Author Archives
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TSP Smart: The Soft Pivot & The Everything Squeeze
And if the recent loosening of financial conditions has been spectacular, just wait until the next de-risking/deleveraging-induced tightening. Let’s call it what it is: Epic Monetary Disorder.
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TSP Smart: Crazy Talk
Reliance on some “neutral rate” to calibrate monetary policy is deeply flawed doctrine. The Fed’s assumptive 2.5% neutral rate may have seemed reasonable during the recent “Risk Off” backdrop. In the current squeeze rally environment, however, it is Indefensible – or, in the words of Mohamed El-Erian, “comical.”
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TSP Smart: Nowhere to Run
If your financial adviser is not talking about the this or including it in allocation advice you might need a new advisor. It is a new investing world.
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TSP Smart: The Greater Financial Crisis Emerges
Crisis Dynamics are now overwhelming the “Periphery.” Things are “breaking.” “Hot money” is exiting China and EM, spurring a self-reinforcing dollar melt-up speculative dynamic.
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TSP Smart: Until Something Breaks
At this point, I doubt the unfolding global liquidity crisis can be contained. And I wouldn’t be surprised if an intense bout of global de-risking/deleveraging erupts between now and the Fed meeting.
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TSP Smart: Pondering Modern-Day Runs
Market upheaval has turned systemic. No place is safe. And the Runs have commenced.
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Doug Noland: Calm Before the Storm
…more pressing, the blowup in Kuroda’s JGB yield peg gamble might be only weeks away. At this point, market operators (i.e. the leveraged speculating community) smell blood. Shorting JGBs at a 25 basis point yield – in today’s backdrop of surging global inflation and bond yields – provides a rare risk vs. reward opportunity for speculating in a multi-trillion dollar market.
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Doug Noland: Bursting Bubbles and Failed Experiments
A Bubble: “A self-reinforcing but inevitably unsustainable inflation.” An Experiment: “A test; trial; a tentative procedure or policy; an operation or procedure carried out under controlled conditions in order to discover an unknown effect or law.”
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TSP Smart: Time to Join Us
Today, there’s a massive “periphery” loaded with “subprime” junk bonds, leveraged loans, buy-now-pay-later, auto, credit card, housing, and solar securitizations, franchise loans, private Credit, crypto Credit, DeFi, and on and on. The “periphery” has become systemic like never before. And things have started to Break.
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TSP Smart: Good News in Bad News
For the last decade, bad economic news sent the stock market higher. Why? It meant more stimulus for the financial economy. As long as the economy was not strong & the stimulus was directed to wall street, life was great. Now the situation is reversed. The strong economy combined with high inflation has the wall street CEOs talking about hurricanes approaching… but they are talking about THEIR economy – the financial economy. Don’t confuse the two.