Bill Ackman, the new bond king, announced early this week, October 23 that he closed his treasury short positions.
“There is too much risk in the world to remain short bonds at current long-term rates,” Bill Ackman.
Bill Ackman is an American billionaire hedge fund manager who is the founder and chief executive officer of Pershing Square Capital Management, a hedge fund management company.
“There is too much risk in the world to remain short bonds at current long-term rates”
BILL ACKMAN
Can three tweets from Bill Ackman, the new bond king, break the worst bear market in long-maturity treasuries in the 250 years of US history?
Market-to-market losses on long-maturity treasuries, which investors have had imprinted in their minds to be safe-haven assets, are unprecedented.
The losses on a 30-year treasury maturity for investors who bought the bond in August 2020 are in the 40% range.
In other words, if a bank, insurance company or pension fund had to liquidate some of its long-maturity treasury portfolios to meet a pressing financial obligation, they would lock in significant losses.
The only thing holding back a 1929 bank run, a potential global bank run in 2023, is the Fed’s Repo market emergency funding, which enables banks to borrow money overnight at a discount rate. But before you breathe a sigh of relief, note that the Repo market is red, with Repo rates smashing 6.5%, which is no longer inexpensive.
Reading between the lines, demand for the Fed’s emergency funding is hot, and that is a sign that banks are feeling a credit squeeze.
“The losses on a 30-year treasury maturity for investors who bought the bond in August 2020 are in the 40% range”
WEALTH TRAINING COMPANY
Short-term lenders are willing to pay a 6.5% to raise immediate funds rather than lock in significant losses on their long-maturity treasury portfolios.
We are witnessing the continuation of the 2OO8 financial crisis, a debt crisis that has been patched over with even more debt. So, it stands to reason that the current crisis is a 2023 sovereign bond crisis, which is larger and worse than anything previously. We could be staring down the double barrel of a systemic bond crisis, which could erode the value of fiat currencies into oblivion.
Keep your eyes peeled on the Repo rates, as the higher they go, the closer we come to the end game. At some point, even the cost of emergency funding becomes unserviceable, and if so, that would be game over. In this worst-case scenario, we will see global bank runs and bank collapses, bearing in mind the US treasuries are, maybe I should say, where the pillar of Western finance is pledged as collateral by commercial banks to raise loans.
So, a crisis in the 23.9 trillion dollar treasury market could potentially blow the collateral chain off the global banking system.
“Twenty-four trillion equals 24,000 billion, so you would need more than Bill Ackman’s billions to move this market” – Wealth Training Company
If you believe Bill Ackman, the new bond king, can end the calamity in a 23.9 trillion dollar treasury market with a few tweets
“The Three Tweets That Broke the Gloom Over the U.S. Treasury Markets,” a title in Intelligencer is fanciful, to say the least.
The piece notes that Bill Ackman went full bond vigilante and claimed that the hedge fund billionaire felt gloomy about the economy and was the most prominent among the Wall Street class to declare that the $24 trillion US was off the rails, and he was going to push it around.
So one man has enough lifting power to move around a $24 trillion market?
Twenty-four trillion equals 24,000 billion, so you would need more than Bill Ackman’s billions to move this market.
The problem, according to Ackman, was there was too much borrowing, which made too many bonds to buy, and Wall Street was no longer confident in the value of those future IOUs. As a hedge-fund manager, he made a bet against Treasuries and then watched as the market gradually accepted his view.
But is Bill Ackman, the new bond king, oblivious to war breaking out on three continents; Europe, the Middle East and Africa?
Waging war guzzles finance, it is the most expensive activity a nation can undertake. There is also a tremendous human cost.
“When all else fails, they take you to war” – Gerald Celente
War is inflationary, it costs an absolute fortune to equip armies, keep troops supplied, fed, watered, sheltered and equip allies with arms, all around the world to sustain these military adventures. The war economy is an economy in itself, and the only entity with the muscle to finance these campaigns are those who own the copyrights to the currency, the central bank.
In the age of war, investors know that the imbalance of treasuries in the market will worsen. Think about it. The government has gone from a pending lockdown due to a lack of finances to more billions for Ukraine to keep up their war efforts in Europe and moving military assets in the Middle East to help Israel fight a multi-front war that all equals a more public deficit, financed primarily with more treasuries.
Bill Ackman, the new bond king, announcing he has closed his short position in treasuries, isn’t putting a floor on the price of treasuries, it is the central bank buying the debt that is doing that
We are seeing the evolution of monetary policy where the US Treasury and the Federal Reserve are working in tandem to fund selective public spending.
It is MP3, monetary policy funding the State’s war efforts, WW3 blood and treasury, and keeping the USD on the throne. The puppet masters are playing for all the marbles.
“When all else fails, they take you to war,” Gerald Celente.
We are in a new paradigm, world disorder, so don’t expect only maxims to follow.
