where "it's never coming out"). That echoes what happened to palladium in 2016-18 right before its price suddenly woke up in 2019. Second, the cost to borrow PPLT shares in order to short them has spiked to nearly 12% a year — unusually high, which suggests so much metal has been redeemed that shares are getting scarce. He thinks platinum (and copper) are getting closer to a real move higher, while admitting he's "probably early" in a messy tape.
Key points extracted from the paid PauloMacro Substack post (saved in transcript.txt) for personal study. Not investment advice. © PauloMacro for source material.