Report

Markets | Fed Spy | US-Japan | Tariffs | Rubrik | Quantum

Table of Contents

Lots happening in markets—let’s quickly run through some of the key drivers (in no particular order):


Advancements in Quantum Computing

Based on empirical evidence, we can confidently observe a curious entanglement phenomenon between the level of the S&P 500 and announcements of breakthroughs in quantum computing or the rising visibility of experts in quantum information theory. Often, these “breaking stories” are actually delayed press releases for research that appeared in academic journals weeks or even months earlier.

Nonetheless, for a handful of highly volatile, exchange-listed quantum stocks, such developments may create potential trading opportunities worth exploring.

Later, we'll publish a deeper dive on the state of quantum computing.

Rubrik Keeps Climbing Higher

Rubrik (RBRK) shares continue to hit new all-time highs, nearly a year after the company’s IPO debut.

Markets | Fed Spy | US-Japan | Tariffs | Rubrik | Quantum | Speevr


We might be missing at trick here—perhaps someone is quietly building a stake in Rubrik stock. It’s possible that dedicated cybersecurity funds—many of which we believe missed out on the post-IPO rally—are now covering their underweight exposure to Rubrik, especially with a strong quarter of earnings behind them. It’s a stock many industry analysts have described as “a great company trading at too rich a valuation”—the classic tech story.

Recently, we floated the idea that Rubrik could be a potential takeover target, citing Microsoft—among others—as a possible suitor. We were clear that this was pure speculation on our part, based on little more than current market conditions, business fundamentals, and broader industry dynamics.

Since then, there has been loose talk and unsubstantiated rumors of potential M&A activity involving Rubrik. Here, we urge strong caution: it’s entirely possible that our previous commentary made the rounds in the market and, in doing so, turned into a self-fulfilling prophecy.

JGB/UST Sell-Off and Trade Negotiations

The sharp rise in Japanese Government Bond (JGB) and U.S. Treasury (UST) yields earlier this week was likely driven by two key catalysts: Moody’s downgrade of the U.S. sovereign credit rating ahead of a deficit-expanding tax bill, and a weak 20-year JGB auction.

Let us repeat, for the umpteenth time, why we don’t cover Japan or Bank of Japan (BoJ) policy in depth: Japan is not high on our list of strategic priorities, and the time and resources required to deliver differentiated value here—particularly for macro hedge fund tourists—is largely futile effort. Curating local sources in China has proven a better return on investment.

As a general observation, the current short-JGB and Yen (JPY) trades being promoted are increasingly detached from traditional BoJ policy speculation. Instead, they have drifted into the realm of second- or third-order positioning—attempts to anticipate the behavior of unfamiliar institutional investors in distant markets. For international players lacking language proficiency and deep local networks, this presents a clear disadvantage.

That said, it remains relatively easy to construct a persuasive investment thesis for non-specialist audiences by stringing together a series of plausible facts and packaging them into a compelling narrative.

Still, even false narratives can be profitable—so long as one enters early and exits with skillful precision. In that spirit, the recent pullback in yields could offer an entry point for those convinced by the trade. As a general observation, the current short-JGB and Yen (JPY) trades being promoted are increasingly detached from traditional BoJ policy speculation. Instead, they have drifted into the realm of second- or third-order positioning—attempts to anticipate the behavior of unfamiliar institutional investors in distant markets. For international players lacking language proficiency and deep local networks, this presents a clear disadvantage.

That said, it remains relatively easy to construct a persuasive investment thesis for non-specialist audiences by stringing together a series of plausible facts and packaging them into a compelling narrative.

Still, even false narratives can be profitable—so long as one enters early and exits with precision. In that spirit, the recent pullback in yields could offer an entry point for those convinced by the trade. It’s still not a consensus story—at least, not yet.

Side Note: Quick & Easy Hack to Spot Weak Analysis

Three key attributes we look for when assessing high-quality research—regardless of the approach or conclusions—are:

i) consistency in analytical framing;
ii) the breadth, depth, and credibility of sources or data considered; and
iii) original analysis that contributes incremental insight or knowledge.


The first criteria is often misinterpreted as an affinity for analysts or research providers who cling to fixed (and often lazy or agreeable) views regardless of developments.

While analysts' (investors) time horizons (mandates) vary significantly, we generally find that those who adhere to a rigorous and consistent framework are less prone to abrupt shifts in perspective or overreaction to short-term market moves. Over the long run, they also tend to produce more accurate forecasts and superior returns.

In political science, weak analysis often reveals itself through the inconsistent or selective application of frameworks—invoking liberalism and values-based rhetoric when convenient, then defaulting to Realpolitik or offensive realism when circumstances shift. This inconsistency is particularly pronounced in geopolitical analyses of military conflicts.

To draw an analogy from the U.S. rates market: current “short Japan” trades are reminiscent of when “independent” market economists suddenly rediscovered the Taylor Rulebut only after the 10-year yield had already sold off 50–60 basis points from recent lows. The Taylor Rule, of course, had largely fallen out of favor during the zero-lower-bound era. Yet few of those making Taylor Rule arguments today bother to explain why it has suddenly become relevant—especially now that the gap between the rule and actual policy rates is the narrowest it’s been in two years.

Back to U.S. Trade Deals

The ongoing U.S.–Japan trade negotiations—coupled with Japan’s position as the largest foreign holder of U.S. Treasuries—further complicate the short JGB and JPY thesis.

Later, we’ll expand on the Financial Times story about a proposed U.S.–Japan sovereign wealth fund joint venture, and how it may align with our longstanding thesis:

USA Inc. = Big Tech + the Fed + the Treasury


When the $500 billion StargateOpenAI venture was announced in early February 2025, we raised two questions:

  1. Where was SoftBank’s Masayoshi Son planning to source the capital?
  2. Would the Trump administration’s proposed sovereign wealth fund play a role in the transaction?


[See: Part 1: John Thomas | Trump Tariffs | SoftBank | Stargate for our earlier commentary.]

For now, here is a useful Substack post by Richard Katz (from earlier this month) offering an overview
of the core challenges in the U.S.–Japan trade talks. Japan specialists may well disagree—and ideally will offer feedback or rebuttals to the post.

Tokyo: No Trade Pact Unless Trump Relents

Immediate Future: High Tariffs and Threat of Renewed Financial Market Frenzy



It will suffice for our purposes. There are many parallels between ongoing bilateral trade negotiations between the Trump administration and the European Union (EU), and others not directly related to trade. We’re told that the EU’s team of trade negotiators are among the smartest and toughest in the field. So far, U.S. adversaries taking a hardline approach have fared better in negotiation. In such cases, the US also has less leverage—short of a direct military conflict.

Tariffs and Market Sentiment

As mentioned in previous updates, we currently don’t hold any strong in-house macro views. In the aftermath of the “Liberation Day” sell-off and the subsequent rebound, we believe market participants have either shortened their time horizons (e.g., day trading) or repositioned portfolios toward longer-term investments or strategies.

Our preference remains mid- to long-term opportunities in the U.S., such as single-name stock picking, which are relatively less sensitive to macroeconomic developments. Macro-trade policy has become so saturated that the only real edge now lies in accurately gauging market sentiment and technicals. The sequencing of events and news cycles—which are less easily controlled—matters more than having privileged access to information without reliable timelines. More often, those who believe they’re “in the know” fall victim to availability bias.

Based on current market commentary and elevated levels in U.S. equity indices, sentiment is clearly skewed toward expectations of lower prices for risk assets. A common thread among these pessimistic outlooks is the belief that prevailing tariffs continue to harm the U.S. economy, compounded by the slow progress across multiple trade negotiations. While we don’t necessarily disagree with this assessment on a fundamental level, market technicals currently appear unfavorable for initiating short positions or underweight allocations.

To reiterate our longer-term view: we believe the risk of asset bubbles—driven by financial repression policies—by the end of the current Trump presidency outweighs the likelihood of comparably large downside moves. This perspective is primarily motivated by the relative (higher) certainty around continued deregulation and expanded U.S. deficit spending in the coming months and years—factors which, in our view, are more impactful than trade policies with diffuse economic consequences. The range of plausible macroeconomic scenarios is simply too broad to make confident predictions. However, the case for a ‘melt-up' in risk assets appears more compelling than a collapse based on current information.

Whether Trump’s policies place the U.S. economy on a sounder footing beyond the election cycle is another question entirely—one that is unlikely to factor into the day-to-day decisions of most professional investors.

A second, and perhaps more persuasive, counterpoint to the bear thesis is rooted in well-established behavioral science/finance literature: the market's initial reaction to a negative surprise is typically more severe than its reaction to subsequent similar events. In practical terms, this means that those attempting to play the short side need both high-conviction adverse scenarios and well-timed execution.

Fed Spies and Mail-Ordered Brides

According to a Wall Street Journal report, FBI prosecutors have charged a former Federal Reserve economist of spying on behalf of China:

The Fed Economist Accused of Espionage for Beijing

John Rogers voiced admiration for China before U.S. prosecutors alleged that he sent secrets to Beijing.


The article suggests the defendant received $50,000 from China’s Ministry of State Security (MSS)—China's foreign espionage agency—in exchange for a couple of Fed working papers and some personal insights. Thankfully, the case pertains to the 2017–2021 period, which also happens to coincide with the era when the Fed itself had no idea what it was doing.

In other words, there are folks in China willing to pay top dollar for access to macro research and the personal views of mid-level Fed staffers—usually they try to hack the paywall. If true, what’s even more impressive is that someone at the MSS appears capable of cutting through the noise—navigating the swarm of analysts, consultants, and self-proclaimed “Fed whisperers”—to organize, curate, and summarize financial information.

Who?! What?! Where?!

Please let us know—as potential customers, hires, or, failing that, as freelance double agents.

Markets | Fed Spy | US-Japan | Tariffs | Rubrik | Quantum | Speevr

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Markets | Fed Spy | US-Japan | Tariffs | Rubrik | Quantum

Fed spies and mail-ordered brides. Market update