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Everything posted by Jimbo

  1. THE BIG COMP So transitory is dead Long live the next FN!!!!! That stands for false narrative The Fed needs to improve its false narrative game It's an international laughing stock!!!! The Fed really needs to have narratives that rate highly on the FNCI Jimbo has an idea Drumroll please: They have a false narrative competition Cash prizes for the best false narrative My entry: "Inflation is contained" Worked for sub prime for quite a while!!!!!!!
  2. The FNCI Your right Transitory deserves a 1 right now. The Fed is just trying to keep the bond herd from stampeding while the smart money quietly exits. Whilst the Fed is printing at a rate of 7% of GDP annually. The RBA (Reserve Bank of Australia) is printing at 12%. So Australia will get more inflation. The Aussie will fall against the dollar. And the J number will be higher in Australia.
  3. INTRODUCING A NEW INDEX I would like to introduce a new index. The false narrative credibility index. The F N C I. This index tracks the credibility of a false narrative. The level of belief that the narrative retains. From 1 to 100. Take the transitory narrative as an example. It's at about 10 right now.
  4. So goes the false narrative. Fed has to abandon the "transitory" narrative. I wonder what they will come up with next. Should be entertaining.
  5. THE TAPER YOU HAVE WHEN YOU DONT TAPER I just love the FED's fake taper narrative. Somehow the deadline keeps being extended out into the wild blue yonder. Its called synthetic tapering. The FED wont bother with the real stuff while the synthetic stuff still works. And it is still working very nicely. Yes Jay is in line for two false narrative awards. I have dubbed the awards "JAYS". One for Inflation is transitory The other for we will taper shortly. He is really on a roll.
  6. ALLMOST ALL STOCKS CAN STILL MAKE WAY WITH THIS WIND So long as the fed keeps on providing the fair wind of QE most stocks will continue to rise. But the markets tired and the wind not as effective as it once was. Real rates this negative cant last. The market is delicate. Its fragile.
  7. IF THE WORD "TRANSITORY" TRADED LIKE A STOCK Then it would be trading like a chinese education stock right now.
  8. THE REPO WINDOW AND DEPOSITORY INSTITUTIONS In order to keep the party going the FED needs to lend to dumb money...the dumber the better..... The smart money is increasingly sitting on the sidelines and simply refuses to borow....no matter how negative rates are..... Who doubts that Robin Hood will qualify as a depository institution. Yep....the REPO window will be put at the disposal of all the Robin Hood day traders....
  9. ETF Suggestion of the Day Once apon a time I suggested an ETF stuffed with stocks the various arms of the US government was persecuting. On the basis htat they would recover when the persecution stopped. Hence the idea of the Tom and Jerry ETF was born. Well this idea can now be extended to China. How about the Whinnie the Pooh ETF Based on the same principles!!!!!!!!!!!!!!! Indeed DIsney could probably get into the ETF business.
  10. GARBAGE IPO OF THE DAY Robbing Hood Now they will (If they can) turn it into a meme stock.
  11. JUST TOO WEIRD FOR WORDS TIPS have negative yeilds of minus 2% How is that even remotely normal. Who buys this stuff?????????? Bond masochists!!!!!!!!!
  12. BONDHOLDERS....SUE THE FED Where are all the class ations from the Bondholders against the FED. They have all lost a fortune from all the printing. Uncle Warren's great Oxy deal has been turned into a bad deal by the FED. Whats 8% return when inflation is 6% and about to go to 10% ....thats a minus 2% return per annum for the next ten years, a 20% haircut a loss of $2 billion on the $10 billion invested. Thats what happens when you dont "FED proof" your deals against inflation. (and a great deal for the common share holders...........who would have thought that the virus would have rescued the Oxy management???) Chevron had an great oportunity to swallow Oxy cheaply in early 2020 .....and blew it!!!!!!!!!! Where are all the lawsuits????????
  13. WHAT THE FED IS REALLY AFRAID OF Its worried that the collapse of the long bond end will feed into and infect the short duration bond space. Thats why it started some hawkish talk. Therefore the current meme: "Interest rate rises not now but sometime in the "distant future." A deliberately schrodingian meme desgined to soothe the bond market herd and stop any possible stampede of the bond herd out of the slaughteryard pen. Its a disposable meme that will be dispensed with when it has serves its purpose. Anybody notice how the J number term I invented is a pun on the first name of the chair of a certain central bank?
  14. THE GREAT CURVE INANITY Current false narrative "The FED is behind the curve on inflation" Reality: The FED is always ahead of the curve on inflation because it creates it.................... Inflating the money supply is a deliberate and concious act of the Fed. The FED then pretends to be behind the curve on inflation. So it does not get blamed for the inflation. This is blame shifting methodology 101.
  15. A SIMPLE SOLUTION TO INFLATION Simple. Abolish the FED and set up a currency board with the Swiss Franc as legal tender. Simple.
  16. THE FED IS PAYING YOU TO BORROW The FED through the inflationary mechanism is paying you 2.5% a year to borrow. Why not buy a house and leverage up 10 to one. Thats 25% a year return the FED is paying you to borrow on your capital outlay. Subtract 5% inflation and your equity in the house will compound at 20% a year above the rate of inflation. A J number of 20. Blackrock and the other hedge funds know this. Its simple mathematics. This is simply private equity for houses. This is how private equity make their money. By letting inflationary transfer of debtors wealth compound their equity in assets at rates far in excess of inflation.
  17. THE FEDS EXERCISE IN SCHRODINGIAN EXPANSION What is the FED doing right now?????? It is expanding the schrodingian uncertainty box where in lies its future actions. Creating maximum confusion as to its future actions. This of course is the oppposite to Schrodingian contraction. Its taper talk is just that ....talk. Synthetic Negative QE. I think the inflation trades are still good. Blackrock obviously agrees having just bought $6 billion in houses. Financed I presume with a lot of low rate long dated debt to give the investment a high J Number. The FED by its interest rate supression activites, money printing, direct bond buying and schrodingian expansion, is actually increasing the J number of this type of investment. After all if your Blackrock why not go along for the free ride provided by the FED.
  18. A VERY APT POST From me: Posted March 24, 2020 THE GREAT INFLATION TRADE The Fed has to go full inflation to save the Financial Industrial Complex. Otherwise its straight debt default. And they wont allow that. There is simply too much debt in the system to ever repay in real terms. Real assets yes financial assets no will be the mantra from now on. Very 1970's. A Grey Rhino in plain sight if ever there was one.
  19. THOUGHTS ON THE DOUBLELINE TOTAL RETURN BOND FUND I always like to look at the portfolio composition of the DLTRBF to see how Jeffrey Gundlach is tracking. Its outperforming the index (but given the index is treasury heavy thats a very easy thing to do....just stuff your fund with higher yielding mortgage bonds....a pretty easy thing to do....and outperformance is guaranteed). A much better index to measure the fund's performance against would be a pure mortgage bond index. Which given the myriad of mortgage bond tranches out there would be a fiendish beast to create. But the fund is still down for the year. Which means the fund has not been able to escape the detructive gravity of inflation. Looking at the internal composition of the fund it is nicely balanced between agancy and non agency debt. Rather ying and yang. But it is unbalanced in regard to duration....only 4 years. This is good as the lower the duration the more protected the fund is against inflation. It seems the fund owns all the old tranches that are about to run off. Thus it is protected to a large extent from mortgage rate rises, which will lead to a sharp drop in mortgage refinancings and blow out the duration of most mortgage bond funds and lead to significant losses in value. It is also protected against housing price drops and mortgage defaults as the home owners for these mortgages that are about to run off would have built up significant equity in their houses. The fund structure gives it "Double Insurance" and with the agency debt implied guarantee from Uncle Sam "Triple Insurance". Indeed one could probably replicate this stategy, at a lower cost to fund investors, with a low duration mortgage bond ETF. It would need a catchy name for marketing purposes. How about the "Old Growth ETF".
  20. THE FEDS MANTRA The visible stated mantra: "Inflation is good" The invisible unstated mantra: the one they don't tell you about, the one on the other side of the coin to mantra one: "Bonds are bad"
  21. THE LONG BOND CRASH The big bail outs in March 2020 financed by borrowing and then printing set up the big long bond crash.
  22. TEN YEAR BOND YIELD Should be around 7%. How much more punishment are bond holders going to take. The FED will be the only bond buyer soon. I note that the ULTRAPRO SHORT 20+ YEAR TREASURY ETF has returned 50% over the past year!!!!!!!! The smart money play is still short the long bond. And long hard assets financed with cheap long term debt i.e. long inflation. The panic move from long bond ETF's into short bond ETFs continues. But you still lose the inflation rate each year on short bonds as well. Still a losing trade.
  23. WAITING FOR THE BOND SIGNAL The market wants to go down but is waiting for bond rates to blow out some more. For this to significantly happen the bond market in turn waits for some more inflation confirmation data. Its all a waiting game right now.
  24. THE FEDS $500 BILLION REVERSE REPO Thats a risk off action. A lot of the smart money has cashed in their chips and gone risk off for the rest of the year. So the FED had to mop up $500 billion of loans to hedge funds etc that was no longer needed for speculative leveraged plays. This is probably due to the Archegos blow up and the banks tightening their lending criteria and increasing their margin requirements. This will probably make short squeezes a lot less frequent going forward. The world has been awash in cheap speculative credit priovided by the FED that has lead to an orgy of overvalued assets (including the ramping of commodity prices).
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