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nice chat. if this is indeed the beginning of a global tightening regime (i doubt it) it will be a fun time as an active participant as long as one has an open mind.

i'm ultra excited for the opportunity in front of us & my view has been that the dollar is the most undesired asset class over the last few years & continues to be. no surprise its been outperforming for a while :)

take care.

We agree China is more toxic & japans central banking interventions are indeed transparent. Hell the economists in charge of the policy even seem proud of the strategy & convicted in its outcome even though they've been wrong since you were probably in junior high.

Even today they still claim the policy is driving inflation toward some goal seeked objective. It isn't but that doesn't hold them back from saying it & keeping a forever bid in the market place.

As for "safest" investments well.. ya. You get 0% & sometimes less than that & sometimes a few basis points more so if the yield to maturity is an indication of risk then sure its riskless. The trade is your capital is lent to a sovereign for ~0% for 10 years with guaranteed inflation decay (cost of carry) & it's possible a default could occur. The only way a default won't occur is by creating more bonds & currency to finance the old debt when a tiny yield is present. Pass, at least with my money. If I need a place to park other peoples money where I earn a maintenance fee (pensions, endowments, etc) doing so regardless of performance then OK I'll do that. That's a fine incentive structure as a fiduciary but structurally it's a guaranteed no upside & 100% downside no matter how unlikely the downside. I like my money too much for that.

I don't like the heavy handed interventions in any country but Japan is without a doubt the most reckless & crazy of them all. They've been doing it the longest & in the last 10 years went from bat shit crazy to mach 3 with hair on fire. It may feel quite common to you but I assure you central banks creating money to buy gov't debt to finance interest on previously issued debt hasn't always been so common. It's not a sign of strength.

All it took was quantitative easing since 2001 resulting in ownership of 40-50% of the entire japanese bond market (which isn't really a market any more because some days 0 transactions take place due to the complete hijacking of the BOJ & a guaranteed 0% yield) & 5-10% ownership of the entire japanese stock market.

The BOJ is a top holder of many largest Japanese corporations shares outstanding which is kind of weird because the BOJ doesn't really have any money they just "create" it. Color me bearish if that kind of monetary extremism can't even get the Nikkei 225 near prior all time highs or any meaningful inflation. I guess they could buy every bond in existence both public & private plus take the stock holdings up to 30% of the entire float.. maybe that's what is needed? It kind of seems weird to trust any of the statistics on inflation, rates, economic prospects for the country with such an active price insensitive manipulator in the market place every day.

they don't ring a bell at the top. i reiterate this is the largest & most systemic of all bubbles of all time.

LOL, no CEO's in the modern era aren't interested in buying assets or growing revenues organically. They are interested in juicing EPS from quarter to quarter. That's why 2018 is already set to be the largest in record history of stock buybacks. That means corporations c-suite execs are deciding to go to the bond market & issue debt so they can take that money & use it as an open tender in the market every single day buying back shares so EPS gets juiced (smaller denominator). Then they promptly sell stock options to this new bidder on the open market... beautiful isn't it? 2018 will also be on record as the largest insider selling year & that's no coincidence. It's just like George Carlin said "it's a big fucking club & you ain't in it"

Every single risk asset. Bonds (lowest yields in recorded history including negative sovereigns in europe), stocks (price-to-sales, price-to-ebidta, & countless other measures), art, housing prices back at nominal pre bubble highs, leverage in margin accounts, public debt, central bank balance sheets, etc. That was just from the back of my mouth. Not only is it a bubble but it's quite possibly the largest & most systemic one ever since so much risk has been shifted to the sovereign & central banking balance sheets.

I can't see shorting it outright without being wheeled out on a stretcher. Options will be the best play to safely express a bearish position with asymmetric risk/reward assuming they aren't priced to insanely due to IV. Still at least you know your risk.

+1. It's laughable. Segregated accounts, position limits, circuit breakers, margin limits, spreads across duration to reduce risk, etc are all GOOD things. The counter party risk in the exchanges right now is HUGE in the bitcoin world. Pass on that.

Also the CME & CBOE bitcoin contracts like many other futures commodities allow "spread" trading across duration. This has a dampening affect as well. In a lot of commodities spread trading volume exceeds that of the outright.

I wonder how much prior boom times have an impact on farmers because prices on the crops have just languished for years now.

2008 had very aggressive price appreciation in corn & beans. Same can be said for late 2010, all 2011, all 2012, & early 2013. After that prices have absolutely fallen off a cliff & continue to hover near those lows every single day.

I suspect it's difficult to be in the "risk management" business which farmers are by being "long" the crop in the ground & having no price appreciation for years. Meanwhile all other risk assets continue to explode higher. At some point it probably becomes challenging to find a light at the end of the tunnel. Now with rising interest rates the cost of capital is higher & likely going to accelerate higher.

Higher operating costs (wages & debt service) & continually deperessed prices of the product you produce. I don't have a solution for any of this but by putting myself in those shoes it sure does seem horrible.

Sanctions have always been a pretty good indicator of war when levied from one sovereign to another. That indicator has probably gone from flashing yellow to red recently.

It's scary what QE did. Inflated the largest stock market bubble & bond market bubble at the same time. While most portfolios are split across them for diversity.

It's more likely they both get crushed unless of course bonds continue to do what they've done in the past meaning nominal yields go to -3% & real yields -5%. It's possible I guess.

The best place to put your money is typically where nobody else wants to put theirs. IMO nobody wants cash today. They want anything except cash no matter how risky. Stocks at highest valuations ever, BTC (unregulated), emerging market high yield, bonds with negative yields (because they think it will price appreciate), art, cars, volatility selling (fixed gains & unlimited losses), etc.

The least desired asset class right now is cash. Compare that to 2009-2011 or so & cash was the prized asset class which underperformed going forward. Aside from the least desired, the cheapest asset class in the world today is volatility.

Historically the 2 term presidential cycle where an incumbent is elected has led to a recession within 6-18 months 100% of the time. I guess this time could be different & a recession doesn't imply a crash but that's an interesting data point.

None of us can know since it would require seeing into the future & bitcoin has no historical precedence of trading during a recession.

My hunch is it gets absolutely slaughtered. It's a guage of risk seeking appetite IMO & historically when the "turn" occurs the assets folks are holding with the most gains are liquidated the most aggressively because they need to finance the losses.

.com stocks in the late 90's got smoked & it's where people had the most gains. housing in 07-09 got smoked & it's where people had the most gains. Safe haven trades even got smoked like low yield & gold because they could be used as a source of funds.

Another illustration was Bernie Madoff. He didn't close up shop because he got busted - he turned himself in because he had no money left. People were using him as an ATM during the crisis. He had very nice slow & steady returns that you'd think in a crisis would be great in a portfolio that's getting smashed. Nope. It's a source of funds. People withdrew from him like crazy cause they needed the money & it's only then that he turned himself in.