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Everything posted by Jimbo

  1. WHY DO BONDS TRADE LIKE CRYPTO Because they occupy (nearly...almost) the same space on the Greater Fool Asset Curve. (A curve they never taught at University ...but exists is real world economics). Bonds used to be rather safe assets...but their position on the curve depends entirely on the actions of central banks. When the CB's print and inflate they move bonds out along the GFAC....towards the position that crypto currently occupies. The theft of bond value....in the form of inflation is a close substitute to the lack of an income stream that is the characteristic of GFA's such as crypto. So bonds in an inflationary environment behave as synthetic GFA's. As they go out along the curve the volatility increases.... Bonds have gone form the Low Debt Low inflation quadrant or "Frame" To the high debt high Inflation "Frame". As they have gone from one frame to another they have gone from safe to risky. It's the frame that determines return and risk of loss. Thats why determining what frame an asset lies in is crucial to any rational investment decision. The frame bonds occupy right now is the nasty loss making one.
  2. JEFFERY GUNDLACH SAYS BONDS ARE CHEAP I beg to differ The FED will have to pivot at some point to save the bond market....just look at the UK...... This will mean inflation and soft default and eventually higher rates.... The market is anticipating this....more printing..... Hard default will not be allowed by the FED as it will be too catastrophic.... Its quite happy to see the greater fool assets...SPACs, Crapto, memes etc lose all their value..... But it wont allow large scale corporate default..... It will draw a rate line in the bond market sand and defend it....... Where is that line and when it is reached will tell you when QE6 starts.....
  3. The simple fact is over the last 10 years the bondholders have been fattened for the slaughter by feeding them all the low rate corn they wanted...... Then in 2022 the FED took out the axe............
  4. THE GUILT OF GILT So the UK government decides to go chapter 11 even more quickly than it was...(or is that IMF program...so 70's isn't it...) So the GILT bondholders finally realise they are the bag holders.... What took them so long?????? Anyway now "forced" QE.... Seems like a nice future template for the USA....... "Forced QE" "You save us or we blow up the bond market" It worked so well in Sept 2019. Why should'nt it work again????? Yes we live in an age when blackmailing central banks is the path to wealth and riches......
  5. INTRODUCING A NEW INDEX As you may be aware...I am a bit of a pioneer in the area of Financial Psycological Indexes (FPI's for short} I invented the False Narative Credibilty Index Which measures the credibility level of false narratives. I invented the Kult Index Which measures the level of cultiness of stocks and crapto Now I introduce a new Index....drum roill please......... The SCREAMDEX The screamdex measures the amount of public pressure being placed on the Fed to pivot. Where should the S and P be...... Try the level on 16 September 2019 before all the printing... Before the $500 Billion repo blast.... Around 3000.
  6. The screaming has started. Yes the torrent of fed criticism has begun. More and more public pressure will be placed on the fed to pivot. But pivoting is no solution. It will just lead to more inflation. There are no good solutions left. Can't wait for the requisite Cramer meltdown to "do something". The fed has just let the market find its own level on rates. The calls to pivot are profoundly anti market.
  7. THE CHOICE THE FED HAS MADE....THE CROWDED TRACK So the FED is no longer printing..... Might even do some QT.... Inflation should go down....but not back to 2%...... So where are we now..... We are on the other track....the crowded one..... This is where all the defecit loving governments now compete for the limited supply of capital.....borrowing.....without the FED increasing the amount that can be borrowed.... Its called the "crowding out effect"....I remember the 70's...... I remember seeing the crowding out effect way back then..... Thats what we are having now.....Government defecits crowding out private sector borrowing.... By offering higher rates for the limited supply of debt..... This will be felt in the junk bond market..... And in the housing market.... Then in the investment grade market Already its not pretty..... This will suck debt capital from periphery countries back to the USA.... Que debt distress and default by said periphery countries.... Que rising US$ exchange rate as funds sucked into USA to fund Government defecit.
  8. THE FEDEX CANARY IN THE CONSUMPTION COALMINE Its all very simple. Fedex is the last mile in the cheap chinese stuff industrial complex. This complex....basically Americas "over consumption through over borrowing" complex is powered by the Federal defecit and Fed printing. The engine has been....temporarily at least....turned off by printer Jay. So people can no longer afford their debt based consumption fix.
  9. THOUHTS ON VARIOUS SUBJECTS Re Gold Gold shares are just a bad long term investment....look at the long term charts.... They also tend to pay lousy dividends which is another dead give away. Re the FED If Jay occupies the Arthur Burns chair of monetary printing at Eccles Print U Who will occupy the Paul Volker Chair of Inflation Control????? The contest will be fierce for this position.
  10. SOMETHING GOOD The bond "vigilanties" (or should that be cuddly bond puppies) are sort of waking up from their sleeping beauty sleep. Which is so long overdue..... Because I am tired....so very tired....... of seeing good public companies...the ones that should be in portfolios....taken private by Private Equity carpet baggers...... using cheap/free leverage provided by the FED. Two take privates have collapsed this week in Australia.,..because the debt has gotten more expensive....so the PE can't offer the usual 30% premium over market price to get the deal done. All the good companies were being knocked off the exchange one by one..... The ASX was being hollowed out.... The good companies that paid real dividends were leaving and being replaced by garbage wealth transfer vehicles......with no dividends and insane valuations..... Hopefully this is all over.....
  11. ON LEHMANS AND OTHERS The US mortgage market has already collapsed....who can borrow at 6% to buy a house. The FED will have to intervene and buy massive amounts of MBS..... No one else will run the inflationary risk of owning a 30 year fixed rate security.... European banks are a joke....CS at $5..... Their share prices have dead lined since 2009.....
  12. WHAT FURTHER IS THERE TO SAY I'm sure there will be support at 3000......... Only minus 25% to go......

    I'm sure there will be support at 3000.........

    only minus 25% to go......

  14. YES THERE IS NO BOND SANTA TLT now down 23% YTD Isnt that just wonderful..... When did it top out..... 1 July 2020.....just after the end of the financial year.... A co-incidence....I think not. After all ....when the 2 and 20 fees are in the pocket.....after 30 June 2020 ..... Its time to sell out and run for the hills....... The FED knows there are no good solutions left. And so they have left the markets to there own devices.... A bout of primal scream therapy is in order... The SandP should be trading around 3000.
  15. THE MYTHICAL LAND OF THERE You never get to there. If you ever do get to there then you find out that there is no there there. No body rings the "There bell" Anyway on the bondholders are bagholders theme..... I have previously said ther has been no real compensation for holding treasuries for the last 5 years. I was wrong...... Its really for the last ten years. And who has been the major beneficiary.....of this sea of cheap free debt. The private equity crowd..... Riding on the inflationary/QE/print wave....... And now it is all coming to an end...... The frame forces are reversing...... Its not going to be pretty.
  16. SOME MORE THOUGHTS ON OXY Uncle Warren could have bought all the Oxy he wanted in 2020 for under $20. Paying over $70 now does not represent what I consider value. I can't really see much more upside in the stock. I can see a lot of sideways movement. Re JHole and what the FED says At this stage of the proceedings it does'nt really matter. Either they go back to printing to counter the treasury issuing tsunami..... Or its game over.....
  17. THOUGHTS ON INFLATION....ITS A PROCESS.... NOT AN EVENT I mean if they can reduce the debt enough in real terms.... via more inflation.....then it becomes much easier to service it out of cash flows. Then corporate america can withstand the higher interest rate required to bring inflation under control without defaulting. So then and only then can they increase the fed fund rate above the inflation rate ....to the rate required by the Taylor rule.....and control it. i.e. the Fed has to create a certain amount of inflation "The required Inflation" before it can get to the "Control Point" and control and then reduce inflation....it is a process the Fed has to undertake. And who ever is the Fed chair when they reach the control point gets to bring the inflation down and becomes the "new Volker". The control (less) inflation equation is: Default event horizon rate > inflation control rate > inflation rate. We dont have that yet ...what we have now is the more inflation equation: Inflation control rate > inflation rate > default event horizon rate. Uncle Warren should have taken Oxy over in 2020 when it was cheap.....no longer cheap. Most of the easy gain in Oxy is over.
  18. SO NOW UNCLE WARREN WANTS 50% OF OXY Uncle Warren I presume thinks that the printing priesthood will eventually pivot back to the big print. The simple fact is that in order to control inflation (eventually....somewhere in the distant future ) the Eccles temple acolytes need to create more inflation in the present. They cannot control inflation now because the cash flow needed to service the interest rate required is simply too great, The numbers don't add up. It would create a hard default situation....to be avoided at all costs. But if they create enough inflation then cash flow will increase enough so the numbers do add up. And then they will increase the rate enough to control inflation...and there will be no hard default. And in the meantime the common shareholders of Oxy will get $3-4 billion of inflationary wealth transfer a year. So why not be the common shareholder.
  19. MUSINGS ON THE RECENT RALLY IN STOCKS (AND BONDS) This is another bear market rally.... It will end...... And the river of time will flow endlessly into the quiet night.
  20. OVERVALUED STOCK OF THE DAY Nike....selling at 36 times free cash flow......give me a break.
  21. CREATING TSUNAMI SEAS Central banks used to be rather benign things... Sort of like a kindly uncle...printing there 2% every year.... Nice safe and predictable...... But then they developed a god complex. They wanted to save debtors (and by extension creditors) from themselves. No one was to suffer any more....the result.....out of control moral hazzard and leverage gone wild..... The result.....treacherous waves of sudden printing. The result...destruction of bond markets. The creation of tsunami seas for asset prices and investors. Inflation will fall so long as the fed does'nt pivot. A rather big if. Of course they will have to eventually to fund the defecit.
  22. THE RISK ON RALLY So we are having a risk on rally. The market is clearly anticipating a FED pivot later in the year. A distinct possibility.
  23. THE FED's QT BELIEF/REALITY GAP Where is the QT???? There isnt any...or very little. The Fed is simply too afraid to do real QT. But it has convinced the market to believe that is it doing QT. Yet another false narrative....... Therefore there is a QT belief reality gap in the market. Rates are lower than they should be. This gap will close..the belief will evaporate over time.
  24. QUANTITATIVE NULL The Fed is not really doing any real QT. The balance sheet is going sideways. This needs a new name; How about "Quantitative null" Stocks cant really rise under such a regime. They can go down some more.
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