The Block, Shumer, & Citrini Effect ("BSC"... IYKYK)

AI or Credit Cycle? "Yes"

I was going to steer well clear of the recent viral Shumer and Citrini posts on AI, but after the Block quarterly result and management comments tonight, I decided better to go to the bar, come home to a bottle of wine coda, and give this a stab against prior reservations.

Look, everyone including myself probably feels a bit lost in recent market action. Many are up a lot on the year and feeling queasy. Others are probably in drawdown as far back as late January, and they may have not even owned precious metals…just business-as-usual long/short or quant with tight risk that somehow went awry. There are underlying reasons for all of this, some of which I have tried to address in the last few notes in discussing the rolling VAR effect along with my running comments on chat, but I won’t rehash these here.

I think the recent market action explains why some things have gone viral in the first place. Atypical markets require an explanation, and coincident headlines or viral news are a classic case of “a bug in search of a windshield,” or “the market makes the news, not the other way around.” In this regard, I am fully prepared for The Economist to run something related to AI or Citrini on the cover tomorrow. I wish I knew what the contra to that magazine cover is, but that’s not the point of this note. Instead, tonight I am going to share a few thoughts around all these narratives, in no particular order.