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Tuesday, February 2, 2016

Some morning news


Busy studying for midterms, or at least that's what I'm telling myself.

Here's some news:

FT Alphaville - the unstoppable tide of Japan yield seekers. Negative rates in Japan have a transmission mechanism to the rest of the world. Now tell me again why you'd rather hold UST10s at 2% when you can buy GE and get 3%?

Lowry Interpreter - another perspective on China and debt. Michael Pettis has been getting a lot of ink recently, despite his opinion having been worthless to guide your investment dollars over the past 5 years.

Bloomberg - this is why you don't try to short the yuan. China attacked the yuan shorts with military zest a couple weeks ago. So anyone still actively shorting yuan at this point, thinking it's an easy stroll into the history books alongside Soros' breaking of the pound, is a clueless idiot who may just be manifesting malignant narcissism due to an extreme coke addiction. Personally, if I had been dumb enough to give these clowns my money to manage, I'd withdraw it all this instant.

WSJ paywalled - Kyle Bass has gone short the yuan with every penny he's got his investors have got. What did I just say above? Debt is only unsustainable in the aggregate if it is not serviceable by the leveraged assets in the aggregate. And the usual debt collapse mechanism doesn't work when the government is autocratic (see Mahathir Mohamad). It doesn't work even more when the government in question is the world's largest creditor.

WaPo - Bernie Sanders and "democratic socialism". It's only "socialist" in the nutbar USA; here in Canada, we call it "mainstream economics".

And by the way, I'm sure Donald Trump is just putting on an act. He always wanted to be an actor, and this is his crowning role: playing a nutty right-wing populist who destroys the Republican elite.

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