By Pucklore | October 18, 2023 | Comments Off on JPM’s Oksana Aronov says, “The 10-year is still… very much priced for a 2% inflation world.” Jay Powell wants to “demolish” the unhealthy relationship between asset prices and Fed policy, so don’t wait for the Fed punch bowl to come back. Also, the default cycle is underway.

Unless we see the economy in complete freefall, the Fed will hold. The Fed has only raised 25 basis points since May, but the long end of the curve has reacted substantially. 30% of outstanding Treasuries are maturing in a…

Larry Fink still thinks bond yields will go above 5% and that inflation will be sticky. He thinks, eventually, corporate and pension funds will sell equities and buy long bonds to more easily match liabilities.

By Pucklore | October 14, 2023 | Comments Off on Larry Fink still thinks bond yields will go above 5% and that inflation will be sticky. He thinks, eventually, corporate and pension funds will sell equities and buy long bonds to more easily match liabilities.

Discoveries in AI, robotics and health will be the next opportunities. This is also allowing us to “recalibrate” away from China. If people are living longer, locking in 7-9% returns for 10 and 20 years will provide confidence and dignity…

Ken Rogoff – “Oh, I’m definitely in the school that they (real rates) are going to stay high for as far as the eye can see.”

By Pucklore | October 12, 2023 | Comments Off on Ken Rogoff – “Oh, I’m definitely in the school that they (real rates) are going to stay high for as far as the eye can see.”

Dr. Rogoff understands that he is in the academic minority with his viewpoint and disagrees with the latest demographic and productivity papers indicating this rates regime is transitory. He still thinks that the fundamentals point to higher rates over the…

Paul Tudor Jones says , “With 122% of debt to GDP… you get in this vicious circle where higher interest rates cause higher funding costs cause higher debt issuance which cause further bond liquidation which cause higher rates.”

By Pucklore | October 10, 2023 | Comments Off on Paul Tudor Jones says , “With 122% of debt to GDP… you get in this vicious circle where higher interest rates cause higher funding costs cause higher debt issuance which cause further bond liquidation which cause higher rates.”

Interest on the debt will exceed defense spending in two years. In about 4-5 years, 20% of taxes will pay interest on the debt. This will soon be a culminating “grinding reality,” and we will have to deal with this.…

“I see more dry tinder for financial flames than I’ve seen in quite a long time,” says Larry Summers to David Westin. Dr. Summers is concerned with the “gravity” of the fiscal situation and even thinks we need financial crisis contingency planning.

By Pucklore | October 7, 2023 | Comments Off on “I see more dry tinder for financial flames than I’ve seen in quite a long time,” says Larry Summers to David Westin. Dr. Summers is concerned with the “gravity” of the fiscal situation and even thinks we need financial crisis contingency planning.

“We’ve got something of an energizer bunny economy…. If anything, it looks like job growth is accelerating…. Interest rates may be less restrictive than they used to be.” Back in 2008, he was more concerned about too much austerity, because…

“That marginal dollar that’s sitting in cash… will just sit there,” says Jim Bianco. “It will be harder to drag that money out.” You get 2/3 of the historical stock market return of 9% with almost no risk in money markets.

By Pucklore | October 4, 2023 | Comments Off on “That marginal dollar that’s sitting in cash… will just sit there,” says Jim Bianco. “It will be harder to drag that money out.” You get 2/3 of the historical stock market return of 9% with almost no risk in money markets.

So Mr. Bianco says that this is what the stock market is competing with now. He agrees that we are generally in a secular bond bear market. And in the short term, he is looking for an old-fashioned capitulation, as…

Howard Marks thinks that the new sea change will make people want to own more fixed income, because rates will be higher for longer.

By Pucklore | October 4, 2023 | Comments Off on Howard Marks thinks that the new sea change will make people want to own more fixed income, because rates will be higher for longer.

He points out that the S&P 500 has returned about 10% per year for the last 100 years – “That’s a good rate of return.” Today, you get high single digit returns on publicly traded debt securities or low double…

Barry Sternlicht says, “Powell loses control,” when the interest on the debt goes from $2T, to $2.5T and then to $3T. “The economy is going to explode.” He and Becky Quick then ponder if Powell will need to start QE again, because, “Who’s gonna buy the stuff?”

By Pucklore | October 2, 2023 | Comments Off on Barry Sternlicht says, “Powell loses control,” when the interest on the debt goes from $2T, to $2.5T and then to $3T. “The economy is going to explode.” He and Becky Quick then ponder if Powell will need to start QE again, because, “Who’s gonna buy the stuff?”

Mr. Sternlicht admits that he underestimated the effect of government stimulus, and the infrastructure bill alone is adding 50 bps to GDP. A construction CEO member of his board says 70% of all his projects are public, and he’s never…

“Look, we are in a cold war. They’ve been fighting it since 2001,” says Kyle Bass of Hayman Capital.

By Pucklore | September 29, 2023 | Comments Off on “Look, we are in a cold war. They’ve been fighting it since 2001,” says Kyle Bass of Hayman Capital.

Mr. Bass also wonders why we give China all the asymmetries, e.g., we let them broadcast anything in our country, but we can’t in theirs. China’s banking system is 4X more levered than ours, and 40% of the leverage is…