The still-broken Polymarket expiration system has produced another doozy. A written log of a crank caller talking about baby sacrifices and brains being turned into mush was determined to be "evidence of blackmail" uncovered in the Epstein files. Users trading the $2m market woke up to YES being paid out overnight this morning based on...unsubstantiated nonsense. Stop me if you've heard this one before, but the biggest profiter was aenews, who determined the crank call "should qualify" as evidence!🙃 When prediction markets smuggle made-up crap as "truth" and "evidence", then these markets are actually a very bad thing, instead of a good thing. The markets wind up endorsing lies, and overturning reality. Users on both Polymarket and Kalshi** have to be mindful that these markets are still a bit of the Wild West, and both platforms kind of just ignore ongoing rules challenges. There are occassionally vague apologies, and in very egregious cases they are shamed into giving refunds. But, by and large, you're meant to just grin and accept a total loss when they screw up. **An example on Kalshi is they recently ruled that Netflix saying "Warner Brothers" on its earnings call should be a LOSS for anyone holding YES in "Warner Bros" because they didn't say the slang term bros. Their young kid rules guy said he "simply had no idea" they were saying Warner Brothers, and indicated he thought they were saying Warner Bros. The two terms are, of course, completely synonomous in every single way and the people who bet on the truth/reality lost all of their money for reasons that defy logic and common sense. If you use these sites or are interested in using these sites, there are still lots of questionable decisions and oversights that happen on a routine basis, and you have to keep your head on a swivel. gl gl gl.

Slight deep dive on Fed Chair. Second biggest win of my career. Over the course of the past ~5 months, I've been trying to predict Trump's Fed chair nomination, as well as the timing of the announcement. Rewind to late November/early December, Kevin Hassett stood at 60% (eventually hitting 85%) AND the pick seemed potentially imminent. I had large paper losses and was in the red for about $200k. Was on track to be my second biggest loss. I had a huge negative position, because my two largest bets were the opposite of what seemed like the current reality: (1) I was betting heavily against Hassett and (2) I was betting the pick wouldn't happen until at least January. I was annoyed, and second guessing my research and thought process on Hassett, but after like a day of thought, I decided, screw it, I'm right -- he was a political hack, and didn't belong anywhere near the Fed -- and I'm not leaving. Why should I leave? I'm not leaving!!!! In fact, I kept betting even more against Hassett. The market, which had already displaced the first betting frontrunner (Chris Waller, a current Fed governor who was appointed by Trump) with Hassett, kept Hassett very high for weeks as Trump continued to fawn over him and make eyes with him. A few weeks later, when Trump implied he may want to keep Hassett's goofy countenance closer to home, Warsh shot up to 60% immediately. Warsh was then somewhat randomly displaced as frontrunner in favor of Rick Rieder, after favorable coverage of his interview pushed him to the 55% favorite. Four different frontrunners in four months. That's my kind of market. My thesis stayed fairly constant the whole time, in roughly four parts: 1. Kevin Warsh is the weak frontrunner. Maybe ~40%-50% odds. He checked off Trump's loyalty card, and is at least respected enough and distanced enough from Trump to have a bit of credibility. He certainly moves well in Wall Street circles, and was previously a Fed governor. Trump also has a very personal connection to him: Warsh's father-in-law gave $5m to MAGA Inc. a few months ago. The issue with Warsh is that, as far as monetary policy, he is at least a bit of a moron. He flunked his Fed governor test in 2008-2009 when he infamously identified inflation (which was below 1%) as his biggest concern, much to the dismay of Bernanke. Someone who wants higher rates to combat inflation is called a hawk. This is literally the opposite of what Trump says he wants (a dove, who is not as concerned with inflation). 2. If Trump actually wants lower rates and a credible, dovish person to achieve that, his best pick was the Governor he already picked in his first term: Christopher Waller. I had him as worth ~25%-30%. Trump is FAR more into loyalty than effectiveness, which helps to explain quite a lot of his bad picks for various positions (think of it like the polar opposite of Lincoln's "Team of Rivals"). With Bessent shepherding this, though, I felt like he could guide Trump tp pick the person likeliest to be able to lead a Fed boardroom down the path of lower interest rates. Waller has a very credible (and perhaps correct!) thesis that rates are too high. 3. Trump's best pick for matching loyalty and credibility is Bessent himself, who was leading the search and has roughly equal views to Warsh. I rated that at around a 5-10% chance. Bessent seemed very disinterested in this (unclear why -- I landed on him liking politics for whatever godforsaken reason and wanting to stay in that lane). But I thought Bessent may change his mind if Trump was deadset on Hassett, who was easily the worst pick (I rated Hassett a 5-10% chance). I thought in the scenario where Trump wants to pick Hassett, Bessent may be like "damn it, man, alright fine whatever, I'll be Fed Chair." Lol. But for real! 4. Other -- As with any pick, Other is probably worth a decent amount, and one of the "Others" ended up in the final 4 and indeed became the frontrunner eventually (Rick Rieder). Zooming out over the course of 5 months, I would've put Other at around 15%. (Side note -- I get pitched on hundreds of prediction market-adjacent products and projects. Vast, vast majority go nowhere. One that has actually gone somewhere is research platform Conspectus Intel from @jennkornn, which was very effective at synthesizing Trump's decision matrix as it relates to these candidates) This morning, Trump announced my weak frontrunner was the pick: Kevin Warsh. In the end, after all the drama and swinginess of the markets, the pick was neither that surprising nor that interesting. But I did wind up making $425,000 on this bet across various markets and sites, a couple of which I've pasted below. Second largest win of my life! Which is a great ending for me (not sure about the country). But it's also not the storybook ending: I would've made nearly $1m if Trump had made the smart pick, Chris Waller. C'est la vie.

Don't let your wife/girlfriend open up the NYT business section today...there's some irresistible hunks in there. Cool story on prediction markets as a career: (ps: I pay all - and a lot of - US taxes, the IRS reference was about an audit lol)