Is it possible that the commodities and associated stocks with the best fundamentals in a world of scarce competition for investor dollars simply received all the money and positioning was so extended that the subsequent massive selloff ensued when the first potential crack appeared in demand? That’s how I’ve been looking at it FWIW
Mathematics are in Control and they won´t be Denied
If You don´t know what to do, put all your Capital in US Bills in your own name, with No Counterparties or "Fund", if you are fortunate to have a US Social Security number
Commodities bull-markets have multiple 50% plus sell-offs. By definition commodities are small markets and by nature speculative. One only buys a commodity to sell it at a later date and it costs money to hold. Even without expansionary monetary policy, commodity supplies are strongly constrained. War in Ukraine & Russia, low investment in upstream oil & gas, low-investment in infrastructure for transportation, 1/3 of farmers in the US reaching retirement age etc etc etc.
However, that being said, there is tremendous overcapacity in services and consumption. My general view is inflation BUT deflation cannot be ruled out. There is also a very wide spectrum for serious policy error from the political class and central banks in the coming years.
Love your writing. I appreciate your thoughtful analysis. Question concerns JGBs. Does the fact that the 10-year JGB yield hasn't really spiked higher give you any pause with regard to your thoughts on inflation? While higher, the 10-year certainly doesn't appear to be confirming the 30-year JGB jump in yields. Thanks.
This is a bit but not totally unfeasible IF... What if there is some kind of regime change in China
I am not talking about a coup or anything that extreme, but what happens to this scenario if Xi's grip on power is weakened? This presumably would affect his ability to dictate economic policy
Low liquidity = the price-setters are the 'tourists' going from what's hot to the next. Seems to be flowing heavily into Healthcare now. But overall, the high wages/pro-labor policies assume political leadership is 'long-term' thinking. For China's case, I think the argument can be made, but for the West? I can't help but think they need to save the boomers' retirements eventually. Which long-term is inflationary, but unsettling that its just becoming 1 trade trying to predict CB actions.
Curious how you're interpreting what the bond market is saying with all this? Seems like bonds are pricing in some type of CB pivot now, but spreads are starting to blowout. Any signal in bonds that you look for in regards to inflation?
From a subscriber
Is it possible that the commodities and associated stocks with the best fundamentals in a world of scarce competition for investor dollars simply received all the money and positioning was so extended that the subsequent massive selloff ensued when the first potential crack appeared in demand? That’s how I’ve been looking at it FWIW
Hello Russell
On one hand it is all very complicated, yet the Answers are So Simple:
There will be no Wage Inflation
"They" cannot inflate their way out:
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/generations.pdf
You and many others keep looking for "Answers" that somehow things work themselves out
They will Not
It will all End Badly, as it was Destined to all along
It is simply this:
There is No Way Out of The Debt Bubble, only Consequences
The "Consequences" will be myriad
For Participants, it will be like 1932
90% down in Markets, Real Estate 70-90%
But unlike the 1930s, War will not clear the deck
Because EROEI wasn´t a problem then, it is now
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/prime_equation.pdf
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/energy.pdf
IF, and I say IF we are lucky, there will be No Nuclear Conflict though the Brits and US Govt are pushing towards one
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/war.pdf
Governments will Fall, more and more
Boris is just the latest
The American Government is going to Fall as well, probably in a very destabilizing way which will spread around the World
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/rebellion.pdf
Hope is Not a Strategy
Mathematics are in Control and they won´t be Denied
If You don´t know what to do, put all your Capital in US Bills in your own name, with No Counterparties or "Fund", if you are fortunate to have a US Social Security number
Ask yourself this:
What is More Powerful and More Important
The US Dollar or The US President
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/us_bills.pdf
You and ALL in Markets must know EXACTLY what to do in The Dollar and US Bond Market
If you don´t, you will Lose
Berkshire Hathaway will be burned to the ground, imagine everyone else
https://www.talentseekscapital.com/uploads/3/4/5/6/34567939/proposition_to_warren_buffett_x.pdf
These events are unstoppable because Mathematics and The Laws of Thermodynamics are not subject to Human Veto
My door remains open to you Russell if you want to Profit from these events, rather than be a victim of them
Best Regards
Charlie
Commodities bull-markets have multiple 50% plus sell-offs. By definition commodities are small markets and by nature speculative. One only buys a commodity to sell it at a later date and it costs money to hold. Even without expansionary monetary policy, commodity supplies are strongly constrained. War in Ukraine & Russia, low investment in upstream oil & gas, low-investment in infrastructure for transportation, 1/3 of farmers in the US reaching retirement age etc etc etc.
However, that being said, there is tremendous overcapacity in services and consumption. My general view is inflation BUT deflation cannot be ruled out. There is also a very wide spectrum for serious policy error from the political class and central banks in the coming years.
Love your writing. I appreciate your thoughtful analysis. Question concerns JGBs. Does the fact that the 10-year JGB yield hasn't really spiked higher give you any pause with regard to your thoughts on inflation? While higher, the 10-year certainly doesn't appear to be confirming the 30-year JGB jump in yields. Thanks.
This is a bit but not totally unfeasible IF... What if there is some kind of regime change in China
I am not talking about a coup or anything that extreme, but what happens to this scenario if Xi's grip on power is weakened? This presumably would affect his ability to dictate economic policy
Low liquidity = the price-setters are the 'tourists' going from what's hot to the next. Seems to be flowing heavily into Healthcare now. But overall, the high wages/pro-labor policies assume political leadership is 'long-term' thinking. For China's case, I think the argument can be made, but for the West? I can't help but think they need to save the boomers' retirements eventually. Which long-term is inflationary, but unsettling that its just becoming 1 trade trying to predict CB actions.
Curious how you're interpreting what the bond market is saying with all this? Seems like bonds are pricing in some type of CB pivot now, but spreads are starting to blowout. Any signal in bonds that you look for in regards to inflation?