The Old World Just Snapped

The old world just snapped. Japan’s yield curve detonated. Gold went vertical. Defense surged. Markets are bleeding, narratives are scrambling, and the dollar sold off while the market tanked - nobody can explain what’s really happening.

But this isn’t chaos. This is the beginning of a new pricing regime—a systemic revaluation of trust, alliances, and economic credibility.

We are not in a correction. We are in a transition.

The correction we anticipated may be kicking off earlier than expected, but make no mistake - it's part of this larger regime shift, not a standalone dip. Drawing from our forward-thinking lens, let's cut through the noise with punchy clarity on what's real, what's risky, and what it means for your portfolio.

Opportunities hide in volatility, but overconfidence blinds to "fat tails." As we flagged weeks ago, these shifts aren't random - they're the geopolitical and economic realignments we’ve been calling since last winter.

U.S. bold moves are redrawing lines, forcing Europe into corners while China watches for openings. Markets aren't reacting; they're forecasting fragmentation. With Davos underway, expect more snaps - here's how it ties together.

P.S. We still project a 12-20% max drawdown (pushing 20% if Europe unleashes a U.S. markets dump), followed by the $2.5T liquidity injection Bessent and Trump are teeing up. We locked in solid gains in Dec/Jan (some positions up 50-65%) - now trimming those, holding core long-term plays, and repositioning for the dip.

Flight Deck → Live Positions and Directives.

1. Trump's Greenland Gambit

U.S. leverage play is unfolding:

• The Ultimatum: Trump's revival of his 2019 bid to buy Greenland from Denmark escalates with 10% tariffs from February 1 on Denmark, Norway, Sweden, Germany, France, the UK, the Netherlands, and Finland.¹
• The Escalation: Jumping to 25% by June without a deal.
• The Strategy: This leverages economic pain for Arctic dominance as ice melts and routes open. Europe screams blackmail, but Washington sees it as a security must-have.
• The Stakes: Overreach could fracture NATO; a win locks in U.S. edges for decades. Davos could ignite talks - or more tariffs.

2. Strategic Drivers & Covert Ops

• The Resource Threat: Rivals like China and Russia are salivating over Greenland's resources via the Arctic Silk Road and Northern Sea Route; Denmark can't hold the line.
• Military Gold: Greenland offers radio stations, air defense, missiles, and intel hubs—critical in West-East clashes.
• Corruption: Our sources note corruption is letting Eastern influence seep in. NATO demands U.S. control to counter hegemony, but the EU digs in due to globalist strings.
• Covert Mapping: 2025's U.S. intel ops secretly mapped ports, airports, and bases without a Danish nod—aligning with Trump's hardball style. It screams resolve but torches trust. If it blows up, Europe might bolt to China, supercharging Taiwan threats.

3. NATO Dilemma & Europe's "Warning Shot"

• The Bulwark: Greenland is NATO's Arctic shield, but EU sovereignty gripes persist amid corruption blind spots. Denmark is beefing up troops.
• The Choice: Tariffs shove a fork in the road - U.S. loyalty or economic bleed. Ideologies fracture in crisis - left to communism, right to nationalism. Alliances splinter under this; hedge the cracks.
• The China Play: U.S.-EU cracks let Beijing dangle aid, preying on Europe's scars. If they bite, Taiwan's next.
• The Market Counter: This is the critical "Sell America" pivot we are concerned about. Europe is plotting U.S. equity/Treasury dumps - a potential China tag-team to jab Trump.
• OpEx Blowup: A pre-Feb blowup if talks flop could spark 20%+ dives, hitting May '25 rally gaps. Black swans thrive here.

4. Repricing Signals

• Gold: $4,806/oz peak.
• Defense: Lockheed and peers rallying on geo-premiums.
• JGB 40-year: At 4.21% (Fiscal crunch + BoJ normalization vs. inflation).
• The Narrative: A "closed" nationalist pivot rhymes with pre-WWII patterns. Yields crack stories; kurtosis hides extremes.

5. Bessent's Deregulation Push and the $2.5T Lending Vision

This aligns closely with our earlier January analysis on financial easing, and a update last yeat on OBBB:

Treasury Secretary Scott Bessent is advocating for a Federal Reserve Chair who prioritizes deregulation, particularly by relaxing bank capital requirements to unlock approximately $2.5 trillion in additional lending capacity. This move is designed to fuel capital-intensive booms in areas like AI data centers and broader industrial expansions, ensuring abundant credit flows to support corporate investments amid potential short-term cash flow strains.

The "One Big Beautiful Bill" (OBBBA), enacted on July 4, 2025, serves as the cornerstone of the economic agenda, integrating trade policies, targeted tax cuts (including no taxes on tips, overtime pay, or Social Security benefits), and enhanced depreciation mechanisms like accelerated and bonus depreciation for qualified production properties.

These elements lower the after-tax cost of investments, logically boosting appetite for capex-heavy sectors such as AI infrastructure and manufacturing.

The Growth Story Narrative vs. Hidden Fragility

Bessent is promoting a vision of 7-8% nominal GDP growth as "non-inflationary" or even disinflationary, drawing parallels to the productivity-driven boom of the 1990s. He's leveraging strong Q3 2025 data, including 4.3% annualized real growth from the Bureau of Economic Analysis (BEA), to convince markets and the Fed that high GDP prints stem from efficiency gains rather than price pressures, thereby avoiding rate hikes and supporting long-duration assets like AI stocks.

However, this optimistic chain is highly conditional - if inflation resurges through channels like tariff pass-throughs, rising wages, energy costs, or sticky services prices (as hinted in mixed GDP price index and PCE dynamics), the narrative crumbles, demanding higher term premiums that push up yields and make financing costlier.

Additionally, if banks hesitate to expand lending due to concerns over non-performing loans (NPLs), delinquencies, spread widening, or recession fears, that $2.5T capacity remains theoretical, embedding a fat-tailed, high-kurtosis vulnerability where stress could arrive suddenly and disrupt the entire boom setup.

6. The JGB "Canary" & Global Stress

The 40-year JGB yield at 4.21% is a key indicator for global market changes:

• The Carry Trade Unwind: The once-dependable "cheap yen" is weakening. Investors are finding it tougher to access low-cost money as economies become more inward-focused.
• Asian Contagion: Higher yields increase borrowing expenses across Asia and increase swings in U.S. Treasury prices.
• Growth Challenge: This rise challenges Bessent's story of growth without inflation. As the BoJ moves away from ultra-easy policy while core CPI stays near 3.5%, it conflicts with tariff-driven price cycles.
• The Bottom Line: Bond yields signal broader market stress. If they keep climbing, it pressures emerging markets and U.S. bonds. The real dangers are in the extreme outcomes.

Charts and Signals

• SPX and Nasdaq Weekly Signals: Top reversal patterns on the 1-week and 2-week charts on Duo Index for both the S&P 500 (SPX) and Nasdaq. These have historically been spot-on for catching market peaks - we're scrutinizing the next signals to confirm if this transition accelerates downside.

• We are waiting for a signal to make our moves - position for correction. But the T signal - assuming it holds on the weekly level - is a strong signal.

• Crypto Regime Shift: USDT.D (Tether dominance index) reversed upward on the daily chart, signaling a return to bearish conditions in crypto. Geo tensions have unfortunately flipped what could have been a rally toward 103-110—we'll keep a close eye as volatility spikes. And will be exiting on bounce.
  

Note: Both BTC and ETH are sitting on support shelves of ~88.5K and ~3-2.9K.
We are a bit concerned that Crypto may just keep going lower - and charting our exits. Pls keep original stop loss positions.

• Dollar Dynamics: USD DX futures (U.S. Dollar Index) just pulled back from a short-term rally, embedding potential fat-tail risks. A weaker dollar could amplify pressures on global assets amid tariffs - position defensively to navigate these swings.
  

These indicators aren't isolated; they tie into the broader repricing we're seeing, where geo snaps fuel market fragility. As we flagged earlier, such reversals often precede sharper moves - stay hedged.

Closing Alpha

The U.S. is remaking the world, markets are repricing entire regimes, and growth stories are hiding real vulnerabilities. Opportunities in gold, defense, and AI have been validated - but always respect the risks, as overconfidence invites those fat-tail surprises.The sharpest investment plays are those that spot what's coming before it hits. Stay vigilant; we'll cover the Davos fallout in the next issue, and already sent Ignite updates - expect more as we reposition.

Flight Deck has been updated already with details.
→ Live Positions and Directives.

That is it for today—we are keeping a shorter format focusing on key news and shifts.