“Oh life is bigger, It's bigger than you, And you are not me”
Markets
Would it be fair to say that the traders who wrote in with solutions to the Citadel job interview question are among the minority who enjoyed a profitable day? Judging by today’s price action, it’s reasonable to conclude that fast money was poorly positioned for the sharp rally triggered by the successful U.S.–China trade talks over the weekend.
[On the math problem: there’s an easier—and faster—way to solve it than the long-winded method most of us go through.]
Absent the market as our guide, the sudden emergence of “seasoned” trade economists—with three months of experience under their belts and a knack for sharing specialist research—is always a telltale sign. Hopefully, the material is peer-reviewed—or at the very least curated by genuine subject-matter experts who can sift through the preprint noise. It’s already hard enough to stay on top of the three key indicators that macroeconomists spend 90% of their time obsessing over.
In general, early information asymmetries tend to get ‘arbed out’ quickly once a dominant market narrative takes hold. Sustaining an edge over competitors requires significant, ongoing investment and resources. Even with the best open-source tracking or NLP tools, the benefits only compound with sustained, narrow focus.
Take ‘Profit' on Long SPX Call
Our tactically bullish call on the S&P 500 from early March—entered at an average ‘paper-trade' level of around 5795—is now nearly 1% in the money. As a good Wall Street strategist might say: we’re closing out this trade at a profit. That’s assuming, of course, one can leave an open position over a two week break, endure a 20% drawdown, and still keep their job. That is, if the mid-March Monday sell-off hadn’t forced the decision earlier.
On a more serious note, by mid-to-late March, many were asking how other market participants had fared. On the whole, based on the cohort we regularly interact with, the risk management displayed by the professional investment community was exemplary. Perhaps most impressive were the multi-strategy fund managers—where one might expect breakdowns (or even reversals) in cross-asset correlations to have impacted performance. It’s usually when products stop doing what they say on the tin that investors start asking tough questions.
In this most recent episode of market turmoil, many would have expected diversified or relative value strategies to perform worse than they did.
We’ll speak more later about the various groups of investors—including retail and private participants. But what we can say with a high degree of confidence is that most market professionals have been in strict risk-management mode these past couple of months—trading to P&Ls and risk limits, rather than executing on new ideas or strategies. Portfolio degrossing or deleveraging was both prudent and widespread. That inevitably means most left money on the table. It is what it is.
Wrong Way Risk, Known Unknowns
That said, the combination of a sharp depreciation in the U.S. Dollar and rising Treasury yields stands in stark contrast to the post-GFC paradigm of financial resilience. These are economic scenarios that fall within the realm of “known unknowns,” but remain atypical in standard bank stress tests. We stress: known unknowns. When bond portfolios start behaving like anti-hedges to equities, things can get hairy fast—especially when U.S. banks are already eight months pregnant with Treasuries and their usual hedge-selling clients are also suffering the breakdown in asset-correlation and heading in the same direction.
Financial Resilience
By design, it’s impossible to build a flawless financial system. That said, the series of post-GFC reforms and regulatory measures have materially improved system-wide resilience—both within banks and across broader financial markets. This includes not just regulation, but the personal conduct of market participants.
Where vulnerabilities remain, they tend to be well understood by both the industry and regulators. While the relationship between market participants and their supervisors may never be perfectly aligned, it’s now far more symbiotic and collaborative than the cat-and-mouse dynamic that defined past decades.
Central banks today are also less reactive, with more targeted tools and facilities on standby should issues arise.
One area where a legacy of mistrust persists is public perception. It’s hard to shift entrenched views shaped by past failures. However, compared to the overwhelming majority of industries—regulated or not—the financial service industry today is cleaner and more ethical than most.
Most bankers or financiers are just rather boring, strait-laced people—more so now than ever. There’s plenty of room for other criticism, but dishonesty isn’t one of them.
Rally On?
The key question now: is all the good news already priced into the market?
We don’t have a particularly strong or directional in-house view to share at the moment—perhaps for the best, in light of our most recent attempt at calling markets. Thankfully, we have plenty of insights from our regular contributors and partners in the coming days.
Let’s break it down:
1) As we’ve mentioned before, one of the unique challenges this year has been gauging market expectations. More often than not, we've been too early—whether on themes like tariffs or Nvidia—relative to consensus. And whether you’re too early or too late, the outcome’s the same in markets. So, we’ll refrain from trying to price expectations for now.
2) On the Russia–Ukraine front, we suspect risks are skewed to the upside. After a news cycle that got carried away at ‘Trump speed,' there’s a slow but positive trajectory toward a peace settlement. More on this in a separate topic update.
3) While perhaps less market-moving, indicators in the Middle East and West Asia are flashing notably positive. Some local news outlets may have overcooked the optimism—possibly to pressure Israel into a ceasefire with Hamas—but the divergence with English-language media is substantial enough to open the door to further upside surprises.
In short, we see ample room for upside surprises in geopolitics on the near-term horizon—and not much by way of negative catalysts. We’ll leave it to readers to judge how much of this is already priced in—and how much of it matters.
Trump on the “Fat Shot Drug”
In other news, President Trump has reportedly declared war on pharmaceutical manufacturers in an effort to lower drug prices by up to 80% for U.S. consumers. In case you missed it earlier today, here's Trump recounting a story about one of his robust and highly successful friends paying $1,300 for the “fat shot drug” in the U.S., compared to $88 in the U.K.
It’s possible that Trump not only told his friend the drug “wasn’t working,” but also added that if he didn’t own so many grocery stores in New York, he might lose some weight—leaving that part out to protect his identity. He does a pretty good impression of the guy.
Let’s fact-check Trump's figures:
His larger-than-life friend is probably on the highest dose (15mg) of the latest and most expensive GLP-1 drug—commonly known as Mounjaro (tirzepatide)—which costs around $1,300 for a month’s supply in the U.S. In London, the same drug retails anywhere from £145 to £290, with most pharmacies selling it in the £210–£260 range. That’s roughly $300—certainly not $88. Even the lowest dose doesn't cost that little. In some lower-income countries, however, it’s even cheaper.
Still, Trump makes a valid point: after sales tax, the average New Yorker is paying 4–5x more for the same drug than a Londoner. A drug developed and patented by Eli Lilly—a U.S. pharmaceutical giant.
For as long as U.S. healthcare insurance has existed, American consumers have subsidized global drug R&D.
Ozempic 3.0
Mounjaro—“Moon Juice” or Ozempic 2.0, as we sometimes call it—is part of a growing family of GLP-1 receptor agonists, originally developed for type 2 diabetes and later repurposed for weight loss. For background, there’s plenty of good information online—or see our previous update on GLP-1s.
Increasingly, weight-loss drugs are becoming a “lead generation” product for plastic and aesthetic surgeons—perhaps even more so than traditional Botox or filler clientele. Patients who lose significant weight often return for a little nip and tuck afterward.
As always, nothing here should be mistaken for medical advice, nor can we get anyone to write a prescription. (He's working on an exciting new venture in the longevity space with the same folks sponsoring research on Metformin.)
Each generation of GLP-1 drugs carries the hype of a new Apple product release. Ozempic (Semaglutide) was the first big breakthrough. The main difference between Ozempic and Mounjaro is that the latter includes a second peptide, GIP (glucose-dependent insulinotropic polypeptide), which essentially tricks the brain into feeling full. Think of it as the first iPhone with both front and back cameras. GIP may also help regulate insulin levels, enabling greater weight loss in patients.
The pros and cons of GLP-1 drugs are beyond the scope of this piece, and clinical trials are still ongoing. Once again, we strongly caution against mistaking scientific results for personalized medical advice. There's a great deal of marketing hype in this space—particularly around secondary or off-label benefits—that ultimately circles back to the fundamentals of healthy eating and lifestyle.
One commonly reported downside of GLP-1 drugs is muscle loss, which accounts for approximately 25% of total weight lost—as well as reduced bone density. This is far from trivial, especially for older individuals, for whom muscle loss may be irreversible, or those with pre-existing bone fragility.
That’s where the next generation of GLP-1 drugs—such as Bimagrumab and Retatrutide (a triple-agonist) from Eli Lilly—comes in. Currently in clinical trials, these therapies are designed to address muscle loss directly, enabling patients to lose more fat while preserving lean mass.
From a market perspective, the final—and arguably most important—point we forgot to make is this: Once released, we anticipate significant demand for third-generation GLP-1 drugs that address concerns around muscle loss. Anecdotally, many people who don’t currently consider themselves candidates for these drugs will reconsider if side effects are reduced and risk profiles become more balanced.
Longevity
As we’ve written before, the most time-tested scientific literature supports the idea that caloric restriction to subsistence levels, coupled with gentle exercise, boosts both health and longevity—not just in humans, but across species. This is also supported by long-standing research into Mediterranean and Okinawan diets.
Of course, beyond genetics and biochemistry, quality of life also hinges on sleep, happiness, and human connection. Stressing about the next inflation print or where the 10-year Treasury closes is unlikely to add years to anyone’s life.
Updates
Thank you very much, but the solutions deadline has now passed. You can always ask ChatGPT’s advanced reasoning model—though DeepSeek’s R1 tends to go a little loopy.
A couple of Harvard and Stanford professors couldn’t resist taking a crack at the problem when it was put in front of them. You might be a little overqualified for a junior role helping to move dealers’ bond axes, but feel free to pass it on to your students. Here’s the book with the sample quant interview questions—though some of them may be a little outdated.
Real-world problems are quite different and don’t always conform to neat models with clean solutions. Consider the following:
Hypothetical Scenario:
You're made POTUS for a day. You discover that your top National Security Adviser has been disseminating classified information to an ally with conflicting interests on a particular issue—via an unsecured phone app by a company with a questionable ownership structure.
Upon learning of this, which of the following would you consider?
a) Fire him on the spot and quietly move on.
b) Pass the case to the FBI and let them handle it.
c) “Promote” him to a subordinate role as UN Ambassador, where his job is to sit in meetings and vote as instructed at the UNSC and General Assembly—even potentially on a highly consequential resolution that runs against the interests of his former collaborators.
d) Some combination of the above.
Surely not, right?!
Finally, doesn’t the R.E.M. singer (below) remind you of Donald Trump? Even the lyrics (above) seem like a perfect match…
