Welcome to the Deep Dive. We're here to help
you cut through all that noise and really get
to the core insights from the information you
share with us. You know, in a world just flooded
with headlines, our goal is simple, clarity,
and maybe those aha moments that help you feel
genuinely well -informed. Today, we're not just
looking at headlines in isolation. We're sort
of tracing the connections, those invisible threads
between political moves, everything from local
deployments right up to big executive power questions.
We'll see how they ripple outwards, shaping our
economy, our society. We want to reveal some
of the forces really at play right now. We'll
be drawing on recent news reports, stuff about
Trump world, and also a detailed look at key
indicators just ahead of this week's big Federal
Reserve meeting. OK, let's unpack this. It's
quite a collection. So kicking us off, let's
dive into something pretty contentious. Former
President Trump's, well, his shifting focus for
a potential National Guard deployment. He initially
talked about Chicago, right? But our sources
say the target's now Memphis. What's behind that
specific change, especially after the pushback
from Illinois Governor Pritzker? Yeah, that pushback
likely made Chicago, let's say, politically difficult.
And a key thing here is the difference between
the stated goal and what might be the implied
goal. Nominally, Trump says it's about fighting
crime in Memphis. He called it deeply troubled,
pointed out it has the highest crime rate. Fair
enough on the surface, but our sources also read
this clearly as an attempt to intimidate a blue
city in a red state. So it really begs the question,
is this... Truly about crime or is it more of
a political signal, a show of force in a particular
context? And that tension definitely comes through
in the local reactions. You've got Tennessee's
Governor Lee and Senator Blackburn supporting
it. Blackburn seemed quite enthusiastic, actually,
about federal troops. But then on the ground,
it's starkly different. Memphis Mayor Paul Young,
who is black, was incredibly clear. He said,
and I'm quoting here, I want to be clear, I did
not ask for the National Guard and I don't think
it's the way to drive down crime. Very direct.
And Shelby County Mayor Lee Harris. even deeper
concerns. He actually said, I'm scared. Can you
imagine? Don't send folks in military fatigues
with semi -automatic weapons to patrol our streets.
He added, I want less crime, but I need America.
powerful stuff. Plus, he mentioned practical
worries, too. Local budgets, the jails already
full. It really makes you think, doesn't it,
about the purpose of law enforcement when locals
fear federal intervention like that? It does.
And looking broader, the historical context is
just vital here, especially with the racial lens
in the South. We have a note from a reader, B
.C., a former Memphis resident, who gives this
really crucial perspective. They point out that
Southern police forces historically evolved from
slave patrols. There's always been a racial element.
And because of that history, Black Southerners
have, well, never fully trusted law enforcement.
It's a deep -seated thing. Right. Generations
of mistrust. Exactly. So deploying the Guard,
it wouldn't be seen as help. It'd be seen as
a naked show of force. That's the reader's term.
It would likely just unite Black Memphians against
it, possibly creating a really explosive situation,
especially if troops end up concentrated in black
areas, kind of like after MLK's assassination.
Wow. So the real story isn't just crime stats
or legality. It's how that deep historical mistrust
can turn a supposed federal solution into, well,
a powder keg. It could backfire completely. And
there's even a legal angle challenging these
deployments, right? Adds another layer. A federal
judge just on September 2 ruled that using the
National Guard in LA violated the Posse Comitatus
Act. That's the law stopping the military from
being used for domestic law enforcement, barring
very specific exceptions. That case is on appeal,
sure, but it shows the courts are looking at
this use of executive power. There's only something
to watch. So, OK, beyond these domestic deployments,
these big questions about executive power, they're
also playing out internationally. We've got recent
kinetic strikes and, of course, the whole TikTok
saga. First, the strikes. Sources say the U .S.
destroyed a second boat, alleged Venezuelan drug
runner terrorists on Trump's orders. Three people
died. Trump announced it himself on social media,
called it a second kinetic strike against extraordinarily
violent drug trafficking cartels threatening
U .S. security. Yeah, what's striking about that
is that it connects to broader questions about
executive power across different administrations.
Our sources argue, look, is this really that
different from earlier military ops, drone strikes
under Bush, Obama, even Trump previously? Congress
often had little say. Civilians sometimes got
killed. Good point. The deeper issue here. they
suggest, is Congress kind of giving up its power
over time, ceding more powers to the executive
branch. They even mentioned Biden's approach,
stopping drone strikes, limiting them to military
targets as maybe a model for a new War Powers
Act. There seems to be a desire to rebalance
things. That idea of Congress abrogating its
power, that's quite stark. What does that mean
long term for checks and balances if power keeps
shifting like that? And then TikTok. A different
kind of executive move, but just as significant
maybe. Congress passed a law, sell TikTok to
non -Chinese owners. But Trump, so to say he's
just refused to enforce it, given himself and
TikTok. three extensions when only one was apparently
allowed. Right. And his stance shifted, didn't
it? He was initially very anti -China, anti -Dick
talk. But then the content started looking more
pro -Trump. Likely influenced by Beijing's ability
to tweak the algorithm, yeah. And maybe he didn't
want to be the guy who killed TikTok for younger
voters. It really throws that tension into sharp
relief, doesn't it? National security versus
political calculation versus what Congress actually
intended. Now, the White House says there's a
framework for a deal. Trump's supposed to meet
Xi Jinping this week. knows the details exactly
zero details yeah and there's a lot of skepticism
about whether it'll actually match what Congress
wanted she is let's face it a very shrewd negotiator
he probably knows Trump doesn't really want to
shut the platform down so the likely outcome
is our sources guess it'll be a deal that looks
a bit like divestment but isn't really you know
a political win on paper but the core security
issue probably still there Classic leverage play.
The real goal might not be the stated one. OK,
this next part. This is where, as our sources
say, the corruption is right out in the open.
Pretty strong words. A New York Times report.
Al Nahan from the UAE ruling family invested,
and maybe we should put that in air quotes, $2
billion into something called World Liberty Financial.
Described as a Trump family crypto scam. Yeah.
And then just weeks later, the UAE, sort of unexpectedly,
gets access to hundreds of thousands of these
super advanced, scarce computer chips. the ones
needed for AI. The implication of a direct quid
pro quo and exchange is called extremely obvious
by our sources. What makes this alleged deal
seem so blatant compared to other maybe grayer
areas? Well, according to the sources, it's precisely
the brazenness that's so concerning. It's just
out there. They argue it might actually force
the hand of the next administration. They might
feel they have no choice but to take action,
even if they worry about the political optics
of investigating a previous president. Because
not acting normalizes it. Exactly. They bring
up examples like Bob Menendez, Rod Blagojevich,
politicians who maybe thought they were untouchable,
but eventually faced consequences. It's a critical
point about accountability, isn't it? When things
seem this overt, the pressure builds on institutions
to respond or risk losing even more public trust.
And almost on cue, seemingly related, Trump files
this huge lawsuit against the New York Times.
$15 billion for defamation. calls it a degenerate
paper, claims libel because their Kamala Harris
endorsement was dead center on the front page.
Which, legally speaking. Our sources call it
one of the most laughable legal theories ever.
They see it basically as a shakedown operation,
quite a reaction to reporting they don't like.
Using the courts as a weapon, perhaps? Seems
that way. Okay, so as all these political dramas
are swirling, they inevitably cast a shadow onto
the economy. Let's pivot now. How are these political
currents hitting key financial institutions,
especially the Federal Reserve? Trump's stated
goal, remember, was basically turning it into
a branch of the Trump Organization. He's had
some wins and losses there. On the win side for
him, the Senate confirmed Stephen Marin. Trump's
pick for a Fed seat. It was narrow, 48 -47. Marin
was a White House staffer. He'll take a leave
of absence. But the worry is huge. Will he be
independent or just a mouthpiece for Trump? Right.
A clear conflict of interest. And our sources
say this conflict has become normalized. Even
Senator Susan Collins voted yes, which, you know,
might have drawn bipartisan outrage not long
ago. It feels like the expectation of Fed independence
has really shifted. It's a significant point
about institutions, definitely, but it's balanced
by a notable loss for Trump's influence attempt.
He tried to fire Fed member Lisa Cook. She's
a black appointee of Biden's. The administration
claimed cause, citing alleged mortgage fraud.
Cook sued. And a DC Circuit Court panel ruled
two to one that, nope, the firing wasn't legal.
That raises big questions about just how much
power the executive really has over the flood,
even if they want more. So what happens now with
Cook? Well, the expectation is the White House
appeals to the Supreme Court. Scotus. And that
sets up this immovable object meets irresistible
force scenario. Because SCOTUS has hinted before,
you know, presidents should keep their grimy
paws off the Fed. Right. Independence is key.
But they also tend to lean towards strong executive
power generally. So who knows? And it's urgent.
There's a massive Fed meeting this week. interest
rates. Trump would probably love to have Cook
out before that meeting to influence the outcome.
It's a really high stakes fight over who controls
the country's money supply. Yeah, absolutely.
So while Wall Street's got like tunnel vision
on that Wednesday meeting, it's probably smart,
as the old strategist Musashi said, to take a
wider view, look at more data points. So what
really matters right now? Our sources flag three
key indicators that paint a fuller picture. Indicator
one, the two year treasury yield. It's at 3 .53
% currently. That level has history. It's apparently
right where it stopped going down before that
50 basis point rate cut last September. It's
the part of the yield curve most sensitive to
Fed policy and where it is now. It's acting as
a contrarian signal given almost everyone expense
multiple rate cuts. It hints the market might
be bracing for something different. And digging
into that expectation for cuts. If you look at
indicator number two prediction markets versus
futures markets, you see a gap, a real divergence.
For the September meeting, CME FedWatch, which
uses futures, shows like a 96 .2 % chance of
a cut. Super high. OK. But Polymarket, an online
prediction market, it's lower, at 90%. Still
high, but less certain. Interesting. And look
out to December. CME is at 73 .8 % cumulative
probability of cuts. Polymarket. Only 60%. Polymarket
is just more conservative, more skeptical than
the futures folks. Our sources say futures traders
might be just extrapolating the past as the future.
Based on weak labor data, Trump's fresher. So
they might be missing something. Possibly. Because
while Q3 stagflation was obvious, the forecast
hints growth and inflation might actually pick
up again in Q4. That would totally change the
rate cut calculus and could catch a lot of people
flat -footed. OK. And the third indicator, market
structure. Which is apparently at extremes right
now. Yeah, this is really interesting the options
market has what's called long gamma Positioning
by market makers positioned at plus 11 apparently
okay long gamma What does that mean for us think
of it like built -in shock absorbers? It tends
to mechanically suppress volatility makes things
seem calmer than they might be underneath ah
Okay, but there's another extreme right the systematic
strategies Things like vol control funds, CTAs,
those automated trading systems. The ones that
buy when things go up and sell and they go down?
Exactly. They are apparently at near five year
highs in equity exposure. They've got a lot.
So what that means is they basically become sellers
waiting for a trigger. They are totally poised
to deleverage, to sell hard if volatility suddenly
picks up. could lead to really sharp, fast moves
down. Wow. So putting those three together, what's
the big picture? It reveals this potential disconnect,
right? Everyone's expecting rate cuts. Things
feel kind of calm on the surface because of that
gamma positioning. But underneath, the market
structure is coiled tight. It's sensitive. A
small shift, a little uptick in volatility could
trigger a wave of selling from those systematic
funds. It suggests this column might be more
fragile than it looks. A hidden vulnerability.
OK. Shifting gears again, let's talk about something
really crucial socially and politically. Black
unemployment. It's seeing a really troubling
rise. The overall rate is 4 .3%, up a bit from
4 % in January. White unemployment, 3 .7%, also
up slightly from 3 .5%. But for black workers,
sources say it's skyrocketed to 7 .5%. That's
a full percentage point higher than just back
in January. That's not just a small change. It
feels significant. It really underscores how
economic shifts don't hit everyone equally, does
it? The sources attribute this trend to a few
things. Federal government layoffs hitting black
workers harder, the crackdown on DEI diversity,
equity, and inclusion initiatives. Right, that's
been controversial. And also just... The fact
that the industries often hit first in a slowdown
tend to employ more black workers proportionally.
Socially, this is just bad news for everyone,
as one source put it. Black communities are really
bearing the brunt here. Economic hardship obviously
increases tensions, especially when you layer
on political provocations like we discussed in
Memphis. Rising black unemployment is often seen
as a leading indicator of a broader economic
slowdown. That could really hurt the party in
power come the midterms, plus any resulting civil
unrest riots, as some might frame it. which sources
even suggest Trump might be provoking. That tends
to rebound on the party in power, too. Makes
the country look out of control. It's a nasty
feedback loop. Economic pain, political fallout,
potential instability. OK, so we've covered a
lot of ground today. We've navigated through
some really complex political maneuvering. you
know, federal deployments, challenges to institutions
like the Fed and Congress's power. And we've
explored these critical economic signals, trying
to get beyond the surface noise to see the market
dynamics and the real societal shifts happening.
We've definitely seen that direct interplay,
haven't we? Presidential actions, court challenges,
market bets, and then the real world economic
pain, like rising unemployment. It's all connected.
Absolutely. It's never just one thing in isolation.
So here's something to leave you with, something
to mull over as you process all this. considering
this really volatile political climate we've
discussed and these frankly quite concerning
economic indicators, how might public confidence
and maybe global perceptions of stability or
instability, how might that influence both investor
behavior and just general societal cohesion in
the months ahead? That's the big question, isn't
it? Something to really think about.