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Tuesday, November 17, 2015

Rick Rule calls the bottom in miners, and hedgefund cokeheads continue piddling their panties


I've got an essay to finish, so bugger off.


Bloomberg - debt market distortions go global as nothing makes sense anymore. It's weird enough to freak out Michael Shaoul, and maybe it was one reason for the recent market insanity. Personally, I think if swaps are priced stupidly right now, that's because some hedgefund cokehead plopped half a trillion OPM into a market too small to mop up that size move. Let him get fucking burned. It's not going to destroy Western civilization, just his idiot clients, and they've already taken too much money out of the capitalist system:
Another potential problem is that inverted swap spreads may ultimately cause investors and borrowers to lose confidence in the bond market’s ability to correctly price risk and provide capital to those who need it, according to Steve Major, head of fixed income research at HSBC Holdings Plc.

[...]

“The role of the bond market is to provide funding at the right rates for the real economy,” Major said. “That’s why the bond market exists -- to help efficiently finance projects, businesses etcetera. If that efficiency is undermined, it’s not going to be a positive thing for the economy.”
Well, Steve, maybe the problem is that there's no longer enough debt to mop up all the cash out there, and this is what it looks like as the cup finally runneth over. How's about you quit demanding that your governments cut spending, and start rewarding investment in productive capital for once in your fucking lives?


Mining.com - Rick Rule just called the bottom on the miners. No really, he did:
With regards to precious metals and precious metals equities, I’m going to go out on a limb and say I think we’ve bottomed.
And actually, he has some good points:
The high point in concentration in precious metals and precious metals equities occurred between 1980 and 1981, at the top of that great super cycle in precious metals.

About 8% of investible assets in the United States at that time were in precious metals or precious metals equity.

The same measurement today is .3%. The median and mean over the last three decades is between 1.5% and 2%. So in order for precious metals and precious metals equities allocations to get to the three-decade mean, they would have to go up 6-fold as a percentage of the total investible assets in the United States. So there is an awful lot of room to the upside.
Yup, if nobody's owning right now, then maybe they will have to some time in the future?

Then again, most of that drop from 8% to 0.3% wasn't a drop in share allocation, Rick. It came from the stocks dropping 95%.

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