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WINDOW OF HEIGHTENED RISK - BUILD WEEKLY ROUNDUP - 2025 WEEK #40
TL;DR: Heightened geopolitical and market risk following U.S. government shutdown, with Treasury yields as the key battleground.
📄 SUMMARY
Historical Parallels to WWI
Drawing from Barbara Tuchman's "The Guns of August," the discussion traces how World War I erupted from the assassination of Archduke Franz Ferdinand in Sarajevo June 1914, with Bismarck having predicted violence would come from "some damn foolish thing in the Balkans" (7:37).
Matt warns about climbing an "escalatory ladder" where parties can "wind up in a situation that they had no intent to ultimately arrive at" (12:58-13:01), emphasizing the need for awareness to avoid catastrophic outcomes.
Government Shutdown Creates Live Risk Window
Matt discusses how the U.S. entered a government shutdown on Tuesday evening, creating what he calls a "window of heightened risk" where "the guard rails are off".
They emphasize this is new territory with rules of engagement now "live" between political factions, comparing the situation to periods of open conflict where "anything can happen right now".
Regional Powers and Military Positioning
Discussion of an unprecedented gathering of 800+ one-star generals and above at Quantico Marine base, described as "the first time that this has happened in the history of the United States" (14:26-14:28).
Matt maps out four regional powers: U.S. (Western Hemisphere), Europe (UK/Brussels), Russia (northern Eurasian landmass), and China (South Pacific/Southeast Asia), suggesting "there's something much bigger going on under the surface" (16:34-16:36).
Treasury Market as Primary Battleground
The analysis identifies long-term Treasury rates as "the Achilles heel of the US Treasury right now" (20:28), with the executive branch holding the upper hand as they can "wait this one out" since priorities were funded in the "One Big Beautiful Bill Act" (23:17-23:31).
Despite the risk environment, equity markets continue hitting all-time highs with Bitcoin "nearing an all-time high" since Saturday (26:25-26:28). Matt notes that rising Treasury yields have shown "positive correlation for Bitcoin and equity markets" over the past 12-18 months, potentially adding "fuel to this rally in risk assets" (26:16-26:20).
Matt notes a bearish engulfing pattern in bonds and rising MOVE index volatility - "the sharpest 3-day spike since April" (27:12) - signaling potential market stress.
🔑 KEY TAKEAWAYS
- The shutdown represents a critical negotiation phase where Treasury yields are the key pressure point - watch for moves above May 2025 highs
- Historical patterns suggest situations can escalate rapidly from seemingly minor triggers - awareness is crucial to avoid unintended consequences
- Despite geopolitical tensions, risk assets remain bid with the primary trend favoring the administration ("tie goes to the White House")
- MOVE index uptick signals bond volatility returning after months of suppression
- Focus should be on building and creating value rather than doom scenarios - "get out and build things, that's the only way forward towards a bright and better future" (28:56-29:01)
🔗 LINKS
- 🎧 Subscribe to the Build Weekly Roundup: https://open.spotify.com/show/7bvfjkPjQ67Eugg8EYdoe5
- 🌎 Build Asset Management: https://getbuilding.com
- ⚓ Build Bond Innovation ETF: https://bfix.fund
- 📈 Build Secured Income Fund I: https://buildbitcoin.com
📱 SOCIAL MEDIA
- Build Asset Management: https://twitter.com/BuildMarkets
- Matt Dines: https://twitter.com/LeveredUSTs
- Cameron Otsuka: https://twitter.com/CameronOtsuka
- Dave Martin: https://twitter.com/DaveMSocial
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit mineprinthash.substack.com
View all episodes
By Matt Dines & Cameron OtsukaTL;DR: Heightened geopolitical and market risk following U.S. government shutdown, with Treasury yields as the key battleground.
📄 SUMMARY
Historical Parallels to WWI
Drawing from Barbara Tuchman's "The Guns of August," the discussion traces how World War I erupted from the assassination of Archduke Franz Ferdinand in Sarajevo June 1914, with Bismarck having predicted violence would come from "some damn foolish thing in the Balkans" (7:37).
Matt warns about climbing an "escalatory ladder" where parties can "wind up in a situation that they had no intent to ultimately arrive at" (12:58-13:01), emphasizing the need for awareness to avoid catastrophic outcomes.
Government Shutdown Creates Live Risk Window
Matt discusses how the U.S. entered a government shutdown on Tuesday evening, creating what he calls a "window of heightened risk" where "the guard rails are off".
They emphasize this is new territory with rules of engagement now "live" between political factions, comparing the situation to periods of open conflict where "anything can happen right now".
Regional Powers and Military Positioning
Discussion of an unprecedented gathering of 800+ one-star generals and above at Quantico Marine base, described as "the first time that this has happened in the history of the United States" (14:26-14:28).
Matt maps out four regional powers: U.S. (Western Hemisphere), Europe (UK/Brussels), Russia (northern Eurasian landmass), and China (South Pacific/Southeast Asia), suggesting "there's something much bigger going on under the surface" (16:34-16:36).
Treasury Market as Primary Battleground
The analysis identifies long-term Treasury rates as "the Achilles heel of the US Treasury right now" (20:28), with the executive branch holding the upper hand as they can "wait this one out" since priorities were funded in the "One Big Beautiful Bill Act" (23:17-23:31).
Despite the risk environment, equity markets continue hitting all-time highs with Bitcoin "nearing an all-time high" since Saturday (26:25-26:28). Matt notes that rising Treasury yields have shown "positive correlation for Bitcoin and equity markets" over the past 12-18 months, potentially adding "fuel to this rally in risk assets" (26:16-26:20).
Matt notes a bearish engulfing pattern in bonds and rising MOVE index volatility - "the sharpest 3-day spike since April" (27:12) - signaling potential market stress.
🔑 KEY TAKEAWAYS
- The shutdown represents a critical negotiation phase where Treasury yields are the key pressure point - watch for moves above May 2025 highs
- Historical patterns suggest situations can escalate rapidly from seemingly minor triggers - awareness is crucial to avoid unintended consequences
- Despite geopolitical tensions, risk assets remain bid with the primary trend favoring the administration ("tie goes to the White House")
- MOVE index uptick signals bond volatility returning after months of suppression
- Focus should be on building and creating value rather than doom scenarios - "get out and build things, that's the only way forward towards a bright and better future" (28:56-29:01)
🔗 LINKS
- 🎧 Subscribe to the Build Weekly Roundup: https://open.spotify.com/show/7bvfjkPjQ67Eugg8EYdoe5
- 🌎 Build Asset Management: https://getbuilding.com
- ⚓ Build Bond Innovation ETF: https://bfix.fund
- 📈 Build Secured Income Fund I: https://buildbitcoin.com
📱 SOCIAL MEDIA
- Build Asset Management: https://twitter.com/BuildMarkets
- Matt Dines: https://twitter.com/LeveredUSTs
- Cameron Otsuka: https://twitter.com/CameronOtsuka
- Dave Martin: https://twitter.com/DaveMSocial
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit mineprinthash.substack.com