The German 30 year bond is yielding 2.8%:
The US 30 year bond is yielding the same:
There is no margin of safety in Germany debt against the strong likelihood that the country will be forced (by Merkel and other banker tools) to absorb the losses of the rest of Europe.
Of course, there is no margin in safety in US bonds either at this price, certainly not enough to compensate for the probability of trillion dollar deficits forever. I expect yields to stay low through this cyclical bear market, but not much beyond that. Bonds will continue to be a good short at times when they are overbought, and we may be approaching such a time.
Two good interviews here with these fund managers.
EDIT: The Bloomberg interview of Kyle Bass is no longer playing, and I can’t find it on youtube, so I’ll just post a couple of other links:
All I could find was this on his new fund:
Here he is talking inflation last October:
Hugh Hendry on the rationale for shorting Japanese corporate credit (extremely low yields, overexpansion, China crash & contagion)
FYI, I think talk of inflation is still premature, since there is still too much credit to be liquidated before currency creation overwealms credit destruction. Significant inflation is more likely to appear towards 2020 than 2012, and we could easily see another episode of deflation in the next year or two.
I don’t follow many individual stocks, but the mania in Apple Computer has held my attention. Looks like it could be running out of steam:
I have a short position here.
The German index is holding up better than any other I’ve noticed, and there’s no reason for it to remain at these levels for long:
As in financials, my preference is to short the ultralong, which will very likely fall by 90% IMO:
Sir Isaac actually dabbled in the stock market during the South Seas bubble — when it started to get crazy, he got out, but then near the very top he succumbed to the mania and bought in again, only to lose his shirt*. Apparently, he forgot his own rule.
*Reportedly 20,000 pounds, back when the pound was such a mass of 0.925 silver.
Nice entry with a clear stop for a short on GDX. Might have a channel forming off the highs:
The grocer is trading down 19% after hours on news of 24 cents in fully-diluted earnings last quarter and projections for full year profits of 93 to 95 cents. They also halted their dividend and announced that only 15 new stores were in the works for 2009, down from up to 30.
The stock is down from over $70 two and a half years ago, but is still expensive at 20 times earnings with no yield. Why would you buy a high-end grocer at this point in the credit cycle when it doesn’t even pay a dividend? Aren’t dividends what grocery stores are for, anyway?
Disclosure: this post is a bit of a brag, since I bought puts last summer and am holding pat.