IS BESSENT’S LOVE AFFAIR WITH TRADERS OVER?

From time to time, there are events that split the market timeline into two dimensions, effectively altering the course of events afterward. And what happened in real time may not have seemed all that consequential, but with the benefit of hindsight, it becomes crystal clear. I believe that what occurred yesterday, between 11 a.m. and 12 p.m. Eastern Time, live on CNBC, may one day be recognized as one of those moments when everyone agrees that something in the markets snapped. At 11 a.m. Eastern Time on Thursday, August 20th, the live CNBC interview with Treasury Secretary Scott Bessent began. And it was truly remarkable how the U.S. Treasury Secretary managed to drop every possible keyword in his vocabulary designed to trigger a significant market reaction from algorithmic trading systems. Within seconds of the interview starting, he immediately said that the buyback of long-term U.S. Treasury bonds could exceed $4 billion. Boom. Then he continued, stating, "We have a big toolkit for the Treasury." He went on to say there would likely be an announcement of increased focus on fiscal consolidation, in partnership with the budget director. When asked about the rising U.S. public debt, he quickly dismissed it, saying, "There's nothing magical about a $43 trillion debt number." And then he dropped another bomb: "We can grow our way out of that debt burden." Boom. As if that weren't enough, another big statement was waiting in the wings. Right in front of the camera, he declared, "I expect that tariff revenue in 2026 will be similar to 2025." Boom. I mean, you've got to be kidding me. The last monthly tariff revenue recorded by the U.S. was negative by roughly $20 billion. An event that has never occurred before in history. And you're standing there telling the market that you'll deliver similar income to the year prior, when you were overcharging the entire world illegally? Now that entire framework has been torn apart, and you've already started reimbursing companies that, in the meantime, passed those costs on to consumers (who ended up paying for them and won't see a penny back). And then, again and again, he continued. He said he believed markets had gotten a little ahead of themselves, that the Treasury and the Fed would work together if there were any changes to the balance sheet. He claimed rates have nothing to do with the buyback decision and that they would adjust to any Fed runoff. He also asserted that, according to market expectations, lower inflation is being priced in for the future. Boom, boom, and boom. And of course, he had to say something about Iran as well, claiming the US would impose the toughest sanctions in history. He said oil markets are misinterpreting what economic pressure means, that their actions would "curtail" Iran's ability to act through proxies, and that the ultimate goal is coordinated economic isolation. I mean, dude, what do you think everyone else has been doing for the past 47 years? This is no news. You're effectively repeating what already didn't work before. So unless you've got an incredible golden rabbit to pull out of your hat, there's nothing new, nothing magical, about whatever you're planning to announce on Iran. And personally, I don't find it surprising that they delayed this new sanctions announcement by a week, which, as a matter of fact, is not exactly a big signal of confidence. The interview ended with Secretary Bessent stating they are pursuing a strong U.S. dollar policy. Boom. Again, you've got to be kidding me. You have the President asking for an unnecessary Fed rate cut when the Fed should be doing exactly the opposite, day after day. The Fed has already restarted expanding its balance sheet under Jerome Powell. You're running a record deficit, a Treasury buyback program, intervening in the FX market to strengthen the JPY against the USD, while you are growing desperate to contain the rise in your cost of debt - and you're saying you're pursuing a strong currency policy? Cmon, man. Now, when you put all this together, the way I'm saying it, you're like, "Jesus, none of this makes sense." And as a matter of fact, it doesn't - unless you consider every single one of these sentences in the way a trading algorithm would pick up on them and interpret them. Trading algorithms have no intelligence whatsoever. Don't be fooled. They are trained to pick up specific keywords. They attach coefficients to those keywords, positive or negative, and based on the series of keywords, weighted by the source (whether it's President Trump, Bessent, or whoever), they produce a result that tells them to buy or sell a certain security. There's nothing complicated about it. You can literally say random words and get a reaction, as long as you plug the necessary inputs into the equation. And even if people claim they have proprietary algorithms, in the end, it all boils down to the same approach. That's why this narrative manipulation has worked so consistently for so long. And don't get me wrong: these people wouldn't keep doing it if they weren't making a profit. But here's exactly what snapped yesterday. Despite the U.S. Treasury Secretary dropping sentence after sentence, carefully prepped and crafted to achieve a very specific market reaction, we saw no market reaction, just crickets. It was even incredible to see U.S. Treasury yields higher after the live CNBC interview ended. And in a follow-up discussion with a journalist afterward, you could sense the level of shock that Bessent was trying to conceal, being fully aware that his performance yielded absolutely zero result. And you know, when people start to get nervous, that's when they make mistakes, or when Freudian slips occur. And here's what dropped yesterday. When a journalist asked about rising crude oil prices, Secretary Bessent, who is supposed to be highly knowledgeable on the matter, actually answered, "We've got a spike in oil prices today that I don't really understand." Dude, how can you not understand what's happening? You worked for George Soros for years. You allegedly broke central banks to make a profit. You ran your own hedge funds for years. And now you're the Secretary of the U.S. Treasury. And you don't know what an imbalance between demand and supply does to prices? Of course you do. The real meaning of that sentence is that he wasn't expecting crude prices to go higher for another reason. And that reason is: he knows they are running a very sophisticated and broad market manipulation to suppress crude oil prices, via direct interventions, insider trading ahead of announcements to frame the wished market reaction, positioning, using unreliable sources at specific times of the trading day when volumes are low to trigger headlines so they can yield maximum effect on price movements, and overall crafting a specific narrative to keep market momentum, and all algorithmic trading, locked into a particular posture. So, to conclude here, putting all this together, we should ask ourselves a question: Is the love affair between Bessent and the traders over? I don't think we can answer that yet. Especially because today, Friday, August 21st, is monthly opex, which is surely conditioning a lot of market prices, pinning most of them to avoid volatility shocks and allow market makers to maximize profit. So we'll have to wait until Monday to really understand if something indeed snapped or not on Thursday this week. And be careful here, because if this current narrative is over, and as we've said many times, traders will sooner or later realize they cannot trust these lies forever, that would be a very big deal. Why? Because a powerful tool in the hands of the U.S. administration, used to egregiously manipulate markets, will no longer be available.