investing

This post was originally published on Patreon on 30 May 2018 Yesterday I said that I believed the Italian meltdown presented a buying opportunity because it was not existential. And today, calm has returned, actually sooner than I had…

It's early days. So I wouldn't call this a crisis. What I would say, however, is that the Fed's rate hike train is doubly negative for the emerging markets. We can see the effects in Argentina and Turkey in particular.

I've talked about 12-18 between curve inversion and recession months as a rule of thumb. That gives you at least a year to rotate your portfolio and get defensive.

Many US public sector pension funds are underfunded. This will impact local governments' solvency in the next downturn. It could also threaten the safety and security of the municipal bond market. So the Fed may end up playing a role.

The potential for a state and municipal fiscal and public pension crisis is a defining issue for the next downturn. Underfunding guarantees problems. The question is whether the next downturn crystallizes a crisis.

This month, we have seen an unprecedented increase in volatility. When the fundamentals take a knock, that’s when we should worry though. Let’s wait for the CPI next week and revisit this conversation.

Bridgewater Associates founder Ray Dalio says we are late in the economic cycle and should expect good things from asset markets. But central banks will have a tricky time dealing with the consequences.

If China wants to accumulate reserves, it will have to buy US Treasuries, even if not every month. Japanese institutional investors are thought to be attracted by the high yields available in the US Treasury market.  But, the wider…

2018 has started with a lot of angst about bond yields. And there is some cause to be concerned. But this owes to an economy that is growing more briskly and to the Fed that has been and probably will be more hawkish than you think.

It’s semantics whether 2.50%, 2.63% or 3.00% is the right level to declare a bear market in bonds. What matters is that the two best-known bond market investors are now saying we are in or near a bond bear market.