Yeah I think this is bang on the money. The piece that investors are missing at the moment is that old style QE (bail outs) and inflation can co-exist it just leads to currency debasement so Long Store of Value / Short TLT is a good expression of this new structure for now.
There will with regret be some new Widows todays. The market appears to be unable to cope with QT and rising rates . We live in a highly financialized system and imagine will hear within a few days of the end of QT.
To re-iterate your view of how the Fed comes into this picture, your argument is that if they start easing, they are likely to only ease down to FFR at 4%. This makes sense, but in light of recent events, do you think that with their new BTFP facility enabling them to better accommodate financial system issues, this increases the odds of them tightening more than what the market has re-priced in the OIS curve recently, giving us a deflationary recession, and forcing them to cut rates even further than that? I'm starting to think that a GLD IEF barbell makes sense over the next 12-18 months even assuming your call is correct. It seems like a lower risk play than a GLD/TLT pair trade. Does this make sense?
That was a super fun talk. I was trying to find the next trade this weekend staring at the JGB 2Yr and 10Yr and Gold and Crude oil. What I did not know is why the TOPIX and Yield behave the way they do. Thank you
Yeah I think this is bang on the money. The piece that investors are missing at the moment is that old style QE (bail outs) and inflation can co-exist it just leads to currency debasement so Long Store of Value / Short TLT is a good expression of this new structure for now.
Agreed - that why it freaked me out a bit... I can see why JGBs have rallied, so might not need to worry too much. To be fair gilts have rallied far more than I would have thought too
Yeah I think this is bang on the money. The piece that investors are missing at the moment is that old style QE (bail outs) and inflation can co-exist it just leads to currency debasement so Long Store of Value / Short TLT is a good expression of this new structure for now.
There will with regret be some new Widows todays. The market appears to be unable to cope with QT and rising rates . We live in a highly financialized system and imagine will hear within a few days of the end of QT.
Given the collapse in oil and yields, I am pretty sure we will be hearing about government stimulus soon
To re-iterate your view of how the Fed comes into this picture, your argument is that if they start easing, they are likely to only ease down to FFR at 4%. This makes sense, but in light of recent events, do you think that with their new BTFP facility enabling them to better accommodate financial system issues, this increases the odds of them tightening more than what the market has re-priced in the OIS curve recently, giving us a deflationary recession, and forcing them to cut rates even further than that? I'm starting to think that a GLD IEF barbell makes sense over the next 12-18 months even assuming your call is correct. It seems like a lower risk play than a GLD/TLT pair trade. Does this make sense?
That was a super fun talk. I was trying to find the next trade this weekend staring at the JGB 2Yr and 10Yr and Gold and Crude oil. What I did not know is why the TOPIX and Yield behave the way they do. Thank you
Yeah I think this is bang on the money. The piece that investors are missing at the moment is that old style QE (bail outs) and inflation can co-exist it just leads to currency debasement so Long Store of Value / Short TLT is a good expression of this new structure for now.
I agree that the JGB curve is distorted because the BoJ has practically nationalised the bond market.
To be confident that we have really gone pro-labour and escaped deflation, ideally I'd like to see BoJ abandon yield curve control.
Agreed - that why it freaked me out a bit... I can see why JGBs have rallied, so might not need to worry too much. To be fair gilts have rallied far more than I would have thought too
My gut feel tells me that USDCNH is the one to watch out for to confirm/refute your thesis
If it appreciates (Yuan depreciates) past 7.40 then you can say the CCP has decided to devalue - and the reflation thesis would be toast.
Yes. Just as the US devaluing the dollar in 1972 was the begininning of.the end of the inflationary era