The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Aitken: Investors will absorb all US Treasury bond issuance through 2025
“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.”
Aitken: Fundamental investors account for only 5-10% of listed turnover
“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…”
Average inflation will exceed pre-2020 decade levels for several years
“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.”
Aitken: UK and EU Will Have Framework Trade Deal by Summer 2020
“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.”
Japanese Dollar Lending Lubricates Global Money Markets and Boosts Float
“How Japanese institutions are lending their dollars in a much greater scale, which is lubricating global money markets and increasing the float of dollars.”
Chinese Corporate Dollar Bonds Are Heavily Absorbed by Domestic Banks
“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…”
Federal Reserve Terminal Rate Will Hit at Least 300 Basis Points
“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.”
Aitken: US household debt health is at a 20-year high
“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…”
Aitken: Fed provided $212B bridge loan to FDIC's bad bank
“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.”
Aitken: Cumulative Fed rate hikes will bite by early Q4 2023
“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…”
Aitken: RBA made an unprecedented mistake with three-year zero-rate guidance
“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.”
Aitken: Talks underway for Australian mineral producers in US defense procurement
“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”
Sanctioning Gazprombank breaks global energy payment chains
“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…”
Aitken: Fixed Income Funds Routinely Run 40 to 50x Leverage
“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.”
July 2007 CDO Downgrades Marked the Financial Crisis Point of No Return
“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.”
Late-Cycle Fiscal Tax Cuts Will Drive a Hotter US Economy
“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.”
Global Capital Allocations to Onshore Chinese Equities Will Inevitably Increase
“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.”
Aitken: Major US disinflations since 1951 required positive real rates
“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…”
US shale companies destroyed roughly $300 billion in capital before 2017
“I think in the 10 years to 20 17, Ted, when I looked it up, US shale companies blew through about three hundred billion of capital.”
Governments will use fiscal spending to offset energy price shocks
“And how are politicians going to assist households with that energy shock, which they hope is a one-off? And the answer is probably more fiscal spending. More transfers to households, and that conversation is already underway.”
James Aitken notes Total is one of the largest global forestry businesses
“Total, gigantic European energy company, well run, good shape, now one of the world's largest forestry businesses.”
Aitken: UK private wealth is piling into gilts for tax exemption
“UK private banks and high net worth individuals are falling over themselves to buy gilts.
Yeah, quite shocking, right?
Very simple reason.
Gilts are the munis of sovereign debt.
We all know about the tax attractiveness of muni bonds in the US, but gilts, there…”
European bank stocks historically drop 40% to 45% during European recessions
“In European recessions, and we've had a couple of them over the past decade or so, European financial stocks tend to drop anywhere between 40 and 45%, in some cases a lot more.”