Jimbo

BANK OF AMERICA Already lost half its market cap. I wonder what its real NTA is????

THE BANKS ARE JELLYFISH.....DRYING OUT ON THE LIQUIDITY SHORE The banks are stranded on the liqudity shore. The deposits are racing out the door to fund the budget defecit. The FED is not doing enough of a Hans Brinker act to plug the deposit gap. THE FHLB is doing a Hans Brinker but its resources are finite. In the mean time the US Government keeps on dynamiting the dyke with new expenditure programs. Anyway the banks dont want to borrow from the FED and FHLB because it is expensive Goodbye profits .....stock price.....and executive stock options. End result....Banks......look out below. Even Jamie has figured it all out and is dumping his JPM stock. Uncle Warren figured it out about a year ago and dumped most of his bank stocks...... but not Bank of America or America Express....keeping these is a mistake.....but obviously they have considerable sentimental value to him. (I think these two positions would benefit from a rather vigorus hedging program which given the circumstances should probably be implemented in a rather urgent manner). Its not pretty. Not pretty at all.

THE ROTATING BEAR We are in a rotating bear market!!! When did the bear market start, ie the bull market end Thats like asking when did the roman empire end????? A subject of much debate: 1/ Did the bear market start on 17 September 2019 when the FED had to rescue the REPO markets with 500 billion of REPO 2/ Did it start with the virus dump in March 2020. 3/ Did it start with the end of the bond bull market in August 2020. 4./ Did it start with the SPAC collapse in March 2021. 5/ Did it start with the topping of the SP500 in December 2021. 6/ DId it start with the end of money printing in March 2022. Take you pick!!!!!! These were all rings of the bell tolling out their doom!!!!!!!

THE JOY OF BONDS TLT down 51% since the August 2020 top. Is that a lot ?????????? Re Chinese stockmarket Your average stock market is usually two wheels turning The wealth creation wheel and the wealth transfer wheel The Chinese stock market is just one big wheel turning The wealth transfer wheel!!!!!!!!!!

BANKS AND BONDS A BAD MIX We are in the one of the worst FRAME's for buying bonds The "NPBD" Frame That stands for No printing and big defecit

A TALE OF TWO FRAMES WE are in the CROWDING OUT frame at the moment The frame where things break And when enough things have been broken We will PIVOT to the PRINT frame And stocks and bonds will go up...... Until some bad inflation numbers come out And stocks and bonds will go down.......

THE LONG AND THE SHORT OF IT The US Govt debt profile easly expalined 1/There is a great reluctance to lend long to the US GOVT....given the need for the FED to regularly print to save the day....inflation risk....guaranteed loss of capital. 2/ There is also great reluctance to borrow long by the US govt due to all the current bond losses on financial institution balance sheets...dont want to exacabate the problem. 3/ So all the borrowing gets crammed into the short side....the shorter the better. 4/ This all comes down to the rule that the size of a government debts is inverse to the duration of the government debts.

A FINANCIAL FAIRY TALE Once apon a time there was a kindly old uncle called FED (The R had been lost somewhere along the way) And all the investors lived in QE 60/40 land and everyone was very happy THEN one day UNCLE FED decided to stop printing endless amounts of money...... And suddenly every one was living in QT 30/20 land (for the big bad defecit wolf was going around blowing all the straw and wooden houses down) And all that talk of living happily ever after seemed like.... Welll just a fairy tale.

WHY HOUSING PRICES HAVE NOT GONE DOWN Housing prices are like a 30 year treasury They may have lost half their value in reality But they are still valued as "HELD TO MATURITY" assets at held to maturity prices on the home owner's balance sheet. Due of course to the 30 year low fixed rate mortages funding them. Valued exactly the same as 30 year bonds held to maturity on a bank's balance sheet.

WAITING FOR THINGS TO BREAK Just waiting for things to brake. Because this system is not operating at anything close to a stable equilibrium level.

EFFICENT MARKETS HYPOTHESIS Markets are not efficient. The efficiency does not reside at the market or price level. It resides at the individual investor level. (the efficient investor hypothesis!!!!) Investors can be "relatively efficient over the long term" by applying value metrics to stock purchases. And only buying stocks which meet their value metrics. Which can be a very small time window of opportunity indeed!!!! Even then this applies only to long term investors. Notice how I dont say perfectly efficient or short term!!!!!!! Short term investors ie traders/speculators really don't care about value. They care about technical analysis and liquidity. As they exist in a different "frame of reference" than long term investors. Uncle Warren covered this in the voting machine VS weighing machine analogy.

EFFICIENCY VS LIQUIDITY Yes...the market price (MP) is determined by the supply of liquidity. The MP is not determined by efficiency....prices are not efficient. Liquidty is like the tide....like the current......that pushes the price around. High liquidity leads to high asset prices and vice versa. We are currently going through a period where the FED is withdrawing liquidity while the US government is increasing the dermand for liquidity. The expression for all this action is found in the short term bond market. Its not pretty.

THE PROBABILITY OF FUTURE INFLATION In the 70's the FED indulged in several waves of printing. We have only had one big wave so far...... The probability of future waves of printing and resulting inflation and interest rate spikes is very high..... As the FED saves the US government from future default crisis. The only way to stop this is US government fiscal discipline Can't see that happening.

THE OPPORTUNITY COST OF CRYPTO Crypto sttill has a One trillion market cap. If you put that into TBills that would be a return of more than $50 billion a year. That's the opportunity cost of owning crypto.

THE BIG FREE LUNCH At the moment the big free lunch is Tbills You are getting the highest return on the government bond curve with the least duration risk. But for how long???? This free lunch is kept alive by the Treasury's bond inversion policies. i.e. the reluctance to fund the defecit through long bond issuance. Because that further hurts the already damaged banks. As inflation goes down the incentives and temptation for the Treasury to sell more long bonds increases. The inversion policy could quietly disappear into the smoke!!!!!! This mitigates against the probabilities for a long bond rally.

THE TROUBLE WITH DISNEY Free cash flow a measly billion....... Hardly enough to support a 150 Billion market cap is it ?????? Used to be 10 billion in free cash flow............ Where did it all go ????????

BEACHED JELLYFISH OF THE DAY Bausch The "Debt impact crater" of the rocket stock otherwise known as Valeant. Market Cap of $3 billlion Debt.....drum roll please..... $20 billion....the toxic waste product of Valeant's flight to the moon and back. Kept alive as a zombie by the QE regime of the FED. Which ended in March 2022. Where is the Beached Jellyfish ETF when you need it!!!!! (which shorts over indebted public companies without the cash flows to pay off their debts) Good idea....until the FED inevitably spoils the party with a pivot.

THE SUN THE SEA AND THE STRAW The short term treasuries are the straw sucking up all the liquidity to fund the budget defecit. While the FED does'nt provide the necessary counterveiling liquidity by printing this dries out the liquidity sea It becomes shallower The shoreline recedes We see who has been swimming naked (Hint....Banks) The jelly fish of greater fool assets and highly indebted companies get stranded and dried out in the unforgiving sun of chapter 11.

INTERESTING FACTOID In China the green candles are red and the red candles are green. Just a different way of thinking I guess.

THE DOCTOR'S BIG SHORT Well Dr Burry has put on the big short. Usually he is too early. But this time around I think his timing is not bad at all.

THE FED HAS BEEN A VERY NAUGHTY BOY In the last four years the FED has really ramped up its interventions in asset markets, 1/ The September 2019 $500 billion BIG BAIL repo hedge fund get out of underwater treasuries jail free card. We still dont know who the hedge funds were that benefited or how much they benefited. 2/ The BIG PRINT of May 2020 to March 2022 ...40% growth in M2. 3/ THE BIG STOP of March 2022 ....basically sending the Bond market. bank and insurance stocks and all the greater fool assets down the toilet....SPAC's Crypto NFT's etc etc. Before this they were content with printing a trillion a year.....which was bad but not catastrophic. Now we wait for the BIG PIVOT

THE GREATEST RUG PULL IN FINANCIAL HISTORY In March 2022 the FED undertoook the greatest asset rug pull in history. We are still experiencing the effects of that frame effect. The Crypto rug pullers are all insignificant in comparision. Most market participants still don't seem to understand this.

THE GRAVITY OF DEBT Eventually all the Treasury bond issuance will weight too heavily on the market. Then it will fall. But we must wait for the usual signs.

TWO WHEELS GRINDING IN OPPOSITE DIRECTIONS What is the stock market It is two wheels grinding in opposite directions 1/ The first wheel...the smallest comprising 5% of stocks ....is about wealth creation. 2/ The bigger wheel.....95% of stocks.....is all about wealth transfer. Choose wisely grasshopper.

ON SHORT SQUEEZES Short squeezes are usually a sign of the end of bull moves and not the start of ones. The MEME squeezes that broke out in early 2021 were actually a sign that the Bull was over. The SPACS fell apart right then.