Paul Tudor Jones is on the NFTRH plan
Of course, the distinguished Mr. Jones has very likely never even heard of little old Notes From the Rabbit Hole, but he is in the media today illustrating our “to or through the election” theme. Click headline, get article if you’d like.
The reckoning centers around debt spending (one of the pillars, along with vigorous government robo-hiring) of our 2024 theme that sees the government in power trying to stay in power and pulling out all the stops to do so. Here I again disclaim that I am no Trump supporter. I’d be a supporter of a reputable Republican, but not that guy.
Moving on, here are PTJ’s key points:
As to bullet point #1, that is the plan. What I am not yet convinced of, however, is whether the counter-trend decline in yields is over yet. Regardless, with yield curves steepening it’s not going to be a positive either way, yields up or down, because curves can steepen during either case (deflationary or inflationary).
I would not touch non-Treasury fixed income either. I do touch only short-term Treasury bonds and cash. As for those hopped up on income, the risk in High Yield is nose-bleed high simply because spreads in favor of Junk bonds are so depressed (bond market players happily seeking income without a care in the world).
Minsky, whoever that is, was before my time but I am sure his moment is coming.
“We’re going to be broke really quickly unless we get serious about dealing with our spending issues,” Jones told CNBC’s Andrew Ross Sorkin on Tuesday.
Problem being that BOTH presidential candidates are barking up the same tree, but with different methods of manufacturing new debt.
Jones pointed out in the interview that budget deficits increased under the administrations of Donald Trump and Joe Biden, and said that Trump and Vice President Kamala Harris are “least suited for the job ahead of them” in regards to the budget. He also said he is still concerned about inflation, particularly if Trump wins.
My [very well heeled] brotha’ from a different mutha’.
So even though little NFTRH is but a spec in the financial blog-o-sphere, somebody with great influence (who I respect) is on plan as well. I have been nimbly speculating bullish all year, but there is an expiration date (rough though it is) on that. The real plan is about the pain that is likely dead ahead and the sad truth is that most will not see it coming because what, after all, do Americans even know about debt? Most don’t even know what a bond is.
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More a question than a comment, Gary.
Can we experience inflationary pressure within a deflationary macro environment? That is, if we were to go to mostly cash in 2025 and the monetary environment is decidedly deflationary, will cash hold its value relative to ‘hard’ assets like commodities, energy, etc?
Thank you
Hi Michael. I’d give gold the best chance to retain value under a deflationary environment, but it too would probably take price pressure even as it zooms upward vs. stocks and commodities. No, I don’t believe commodities/energy would do well at all. I think we can experience STAGflationary pressure, economically corrosive pressure, that is more inflationary than deflationary. And that could see certain key commodities rise and cash under-perform. In both cases, I’d expect steepening yield curves with the differentiator being whether nominal yields are falling (deflationary) or rising (stag).