The Ledger, every show

“The reality is that we're going to have two quarters of global growth that are going to be absolutely horrible. And in that context, the market clearing price of earnings, and therefore the market clearing price of equities in general, in the US in particular,…”

“It is not the treasury basis trade unwinding. The treasury basis trade this week has been fine. The treasury basis trade does not explain what happened.”

“Nor, as Louis would attest, does the convenient but incorrect rumor that, oh, China must be bashing treasuries. Just ignore that.”

“During this transition, however long it is, we'd be more surprised if we didn't start to read more stories about private something being under pressure. More stories about people who didn't read the prospectus and tried to get the money out and they couldn't a…”

“The pass-through effect this time, if the Fed's going to succeed in bringing inflation down back to target levels, it's going to have to be more persistent and more hawkish, I would argue, than any of us have experienced.”

“And there is no overstating the profound impact of this Inflation Reduction Act. It is just starting to be felt. It seems every marginal dollar of Western capex coming into the United States, because the tax subsidies are so generous, Not to mention all the sk…”

“So successful has this bailout been so generous That they're probably going to end up taking the Fed funds rate to a level that none of them actually imagined when they started 2023.”

“Who's going to buy all these bonds that the United States is selling in 2023, 20 24, 2025 with a rising budget deficit before the recession comes? And my answer is everybody. Everybody. You give people the right incentive, the right coupon, they will buy it.”

“And yet the facts are that if you and I, Ted, decide we're going to buy some listed asset today, well, we're going to be five to 10% of the turnover. Because the way the world works today is that the flow is dominated by the machines, and that's not a criticis…”

“There's more and more money coming in as volatility comes down into the most liquid stocks. But then at some point, that's all going to turn around. We don't know when. But boy, oh boy, that's going to be a lively couple of days when that happens.”

“First and foremost, those are the ones that are going to struggle. It's those profitless companies, no matter what their line of business. And then they've been unable to refinance to this point. Boy, oh boy, it's going to be a brutal period ahead.”

“Unless oil and gas companies are given unambiguous political cover to expand CapEx once more in the naughty stuff, the non-renewables, then I'm afraid it's difficult to imagine a rapid solution To the energy supply bottlenecks that we're all seeing right now, …”

“That over the next several years, average inflation would turn out to be higher than in at least the 10 years prior to say, twenty-twenty. That would be my best guess.”

“And if you wanted to give those running US sanctions or European sanctions an opportunity to crack down on crypto markets, then that would be it. Either encourage or facilitate large inflows into crypto, or coins I should say, from people who might Be on the s…”

“Suffice to say, I would imagine that portfolios that continue to be structurally turned towards commodity and resources are going to do well, because I think we're probably on the front edge of a sustained period of commodities nationalism, which serves to bro…”

“And then, surprisingly for a lot of people, what promulgated the colossal unwind of all these RV positions was the Fed cutting those 50 basis points the other week out of the blue.”

“We're going to have interest rates at very low levels. We're probably going to have some element of yield curve control in the United States. I don't know yet, but some element of asset purchases are going to be semi-permanent from the Fed, which probably serv…”

“Over the past 12 years, we have, as intended, transferred all the risk to non-bank financial institutions. So the risk is now in non-bank financial institutions and often in vehicles that own illiquid assets with daily liquidity, which is absolutely absurd.”

“If I'm an allocator to a particularly large buy side firm, and I say to myself, gosh, I can't redeem, but how do I justify to my superiors that I've done my best to hedge? I start shorting that stock. And I know it's absurd, but I've actually seen it happen ov…”

“The cost of capital for non-renewable businesses is going to go up, and the cost of capital for renewable businesses is going to go down, and obviously, Ted, in a low interest rate world, the multiplier effect of that is going to be profound, because the re-ra…”

“I think there's a good chance that we have the bare bones of a deal, if you will, about the future relationship between the United Kingdom and the European Union. I think we have the bare bones of a deal by the summer.”

“The trade war is not easy to resolve. We've probably got it what I think of as a phase 0.5 deal. The bare minimum coming very soon. A bigly good signing ceremony and, you know, the usual circus and theater as we come to expect. But the rest of it's impossible …”

“How Japanese institutions are lending their dollars in a much greater scale, which is lubricating global money markets and increasing the float of dollars.”

“So we're told for years that all these Chinese property companies and Chinese corporations are borrowed in dollars. If the dollar goes up and the Fed tightens policy, they're in, in a world of pain. And this young man managing a Chinese bank balance sheet in B…”

“So Fed funds doesn't get to 525 basis points like it did in O six. It gets to something like, oh, let's say, 300, which I think would surprise some people if we got there, but that's where I think it's the minimum.”

“Even if this weekend we get big, beautiful tariff trade negotiations with Japan and South Korea and maybe some others, it's too late. To arrest the jolt to confidence, the jolt to capex, the jolt to business spending, the jolt that will soon start to impact co…”

“When Scott eventually gets to deregulation and freeing up some of the constraints in the leverage ratio, it should serve to dramatically improve the functioning of the treasury market, and that would be a good thing.”

“It's been a very remarkable three years and a very remarkable 18 months, because I don't think any of us would have imagined that in the context of the most rapid rate hikes any of us have experienced, that the fallout of that could be so limited.”

“And then when we compare Historical episodes of US households being overextended, not just with mortgages, but with credit cards and everything else. They're in very good shape compared to any time, certainly in the past 20 years in terms of credit card borrow…”

“Something that's still little commented on today is that the Fed provided a bridge loan to the tune of two hundred and twelve billion dollars to the FDIC's bad bank.”

“But as we get into the back end of 2023, my best guess is no later than early fourth quarter. That's a guess. The cumulative impact of hikes starts to bite. The consumer starts to retrench a little. Continuing claims are heading up. The labor market keeps soft…”

“The Reserve Bank of Australia, as they have acknowledged and admitted and apologized for, which is unprecedented, made a mistake Coming through COVID by saying that we do not expect to raise policy rates for three years.”

“There is a negotiation underway, which could take some time to see whether Australian critical minerals producers could be approved by Congress for participation in US defense procurement. That would be an enormous development”

“It seems a growing number of investors realize the seriousness of the situation we face today, and the desire of minimizing their maximum regret over getting this Ukraine situation wrong. And that is starting to impact asset prices far beyond energy and commod…”

“What US Treasury learned in 2014 is that if you put Gazprom Bank on the sanctions list, you break energy payment trails everywhere. Because Gazprom Bank is the key intermediary, or has been, the key intermediary for all sorts of global payments from global ene…”

“There were times over the past week where there was no treasury curve and the treasury futures market was not functioning.”

“And all in all, I might run that position for four or five years, 40 to 50 times levered. And I know that sounds extreme. But that's what people do.”

“Unlike 2008, every regulated financial institution and all the big ones has more liquidity, has more capital and generally less leverage. If we assume that central counterparties are robust, given all the derivatives that are now centrally cleared, the financi…”

“All it would take is a minor turn in those outflows to generate a fairly substantial re-rating in both UK equities and Eurozone equities in particular.”

“The CDOs were non-mark to market vehicles unless and until they were downgraded. And once they were downgraded, it was price discovery free for all. And that was the end of it. That was the point of no return.”

“And they are going to be slow and gradual for a long time to come, barring a tremendous exogenous shock.”

“You would think based on that observation, the probability is higher that in 2018 and 2019, the US economy will run a bit hotter than it has done over the past several years.”

“Whether it be passive money or active money, over the next several years, there will be increasing allocations to Chinese onshore equities, and that's not going to go away.”

“How many million people is Modi going to lift out of poverty? Right? I reckon it might be more than the Chinese have, but just whisper it.”

“And when it comes to social media companies, the House of Commons Digital Media Committee has been holding hearings in London and Washington about the role and activities of these social media platforms. And not just because I'm personally interested in it, bu…”

“Are the clients I work with blanket selling US assets? They are not. For the past month and a half, the tactical ones have been increasing their dollar hedge ratios versus various currencies, which is the first step.”

“As you look at the seven big disinflations in the United States since 1951, the end of the Treasury Fed Accord, those big disinflations only occurred unsurprisingly When the real Fed funds rate or predecessor equivalents were notably positive, which makes a lo…”

“All these very good industrial companies in the United States, and some here in the UK who have US businesses, they're going to have a full order book as far as the eye can see as the ripple effects of the Inflation Reduction Act and the accelerated onshoring …”