Wake up in the morning, where's my little China gold?
"Gold is the reciprocal of the world's faith in the world's central banks"
Jim Grant
Ron Paul and Citadel Intern Ben Bernanke in 2011
Gold is a handgun you keep in a drawer and hope you never need.
The people who massively benefited from ZIRP and QE really miss ZIRP and QE. They don't care about the cost of living because they're rich and levered-long.
Ben Bernanke earned his millions in 2020…
Lisa: "Is there a Long Term Capital Management?"
Damian: "I don't like to think Citadel - I'm kidding! I'm joking! I never said that!"
Damian, Later: "I have to apologize to Ken Griffin because Citadel is a wonderful company..."
This is a great story about the incestuous circular demand for Nvidia that is “at least partially” coming from…Nvidia:
Stan Druckenmiller and Paul Tudor Jones
"Janet Yellen was issuing two years at 15 basis points when she could've been issuing 10-years at 70 basis points or 30 years at 180 basis points...it was the biggest blunder in the history of the Treasury, and I have no idea why she has not been called out on this. She has no right to still be in that job."
A Reality-Check from The Credit Strategist (Michael Lewitt) Boring but important.
The United States reported a $1.7 trillion deficit for fiscal 2023 (the 12 months ended September 30, 2023), up $320 billion (+23.2%) from fiscal 2022 as revenues fell by $457 billion and expenses (miraculously) also fell by a lesser $137 billion…
The deficit is on course to hit $40 trillion by 2027. Even the folks in Congress (some of them at least) can do the math and see that it will soon cost more than one trillion dollars annually to service this debt even under the most optimistic interest rate assumptions. The last time interest rates were at their current level in 2007, the federal deficit was equal to ~35% of GDP; today that ratio is ~98% and rising (I think it is much higher but am using the government’s numbers but even these numbers should render you physically ill if you are paying attention. This alarming jump illustrates that the cost of servicing the debt is cannibalizing the budget at an accelerating rate. If it hasn’t happened already, the Fed will soon lose its ability to fight inflation with higher rates because of their impact on the government’s ability to service the federal deficit, a handicap that will unleash further inflationary pressures and threaten financial stability. This is why delaying action on the deficit is no longer an option. We are already at Defcon 51.
The national debt hit $33.6 trillion in mid-October 2023, up $10 trillion in less than four years (since the first quarter of 2020) as pandemic spending supercharged our appalling fiscal. The Congressional Budget Office projects the deficit will hit $54.5 trillion in 2033 as debt grows on an exponential rather than linear basis that is virtually impossible to reverse or slow. In particular, the rising burden of servicing this huge debt is going to grow as long as interest rates remain elevated (meaning until the Fed is forced to lower them to prevent an economic collapse). And even if interest rates drop, the rising quantum of debt will keep debt servicing costs elevated ad infinitum. In fiscal 2023, $659 trillion (more than 10% of total spending) was spent on interest, up sharply from $475 trillion a year earlier. In fiscal 2024 it will be higher because much of the government’s debt carries short maturities. Whoever decided to borrow short-term to fund our deficit must have worked in Silicon Valley Bank’s Treasury Department. Unlike SIVB, however, there won’t be anybody around to bail out the U.S. government or the U.S. dollar when these reckless spending habits hit the fan.
The Fed is now contributing to deficits by no longer returning capital to the Treasury as it did in previous years and by continuing to pay market rates on reserves. The latter policy will produce something on the order of $1.6 trillion of losses to U.S. taxpayers according to bank analyst Chris Whalen. Mr. Whalen further points out (along with others) that the U.S. economy looks deceivingly healthy due to the Fed’s reluctance to aggressively reduce its balance sheet and take other steps to unwind the massive pandemic liquidity infusion that is still inflating economic activity: “The buoyant economy and job market are basically the result of the fact that the Fed has refused to drain liquidity from the economy causing, well, another liquidity crisis.” The 4.9% 3Q23 GDP print is best understood as the economy continuing to ride the tsunami of government spending unleashed during the pandemic; there is no way growth would be anywhere that number if the deficit wasn’t closing in on two trillion dollars. Rather than marvel at the so-called strength of the economy, observers should be noting that it is not organic but driven by massive government stimulus still working through the system. Without that stimulus, growth would be much lower...
Vincent Daniel and Porter Collins with Zach Abraham I may be on Zach’s show on Thursday fyi…
The Syndicator's Dilemma: A Multifamily Boom Goes Bust Starts about 8 minutes in.
After listening to the syndicator episode, I wondered who the top CRE lenders were:
The Top 15 Commercial Real Estate Lenders of 2022 (the ones over $10 billion listed below)
CBRE (shares are 37.5% off high)
Walker & Dunlop (-56.4%)
Berkadia Commercial Mortgage (owned by Berkshire Hathaway and Jefferies)
PGIM Real Estate (owned by Prudential Financial)
KeyBank Real Estate Capital (owned by KeyCorp, which is off 58.8%)
Cushman & Wakefield (-68.7%)
Greystone (private)
Arbor Commercial Funding (Ivan Kaufman, founder Arbor Realty Trust)
MetLife Investment Management
Strategic Alliance Mortgage
Bellwether Enterprise
As with CRE office, the valuation haircuts in the public markets have been massive - in private NAV’s, not so much it seems.
https://www.military.com/military-life/defcon-levels.html
That was an interesting treatment of China Girl!
I'm sickened to press the "like" ❤️.