Capital Flows
· Capital Flows
· May 12, 2026 at 01:55
· ⏱ 4 min read
| Read on Substack ↗
Summary
The impossible trinity framework places the US at the center of global macro flows, recycling foreign capital into US assets. The melt-up continues because neither the dollar-crash nor long-end-rate-blowout end-cycle scenarios have materialized, and the author remains positioned for continuation, citing falling real rates and AI capex as sustaining forces.
•The US is the center of every other country's impossible trinity because it runs open capital, sovereign policy, and a floating dollar as the global reserve currency.
•Japan's yield curve control capped rates and equities, forcing the FX release valve and pushing USD/JPY from 100 to 160.
•The dollar will keep falling until returns drag enough to force foreign selling and repatriation, but that level has not been reached yet.
•AI capex debt is the main credit growth driver; defaults in data center financing would break the cycle, but demand is still accelerating and no defaults are showing.
•The ECB is effectively more restrictive than the Fed because Europe is short crude; once crude falls and the ECB pivots, European stocks (DAX, Eurostoxx) are expected to rally sharply.
•The Qualcomm trade exemplifies the framework: a false breakdown on the long-term chart, sector flow from semis, and idiosyncratic mispricing led to a 700% gain on leaps from a $135 entry.
Qualcomm had a false breakdown on its long-term chart while semis were rallying, creating an idiosyncratic mispricing. The author stacked macro regime, sector flow (SMH), and the specific setup to buy
Qualcomm had a false breakdown on its long-term chart while semis were rallying, creating an idiosyncratic mispricing. The author stacked macro regime, sector flow (SMH), and the specific setup to buy leaps, which appreciated 700%.