09-26-26 savo
away from debt.
De-Treasurization |
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09-26-26 spal
am building a big durian farm, combo agri + tourism... a little optimistic to do it at 62.
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Hann - sounds very cool. |
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09-26-26 carib
Foreign investors made a record $942bn in net purchases of US equities and investment fund shares in the 12 months to July, accelerating a shift in overseas investment towards American stocks and away from debt.
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09-26-26 carib
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09-26-26 carib
Savo: likewise.
Running an investment fund or owning a cash cow produces a similar outcome: every year you cash a fat dividend that exceeds your spending needs. |
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09-26-26 savo
Bonds were clearly not the place to be after the 2008 crisis.
numerically speaking may be... but quality of life speaking i would not agree with that.
I love recurrent cash entering the account, paying bills and allowing some reinvestment.
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09-26-26 carib
| Hann: I am not at all familiar with "vaults".. but I am not sure they cost that much. A normal safe deposit box in a bank vault costs at worse a couple of thousands, and 50 kg of gold fit in a small box.. but are worth over 60MM$.. |
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09-26-26 carib
The past is not necessarily a guide for the future.. but it can provide clues. What made excellent returns in the last two decades, without doubt?
1) tech stocks
2) bitcoin
3) gold (if bought below 1000)
Bonds were clearly not the place to be after the 2008 crisis.
Now most Colores are old hacks with significant capital. Besides the intellectual and emotional rewards of booking profits, what we need is just to secure a stream of income that allows us to live well and sleep well at night.
Or am I mistaken? |
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09-26-26 savo
hann..
while people look at hyperscalers...
look at the graph of the utilities Sector:
https://www.cnbc.com/quotes/.GSPU/
and regional banks...
https://www.cnbc.com/quotes/KRE/
these two sectors are key to the underlying economy. |
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09-26-26 savo
hann... and this time the crisis will be a sovereign debt crisis... not mortgages... or dotcomms.. or emerging markets..but developed market sovereigns.
who bails out the developed market sovereigns which are already taxing their citizens to death?
Central banks?
that would be the last nail in the coffin of fiat currencies. |
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09-26-26 hann
09-26-26 savo
At some point... i do not know when... the stock market will break.
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I think we'll have a multiyear crash, maybe US tech down 60-80%. Other markets not sure. Money will flow somewhere...
I have about 25% usd cash. Mostly in money market funds - i don't like this either as they also get into trouble in a big crash.
Have carpal tunnel in both hands screening actively w AI and bloomberg past 4 weeks w no new ideas.
Trump btw rejected Iran proposal. So 30 Sept back to war...
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09-26-26 savo
hann
stock markets are behaving as if interest rates are not going up.
I think interest rates are going much higher for the simple reason that they remain real negative.
With negative real rates people borrow and spend, do not save.
Hence there is not enough capital around to finance the roll over of so much government debt word wide plus the growing fiscal deficits.
At some point... i do not know when... the stock market will break.
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09-26-26 hann
More on gold -
09-25-26 savo
that means 2 trn dollars per annum on interest as the 40 trn rolls over...
the only solution is very high inflation.
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Hann... FWIW i believe that is a narrative fabricated by the government terminals which repeated ad nauseam has become official wisdom.
My view is that gold (by that I mean the precious metals complex including miners) is the opposite... is a protection against the incapacity of Fed officials to act independently from politics and provide stable currency no matter what.
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Ok - put this way I agree. Big trend is USD debasement vs real assets, high interest rates but much lower than inflation. Gold is a good way to preserve purchasing power.
Owning physical in size - SG vaults charge 1-2%/year. If i keep it, high chance of eventual theft. If SHTF, not sure what price u will get if you need sack of potatoes. Silver coins are more practical.
Gold miners - div yields are low, have to deal w overhead, resource nationalism, declining grades etc. Like owning a real estate developer vs owning the real estate. Most of the time better to own real estate. But gold there's no yield and no daily utility.
In lieu of gold, I'm trying this:
own real productive assets - biz, farm(s). rice fields, mixed food farm u really don't make any money but there's always food. excess we actually just give away. am building a big durian farm, combo agri + tourism... a little optimistic to do it at 62.
portfolio wise - in this flavor
undervalued commodity producers at low end of cost curve, pays div and appreciates, can be semi-no brainer sometimes.
biz that benefits from some inflation - financials not too exposed to asset blow up, cheap, market leader, div. generally where interest rates are already high.
resi/commercial/office real estate - never really got into this for yield. we just buy what we use. i feel i can get better returns/yield from port investments
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09-25-26 savo
soon the 3 months to 30 year rates will be above 5%
that means 2 trn dollars per annum on interest as the 40 trn rolls over...
in fiscal year 2025 the federal government collected 5.3 trn.
but next year the federal debt will be 3 trn higher... which means interest will continue going up because rates go up but the capital go up too.
the only solution is very high inflation.
If the debt grows at a rate of 3/40 = 7.5% and the economy grows say 2%...the US needs an inflation rate of at least 5.5% to keep the ratios unchanged. But if interest rates go up and the debt grows faster then the inflation rate they need goes up too.
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09-25-26 carib
| PS: a second source of profit for the token issuer.. would come from lost tokens. Statistically, a certain % of token owners, within a long period of time, tend to lose control of them, or dies without leaving the password. |
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09-25-26 carib
On Tether gold.. given the "weaponisation of the $", and custody in Switzerland, I thought they should have made the token payable in CHF, essentially storing gold bars in a swiss vault, and tokenising it. Anyway, US persons cannot buy it.
Obviously the vault should be well insured, and that would imply a cost, but most likely the token would trade above par (implying further issuing above par) and that could cover the cost. |
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09-25-26 savo
similar inflation prints than the US ... double the interest rate... the Fed is 350 bp point off-mark
South Africa...
SARB unanimously raised the repo rate by 25bps to 7.25%, with a return to a hawkishly cautious tone
Our base case sees a 25% probability of an additional 25bp hike in November..
...with additional tightening in January should our higher inflation scenario materialize
August headline inflation rose to 4.4% (from 4.3%), while core eased one tenth to 4.1% as expected |
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09-25-26 savo
| and in the balance sheet of the fed... who was transferring profits to the US treasury when rates were falling and is now asking for money! |
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09-25-26 Merlino
| With long rates this high I guess large paper losses are hiding in BS of Insurance, Banks and other Institutions. Since 2009 they do not need to declare and mark to mkt these losses otherwise... |
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09-25-26 spal
Plus the idea that money stays always the same is not true in my opinion.. it changes all the time.
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Booking wise / the mere accounting count was what was meant in the context of the instantaneous exchanges described --- I then went on to say that this us of course independent of the valuations which can in fact fluctuate - and do - and do not need exchanges to occur for that.
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09-25-26 carib
ft
Bank accounts of a Montana-based payments business working on behalf of Tether and Bitfinex have been seized by federal prosecutors who accuse it of making hundreds of millions of dollars of illegal transfers.
According to a civil forfeiture complaint filed by the Department of Justice in California, Capstone was unlicensed, hid the nature of its business from US banks and appeared to have made payments to “hundreds of individuals and entities” for two unnamed firms.
Those companies are Tether, the world’s largest stablecoin issuer, and its sister exchange Bitfinex, said people familiar with the situation.
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09-25-26 carib
| PS: not available to US persons. |
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09-25-26 carib
Savo: interesting. I did not know.
Basically, it costs you 25bp if you ask for redemption, as far as I see from their website. To custody fee, and the minimum size is about 100K$ equivalent.You pay US$, and can redeem gold bars in switzerland. |
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09-25-26 savo
| carib..i do not know how it works..but there is tether gold |
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09-25-26 carib
| Pity there is no credible stablecoin based on Gold, issued by a credible entity. |
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09-25-26 savo
spal.. money is a very elusive concept ... there are many forms of money around in addition to dollars at the bank... and measuring them is probably an impossible mission.
Plus the idea that money stays always the same is not true in my opinion.. it changes all the time.
As an example M2 grew 100% since 2016.
https://fred.stlouisfed.org/series/M2SL
and that is one measure of money. |
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09-25-26 savo
My observation is higher interest rates are actually negative for gold as opportunity cost of ownership is higher.
Hann... FWIW i believe that is a narrative fabricated by the government terminals which repeated ad nauseam has become official wisdom.
My view is that gold (by that I mean the precious metals complex including miners) is the opposite... is a protection against the incapacity of Fed officials to act independently from politics and provide stable currency no matter what.
Higher rates at times of inflation is a symptom of economic malaise. Real rates are still negative.
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09-25-26 spal
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09-25-26 spal
Savo - if someone (say a foreigner) sell a US Treasury they get a dollar deposit from a prior holder of deposits and the other person gets the T-bill. If they then buy gold - the gold holder sell gold and get the deposit.
The "money" always stays the same.
The issue is always and only valuation effects and never mere flows. |
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09-25-26 hann
Gold - It's interesting to look at returns in gold terms (like how many oz u can buy now vs 5, 10, 20 years ago). It's a little sobering. To have done a lot better u have had to buy AI, Faang etc.
I used to own gdx/gdxj during run of gold from 1.2k to around 2k. Tbh it's not my favorite investment. Volatile, no div income. My observation is higher interest rates are actually negative for gold as opportunity cost of ownership is higher. Of course the recent run from 2 to 4k is during a major trend shift to higher interest rates and inflation.
Japan - https://www.youtube.com/watch?v=xO2aDuaabj8
Very interesting. Jp economy is starting to grow. Tailwinds - corporates investing after years of debt reduction, self sufficiency/china replacement, fall in yen - CA surplus, higher domestic rates means local funds can earn in jpy, no need to place in USD assets, can also export more easily. Govt deficit only in 1+% range. Debt to gdp on net of financial assets basis is only 60%. Also pension obligations, even in the worst possible case reaches year 2100. AI checked some of these.
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