The Resilience Brief — Week 3: Restraint

The 10-year Treasury hit 5.304% on Wednesday. Highest since May 2002. Biggest quarterly jump since 1994. Same morning, inflation came in cool — August PCE at 3.4%, under the 3.7% expected, core at 3.0%, GDP revised up to 2.2%. So inflation's cooling and bonds are panicking. Both true. Markets rallied, then flipped: Dow down 0.86%, S&P down 0.25%, Nasdaq up 0.24%. Odds of an October rate hike got cut roughly in half.

Wisdom: Two true things can point opposite directions. Wisdom isn't picking the loudest one. It's sitting with both and thinking.

Tuesday the Senate Judiciary Committee hauled Jack Smith in. The hearing was literally titled 'Oversight of Jack Smith's Abuse of Authority and the Targeting of Republicans.' Four hours. Hostile room. Sole witness. One man at the table. Smith was the special counsel who prosecuted Trump twice — the 2020 election case and the Mar-a-Lago documents case. Both cases died when Trump won the 2024 election. Since then, the Justice Department has been digging through Smith's own work, and Trump has called for his prosecution. So Smith walked into a room full of people who showed up to make him the villain, and he didn't flinch. 'I will not be silenced by the continued threats of prosecution from the president or others,' he told them.

Courage: Forget the politics. Watch the posture. A man alone at a table, a room against him, and he answers every question straight. That's courage. You don't need the room to like you. You need to know why you're sitting there.

Last week bitcoin was over $87K and everybody was excited. This week it's around $83.5K. What happened: inflation data came in soft, bitcoin spiked over $85,500 — then the 10-year yield hit 5.3% and the dollar jumped to a three-month high. Risk assets got quiet. Leverage is draining out of it.

Temperance: This is the healthy part. The spike gets the headlines. The cool-down is where it either holds or it doesn't. Don't chase. Let it come to you.

Monday, one week before the Supreme Court's new term starts, Justice Alito recused himself from the first case on the calendar: Boulder County's lawsuit against Suncor and Exxon over climate damages. One sentence from the court clerk. No explanation. He just stepped back. Alito owns energy stocks. He knew a 4-4 split leaves the lower court's ruling standing with no national precedent. He knew that. Stepped aside anyway.

Justice: Justice isn't the outcome you want. It's the process working even when it costs you. A judge who can't sit the case shouldn't sit the case. Full stop.