Bonds!

[Blake Hampton]

[Gregmal]

8 minutes ago, Blake Hampton said:

And this doesn't scare you at all?

You can't invest from a manic position. Why do you think the best investors and business people are autistic and semi sociopaths? All I can do is think ahead, brainstorm continuously, and follow the spin on the ball out of the pitcher's hand. Behind it all there's self correcting mechanisms but in terms of the short/mid duration twists and turns, if you haven't thought of them or considered how to prepare for them, youre not doing it right. 

 

This is why most people miss the ball. When years ago, Kuppy asked on his Twitter "what would you do if everyone who got the vaccine died in 10 years" everyone was alarmed, outraged, and got mad. So bizarre, right? It's a theoretical question that really makes you think! I found it to be a neat thought exercise. Likelihood? Probably nil(knock on wood), but think! Thinking and brainstorming are soooo valuable because for investors they're like practice. Practice and then when youre in that game...less chaos and emotion. 

[SharperDingaan]

10 minutes ago, Gregmal said:

Not number one on my list of expectations, but would be pure badass if Xi instead of doing the normal, “see your tariffs and raise you” simply goes “we re dumping all our treasures, and will resume negotiations in December 2026”. 

 

This is why we think a US debt restructuring is a lot nearer, and a little different to what most people would think. Imagine a mandatory conversion of all maturing foreign held T-Bills, as at date X, into 100-yr zero coupons (approx. 20% of the total debt). Domestic T-Bill holders as at date X, given a time-limited option to convert, should they wish to do so. On day X +1, that option trades on the market.

 

20% of the annual debt service cost instantly disappears, along with roughly 16-20% (Face Value - the NPV of the zero's) of the national debt, and there is nothing that the 'foreigners' can do about it. The trigger? .... a foreign buyers strike, stoked by the tariff war. The escalation? nationalization of foreign owned assets in the US, and US assets located abroad. Charming.     

 

Nobody wants nationalization .... so the debt run gets deflected onto the US gold reserve instead, via physical settlement of in the money options ... and all of a sudden, BTC becomes a 'new' national monetary reserve. An enterprising lad could do very well 

 

SD

 

 

[Gregmal]

2 minutes ago, SharperDingaan said:

 

This is why we think a US debt restructuring is a lot nearer, and a little different to what most people would think. Imagine a mandatory conversion of all maturing foreign held T-Bills, as at date X, into 100-yr zero coupons (approx. 20% of the total debt). Domestic T-Bill holders as at date X, given a time-limited option to convert, should they wish to do so. On day X +1, that option trades on the market.

 

20% of the annual debt service cost instantly disappears, along with roughly 16-20% (Face Value - the NPV of the zero's) of the national debt, and there is nothing that the 'foreigners' can do about it. The trigger? .... a foreign buyers strike, stoked by the tariff war. The escalation? nationalization of foreign owned assets in the US, and US assets located abroad. Charming.     

 

Nobody wants nationalization .... so the debt run gets deflected onto the US gold reserve instead, via physical settlement of in the money options ... and all of a sudden, BTC becomes a 'new' national monetary reserve. An enterprising lad could do very well 

 

SD

 

 

My man! You seem to have gotten a little caught up in the "fuck Trump" stuff, but generally speaking...this is where flexibility of mind like you and I have is crucial and this is where we thrive. This is why we make money regardless of who the figurehead puppet is. Its raining opportunity, the financial markets are our oyster!

[dwy000]

5 minutes ago, SharperDingaan said:

 

This is why we think a US debt restructuring is a lot nearer, and a little different to what most people would think. Imagine a mandatory conversion of all maturing foreign held T-Bills, as at date X, into 100-yr zero coupons (approx. 20% of the total debt). Domestic T-Bill holders as at date X, given a time-limited option to convert, should they wish to do so. On day X +1, that option trades on the market.

 

20% of the annual debt service cost instantly disappears, along with roughly 16-20% (Face Value - the NPV of the zero's) of the national debt, and there is nothing that the 'foreigners' can do about it. The trigger? .... a foreign buyers strike, stoked by the tariff war. The escalation? nationalization of foreign owned assets in the US, and US assets located abroad. Charming.     

 

Nobody wants nationalization .... so the debt run gets deflected onto the US gold reserve instead, via physical settlement of in the money options ... and all of a sudden, BTC becomes a 'new' national monetary reserve. An enterprising lad could do very well 

 

SD

 

 

Nobody would ever buy a US t bond again.  Why would you?

[Gregmal]

4 minutes ago, dwy000 said:

Nobody would ever buy a US t bond again.  Why would you?

Buttttttttt.....safehavens dont grow on trees. They'd buy META or GOOG or AAPL bonds I'd gander!

[sleepydragon]

32 minutes ago, Gregmal said:

You can't invest from a manic position. Why do you think the best investors and business people are autistic and semi sociopaths? All I can do is think ahead, brainstorm continuously, and follow the spin on the ball out of the pitcher's hand. Behind it all there's self correcting mechanisms but in terms of the short/mid duration twists and turns, if you haven't thought of them or considered how to prepare for them, youre not doing it right. 

 

This is why most people miss the ball. When years ago, Kuppy asked on his Twitter "what would you do if everyone who got the vaccine died in 10 years" everyone was alarmed, outraged, and got mad. So bizarre, right? It's a theoretical question that really makes you think! I found it to be a neat thought exercise. Likelihood? Probably nil(knock on wood), but think! Thinking and brainstorming are soooo valuable because for investors they're like practice. Practice and then when youre in that game...less chaos and emotion. 

i keep seeing people mentioning this Kuppy guy on twitter and here, like he’s Warren Buffett. Who is him anyway? I saw he keep pitching oil drillers and i thought I am bad at investing but he’s worse than me

 

[dwy000]

20 minutes ago, Gregmal said:

Buttttttttt.....safehavens dont grow on trees. They'd buy META or GOOG or AAPL bonds I'd gander!

Is it a safe haven if they can change the terms and force you to take something you didn't want?  The whole concept of safe haven would be gone. 

[gfp]

9 minutes ago, sleepydragon said:

i keep seeing people mentioning this Kuppy guy on twitter and here, like he’s Warren Buffett. Who is him anyway? I saw he keep pitching oil drillers and i thought I am bad at investing but he’s worse than me

 

 

He's on twitter.  He went to Tulane undergrad.  He owns Saint Joe.  He does a lot of podcast interviews.  I disagree with him on a ton of stuff.  He's cocky enough to blow up a fund but you never know.  Stay modest caballeros 

[Gregmal]

14 minutes ago, dwy000 said:

Is it a safe haven if they can change the terms and force you to take something you didn't want?  The whole concept of safe haven would be gone. 

To what? Where do people go? Cash? lol 

[dwy000]

4 minutes ago, Gregmal said:

To what? Where do people go? Cash? lol 

Other country bonds (ones that dont screw you after you buy them). Cash.  High grade corporates.  Something where investors have faith the issuer will keep to the terms. 

[Gregmal]

4 minutes ago, dwy000 said:

High grade corporates. 

Exactly. Best companies in the world benefit from government stupidity.

[gfp]

I wonder if the government, with their ability to create dollars to satisfy obligations with a mere keystroke on their computer (and AA+ credit rating) looks derisively at Johnson and Johnson, with their talc liabilities and other assorted business risks and no magic money computer and their AAA credit rating

 

edit:  I'm just saying, if it was me, and I had the money computer, it would sort of piss me off

Edited April 9, 2025 by gfp

[SharperDingaan]

28 minutes ago, dwy000 said:

Nobody would ever buy a US t bond again.  Why would you?

 

Mania depends on the narrative not being questioned, and the nay sayer being trashed as nutcase. A very profitable place to be, as the Great Recession demonstrated!

 

We just look at the outlying possibilities and the possible path towards them. Paths and probabilities changing daily, but over time ... the cone of possibilities becomes progressively narrower.

 

It's pretty clear that Trump has no practical plan; it's nothing more than make it up as you go along, and bite the heads off anyone who dares to challenge. Idiocy of course, but also an opportunity generator that is foolish to waste.

 

Ideally, he experiences a senior moment that he can't recover from. In the meantime; suck as much juice out of the orange as you can, while you still can.

 

SD

 

 

 

 

[Gregmal]

1 minute ago, SharperDingaan said:

 

We just look at the outlying possibilities and the possible path towards them. Paths and probabilities changing daily, but over time ... the cone of possibilities becomes progressively narrower.

+infinity, directing to @Blake Hampton

 

This is your friend! You’re young. Lose the ideology, embrace the probability, and you too shall prosper. 

[Dinar]

This may sound insane, but I think for those that live in high tax states (NY, NJ, California), municipal bonds right now are an incredible opportunity.  For those in NY (particularly NYC), NRK seems like a really good bet.  The price and NAV has gotten crushed as muni  (MUB) has fallen.  MUB is at a five year low.  NRK is down 18% from its high.  I own NRK.   

Unless I made a mistake, you are buying high quality long-term (20 year life and 14 year duration) triple tax free (for NYC residents) munis paying 4.70% coupon which are trading at 93 cents (93% of par).  So before taking into account the discount to NAV, you are buying triple tax free munis at a 5.3% yield to maturity.  Given 50%+ tax rates in NYC, this is like buying 10.6% fully taxable corporate. On top of that you are getting a discount of roughly 7.5% to NAV.  

Edited April 9, 2025 by Dinar

[gary17]

34 minutes ago, SharperDingaan said:

 

Mania depends on the narrative not being questioned, and the nay sayer being trashed as nutcase. A very profitable place to be, as the Great Recession demonstrated!

 

We just look at the outlying possibilities and the possible path towards them. Paths and probabilities changing daily, but over time ... the cone of possibilities becomes progressively narrower.

 

It's pretty clear that Trump has no practical plan; it's nothing more than make it up as you go along, and bite the heads off anyone who dares to challenge. Idiocy of course, but also an opportunity generator that is foolish to waste.

 

Ideally, he experiences a senior moment that he can't recover from. In the meantime; suck as much juice out of the orange as you can, while you still can.

 

SD

 

 

 

 

Are you saying buy mispriced bonds?  you write too abstract for my ESL level English lol 

[Paarslaars]

3 hours ago, Gregmal said:

My man! You seem to have gotten a little caught up in the "fuck Trump" stuff, but generally speaking...this is where flexibility of mind like you and I have is crucial and this is where we thrive. This is why we make money regardless of who the figurehead puppet is. Its raining opportunity, the financial markets are our oyster!

While I agree with that, I see little you can do right now but then again, I don't look at the world like you guys do.

At this moment, too much uncertainty is going on. I want to see how all the tariffs play out after negotiations and then make moves.

Too unpredictable right now.

[thepupil]

8 hours ago, Gregmal said:

Buttttttttt.....safehavens dont grow on trees. They'd buy META or GOOG or AAPL bonds I'd gander!

 

 

perhaps, but thus far, as is the case with every other risk event on record, spreads are increasing and corporates are selling off 

 

AAPL's long bonds have widened from 55 bps to 85 bps, CDX IG (credit deriv of 125 IG issuers at 5 yr tenor) has gone from 50 bps to 80 bps, high yield has gone from 300 to 475 bps.

 

thus far, the sell-off has been like every other one...despite increasing liquidity issues in tsy market, tsy's are more liquid, receive better capital treatment, have full fath and credit, have the printer on their side

 

the idea that the US has some sort of credit event and people would flee to USD denominations of corps remains very strange to me.

 

as much as I enjoy @Gregmalhaving gone from #neverbond to a bond enjooooyer, i have to disagree. 

 

If the USD / government defaults (which despite everything i'd peg at an extremely low probability event given that the government, FED, and private US folks own 75% of our debt and we're still, despite all efforts to the contrary the reserve currency), then I would think ALL USD denominated obligations (tsy's, MBS, corps, etc) decline significantly relative to gold and other currency terms.

 

 

 

 

 

 

 

[mattee2264]

For the bond experts on here what is going on with 10 year US Treasuries?

 

Usually when a recession and rate cuts are priced in you'd expect it to slide especially with additional buying as investors flee to safe havens.

 

Is it the bond market pricing in the inflationary impact of tariffs? Or is it countries like China selling off US bonds as a retaliation measure?

 

 

[gary17]

market losing confidence in the US

[gfp]

Yeah, I'm not bond expert but I would say this morning's move is foreign capital flows and also may be a bit of a knee jerk that doesn't end up being the ultimate direction of the market.  But that's what makes a market!

[backtothebeach]

I read somewhere hedge funds are unwinding their interest rate differential (carry?) trade, i.e. short long-term, and long short term bonds.

Makes sense if the yield curve is uninverting.

[formthirteen]

Just now, backtothebeach said:

I read somewhere hedge funds are unwinding their interest rate differential (carry?) trade, i.e. short long-term, and long short term bonds.

Makes sense if the yield curve is uninverting.

 

And how well are Fairfax and the others prepared for this scenario?

[Dinar]

1 hour ago, formthirteen said:

 

And how well are Fairfax and the others prepared for this scenario?

Fairfax has I believe 4 year duration, and owns almost exclusively US Treasuries.  As spreads increase, it can swap treasuries for high grade corporates, and increase interest income by 30%.