Q&A - June 2026

The monthly mailbag, lightly opinionated

Each 20th I send the paid subscribers a call for questions, and this month the inbox had a particular flavour. People watched as AI discovered gravity. Korea tripped twice its own circuit breakers before their miyeok-guk got cold. And then watching gold and oil get walked off on both the ceasefire and the war.

Make it make sense.

---

Usual rules. Names and identifying details get stripped, questions get trimmed to the bone, and the ones I keep to myself stay that way because I’m fond of my privacy. Comments are open to everyone, so push back, correct me, fill in what I got wrong - the people down there are routinely sharper than the one typing this. And the ants are back on the desk this month. The Korean kind made sure of it.

So, the June mailbag:

On Korea

What explains the gambling addiction of South Korean retail - the memory-stock craze now, crypto a couple of years back? Would you mortgage your house to buy the top in the Kosdaq today?

I would suggest to drop the word “addiction”, because I feel it’s wrong… It implies a personality flaw. But what you’re looking at is just the way the rules work.

Korea - like much of Asia - has a very strong worker-ethic: Study like your life depends on it (it generally did), work hard, save what is left, buy a flat (because a house is out of reach), and retire with dignity.

But somewhere in the past fifteen years that flat got pulled out of reach. Seoul housing is now among the least affordable on the planet relative to earnings. Youth underemployment is brutal. The local name is “Hell Joseon”.

So the old way is cut off. Study-work-save doesn’t reach that “Korean Dream” anymore. So Koreans being humans, they do what every other human would do: look for alternatives. Hold that thought.

Then a second thing that most outsiders miss: gambling is illegal for Koreans. There’s only one casino in the entire country! And it’s parked on a mountain for a reason. The impulse to gamble doesn’t just vanish because you ban the venue. So either it goes underground or legal.

The only legal casino left is the stock market. First it was crypto and we saw that with the “kimchi premium” (Bitcoin trading at a premium on Korean exchanges). Hold that thought.

Now add to this picture that retail is a huge slice of Korean volume, and a culture that does everything at ppali-ppali speed, and you get a very financially-literate population pointing all of it at high-velocity bets.

That’s why in Korea Samsung & SK Hynix got to be half of the Korean stock market.

And because it’s always prudent to give retail more leverage, we saw the inauguration of 2x leveraged ETFs on just those stocks. The regulator said it was fine. Trying to look regretful since.

So no, I don’t think it’s something Korean, nor an addiction. It’s just how it looks like when you cut off the trodden path to your dream, leave one venue open, and hand out leverage like candies at Chuseok.

As for mortgaging my house? Nope! And not because I have any interest in chasing tops - that’s actually besides the point.
My house is the one chip, the one place where I don’t have to win. The whole reason for owning a house is to live in it. Whatever the price does.

Retail didn’t break any rules. The rules - as much as anywhere in the world - were already broken before they got there. They just get to play them at 2x, and a 25% down day was always baked into the 떡.

On TIPS

I hold about 25% of my traditional IRA as dry powder in VMFXX, currently yielding 3.56%. Would I be better off moving some or all of it into a Vanguard short- or long-term TIPS fund? The TIPS funds appear to have a lower yield.

Standard disclaimer first, and I really mean it: I’m just a keyboard warrior, not your advisor. It’s your IRA. It’s your call.

I’ll try to explain the instruments to the best of my ability. If I say something wrong: comment to correct the record!

The core of this question is that you’re comparing an apple to the idea of an apple.

VMFXX‘s 3.56% is a nominal yield. It’s basically cash, it floats with the fed funds rate, and it resets every week. The number on the TIPS fund - 2.16% for the 10Y - is the real yield. It’s what you earn ON TOP of inflation.

The 10Y sits at 4.372% now. Thus that means the bond market is saying inflation will be 2.21% averaged over the next 10Y.

A TIPS recalculates inflation on a daily basis. So if you entered 10k, and inflation has risen 10% since issuance, you are considered to have 11k in play.

So the 10Y says right now that inflation will be 2.21% over the next 10Y. May came in north of 4%. (light a candle and launch a small prayer to the bond traders… they’ll need it) A TIPS basically gives you 2.16% PLUS the daily-adjusted inflation rate.

Now as with everything there are risks.

1. VMFXX is a 7 day backward-looking extrapolation yield. Whatever the FED decides. You follow. They cut? You earn less, and vice versa.

2. CPI was reported at 4.2%, so you’re basically losing in real terms. Using official metrics. (And we all know how “accurate” these are…)

3. No capital appreciation. If rates fall and bond prices rise, bond fund holders capture that gain. But you just get the FED rate. Not the differential.

But TIPS carry different risks entirely:

1. Duration. A TIPS is a bond fund. When real yields rise, prices fall. Inflation adjusted or not. But you’re locked in for the duration, so you can’t jump.

2. CPI. Again. TIPS protect you against official CPI. I rest my case.

3. A fund has no par floor. Individual TIPS held to maturity do. So in deflation, you’ll get par back at maturity even when adjusted principal falls below par. TIPS funds however have no maturity date. They roll constantly. So in a deflationary episode they stay underwater with no date when you're guaranteed whole.

There’s a big difference between holding the individual TIPS ladder and a TIPS fund. Don’t conflate those two.

There's also a tax note even in an IRA context: in taxable accounts, you pay income tax on the CPI accrual each year, even though you don't receive it until the bond matures or you sell. The IRA wrapper shields you from that, but if this money ever moves to a taxable account, it's not a small thing.

Last thing, and it’s the actual question behind your question: powder is supposed to be dry. Liquid, deployable, sitting at par the day you want to buy the panic. A long TIPS fund can be down 10% the exact week you want to deploy it.

If this is money you’ll deploy into a crash, cash does the job and nothing else does.

If it’s a permanent inflation allocation you’ll hold to maturity no matter what the screen says, short TIPS or a self-built ladder makes more sense - but then it isn’t powder, it’s a position, and you should call it one.

On Cushing oil

I keep reading that tank bottoms at Cushing don’t matter because the pipelines take everything to Houston and PADD3 directly. How does Cushing matter for contract settlement if it no longer matters for physical delivery?

I’ve been turning this over for the better part of 2 weeks and I keep putting it off because it doesn’t really make sense… My condensed answer:

There are two different questions here.

One is “where does the world’s oil physically go” - and there you’re correct, Cushing is more and more a pass-through, the Gulf (of Mexico — I refuse to call it the Gulf of America) Coast and the export docks do the real work now.

The other is “where does the WTI futures contract settle” - and that answer hasn’t budged an inch. The NYMEX WTI contract is delivered at Cushing. Full stop.

So Cushing doesn’t have to matter for global supply to matter enormously for its price.

When the deliverable stock there gets thin - and right now it’s sitting around 19 to 20 million barrels, the operational minimum - the shorts holding expiring contracts have a genuine problem. They can’t deliver barrels that physically aren’t in the tank, or they’ll have to pay through the nose to get out of the obligation.

That’s a squeeze. And it doesn't care what a billion barrels stuck in the Gulf are doing.

April 2020 was the mirror image of this: too MUCH oil, nowhere to put it, and WTI went to minus $37.

The “doesn’t matter” crowd is also half-right though…

The tightness mostly surfaces in spreads rather than flat price. In early May, the Cushing-to-Houston spread blew past $4, then collapsed under 70 cents. At $4 it’s worth to ship them out, at $0.70 it is not.

So the WTI price can be perfectly still while the prompt spread violently whips around.

So “tank bottoms don’t matter for flat price” - largely true. As long as the barrels can get to Cushing fast enough. And with a high enough spread, they’ll get there fast.

“Tank bottoms don’t matter for settlement” - false. Because the barrel HAS to be in Cushing. Not in Houston.

On gold’s sell-off

Gold sold off some $1,500 over the past several months and $500 over the past few weeks. All the debt, the instability, the chaos, a president who changes his mind by the minute - you’d think investors would flock to safety. What gives?

My read? A few things combined.

First: like I was writing in “Selling the future to survive the present”: a pure liquidation event. You sell what you can, not what you want. And gold is one of the most liquid assets. So down the price goes.

Then real yields. The new Fed chair walked into his office and - against every expectation that he was installed to cut quickly - reaffirmed he’s there to break inflation. So the market is now pricing hikes, something like 60% by September, and 80% by December. Higher real yields, even the official kind, are a headwind for the pet rock that doesn’t generate any…

In my “Weekend thoughts” there’s a graph “Foreign holdings of US Treasuries”: it’s pretty high, which gives some credence to this point as investors are moving from gold to USTs now the war is ending (or is it?)… But there’s also the graph (first one) that shows that gold overtook the USD as a share of foreign reserves.

Than there are the algos that are following Trumps words literally. What is it now? 39 times he won the war already? But those algos don’t seem to learn. The Strait will re-open every week, and is closed every weekend because of WAR. But by Sunday night, it’s back to peace talks. Gold doesn’t trade during weekends, so the algos just sell it. I’m oversimplifying, but you get my drift.

And than there’s the KOSPI-unraveling trade, which is basically margin leverage getting cleared out, which needs… liquidity… which means you sell what you can. Like… gold…

So what you see as chaos, I see as a confluence of factors. And I’m pretty sure China is doing some more manipulating on top of it as it wants to accumulate cheap gold. So don’t blame the bullion banks alone for the dumping.

None of this changes my mind as I’m certain we have REAL negative yields. [See “Length, not temperature”]. But the headline number doesn’t say so, so most people and all the algos keep trading as if the current situation makes any sense.

I strongly believe this is a positioning washout inside a bull market, not a top.

On oil’s appreciation

How do you think the various asset classes perform once Brent reaches $125-150 in the coming months - and with the distinct possibility of going well beyond $150?

Brent

Dubai futures

As I write this, Brent’s around $72. It went from roughly there to $166 Dubai at the March panic peak and all the way back.

The first question isn’t actually “what happens at $150”.
It’s “how does it get there”?

And secondly: what is this $150? Is it a war spike (we’ve seen that)? Or is it a structural repricing?

Anything can trigger a spike: the Strait shuts again (edit: it just happened), a tanker burns, force majeure somewhere - is largely transitory. The world reroutes around it.

Equities wobble and recover, and the whole thing mean-reverts.

So if you believe that, I wouldn’t rebuild my portfolio around that as it won’t survive the next ceasefire post.

The more interesting world is the one where $150 actually stays.

Physical supply normalising slower than the price implies, buffers running down, the SPR cabinet bare, no quick barrels to paper over the hole.

That’s actually my thinking, and it’s the one that reprices everything, because oil is the input cost sitting underneath every other input cost.

So here’s what I think as the roadmap:

The liquidity squeeze 2.0

Equities crack. Not all of them - the producers and the energy complex love this - but the index is the index, and $150 oil is a margin grenade for everything that burns diesel, ships a box, or feeds a petrochemical plant. So… Basically everything. Think 70s or ‘08, but with lots of leverage sprinkled on top.

Bonds do a three-step: first they rally - flight to quality, the market starts pricing emergency cuts, the 10-year drops. Then the Fed obliges and cuts, or restarts QE under whatever euphemism, and bonds rally again on the cut itself. Then the market notices the Fed just eased into an oil-driven inflation, real yields collapse, and yields rise - not because anyone’s hiking, but because nobody wants to lend dollars long to a borrower printing into stagflation. That last leg doesn’t come back. The Fed gets to defend the bond price or the dollar’s value, can’t have both.
Japan’s already living in that third step, so watch it there first.

Gold and silver. Short-term, they get sold in the same liquidity event as everything else - the hedge liquidated for cash, exactly like the other question. Then they go vertical because negative real real yields is the entire bull case.

The dollar. Near-term it can actually spike, because a global margin call is a dollar squeeze - everyone scrambles for the thing the debt is denominated in. Longer-term it erodes, on the petrodollar fragmenting, the yuan oil settlements, the same buyers just roll over into bullion instead of Treasuries.

Anything real survives the squeeze: commodities, the energy complex, …

But of course they won’t let $150 happen if they can stop it. They already quietly “unsanctioned” Russian and Iranian crude the moment oil broke $110, to cap the visible price and keep the war risk off the front page. SPR releases, sanctions waivers, jawboning, “peace talks” headlines.

Getting to a sustained $150 means those caps have to fail.

That’s a real bet buried inside your question.

One caveat, the same one I gave last month!!

I’m a long-term bull on exactly this scenario, and I still think the path there runs through a liquidity squeeze that takes the metals and the miners down first.

I’m often right, but early. I’ve learned the hard way that that is the most expensive way to be right.

On books

Name two or three books or writers, not related to markets or finance, that have most inspired you.

I will cheat a bit on this one... Because hey. F**k the rules right 😉

Half of how I see the world wasn’t found on a shelf. The question says two or three. I’m going with five or six. The rules will survive.

Aeon Flux first. Thé greatest movie ever made. I’ll die on this hill.

A future where the world is split: the last city of mankind on one side of the wall, everything they’re told is death on the other. Perfect order. Perfect surveillance. Æon Flux, fighting the system. She keeps going, doesn’t ask permission.

Spoiler alert: that “perfect society” rests on a lie. Something that landed on me and never left. The system looked stable. It was anything but.

Anthony Horowitz next. Pre-Potter. Pre-genre. Groosham Grange.

An ordinary outsider with something the rules didn’t account for, thrown at an order far older and far bigger than himself, with no realistic shot at winning.

Wins anyway.

Decent and stubborn at exactly the same time. That’s a combination nobody thinks to mention when you’re eight. The Power of Five came later. Same kind of skeleton, but bigger stakes - saving the world and stuff. Good vs bad. Kindness against overwhelming odds.

I was but a kid (and yes, you can probably go to guess my age based on that 😉) reading about good people who refused to lose, and apparently that shaped me to this day.

Douglas Adams. Cardinal sin… As I came to Hitchhiker’s through the film.

Yes.

But the lens landed immediately and that’s what mattered. The universe is vast, indifferent, and mostly run by bureaucracy. Earth gets demolished for a bypass and the plans were on public display in Alpha Centauri the whole time - really, you should have checked…

You can find his influence in how my brain works: just write the insane/absurd thing flat out, and let the reader catch it.

He was way funnier. And decades earlier.

Rand. Specifically Atlas Shrugged. And before you roll your eyes:

People cite her for the markets, the capitalism catechism, whatever their economics professor said. I cite her for Galt’s Gulch.

What stays most with me is where a group of people look at their system that is completely corrupt, broken, and demanding their participation anyway to keep it running. And they simply stop. They walk away.

Silent resignation as a weapon. Recognition that some systems just don’t deserve your energy.

That idea has followed me forever. Every time I’ve looked at a broken institution demanding compliance and thought... no way José.

And Firefly. Not a book. Again. I think I’ve mentioned already I don’t care much for rules 😉.

I loved it because it was so accurate. Not only in the societal sense, but also the physics of it.

Alias did the same thing a bit earlier: subtext under subtext under subtext, every scene running three levels - or more - deeper than whatever was spoken. It only ran for 5 seasons… because the longer it ran, the deeper the complexity became. Which ain’t prime material for continuation I presume.

That’s where I’ll leave it for April. The floor is yours.