Comment of the Day
Video commentary for October 19th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: government interference in commodity markets seldom works as expected, oil steady, gold weak, dollar firm, commercial property a catalyst for additional weakness, bond yields surge.
Battered Safe Credit Is Now a 'Screaming Buy' After Yield Jump
This article from Bloomberg may be of interest to subscribers. Here is a section:
After historic losses this year, high-quality corporate debt has flipped the script to become one of the hottest asset classes in the market.
Investors are increasing allocations to investment-grade corporate bonds as the yield they can get just by holding the debt to maturity has reached its highest level since the global financial crisis. At 5.6%, global high-grade yields now exceed where junk-rated debt was trading at the start of the year, according to Bloomberg indexes.
It’s a major shift for the $10 trillion global high-grade market, which has suffered massive losses this year amid aggressive central bank rate hikes. The steep losses in investment-grade bonds, despite their near-zero probability of default, has created one of the most favorable entry points in years for some investors.
“High quality is a screaming buy,” said Eric Vanraes, head of fixed income investments at Banque Eric Sturdza SA. “The big difference between high yield and investment-grade is that in high yield you have to cope with default rates.”
Eoin Treacy's view - There is a point where higher yields will be a good buying opportunity in fixed income. To buy at today’s levels is certainly preferable to paying all-time highs and many investment managers have a mandate to hold some fixed income so they don’t have much choice.
FBI misled judge who signed warrant for Beverly Hills seizure of $86 million in cash
Thanks to a subscriber for this article from the Los Angeles Times which may be of interest. Here is a section:
Eighteen months later, newly unsealed court documents show that the FBI and U.S. attorney’s office in Los Angeles got their warrant for that raid by misleading the judge who approved it.
They omitted from their warrant request a central part of the FBI’s plan: Permanent confiscation of everything inside every box containing at least $5,000 in cash or goods, a senior FBI agent recently testified.
The FBI’s justification for the dragnet forfeiture was its presumption that hundreds of unknown box holders were all storing assets somehow tied to unknown crimes, court records show.
It took five days for scores of agents to fill their evidence bags with the bounty: More than $86 million in cash and a bonanza of gold, silver, rare coins, gem-studded jewelry and enough Rolex and Cartier watches to stock a boutique.
The U.S. attorney’s office has tried to block public disclosure of court papers that laid bare the government’s deception, but a judge rejected its request to keep them under seal.
The failure to disclose the confiscation plan in the warrant request came to light in FBI documents and depositions of agents in a class-action lawsuit by box holders who say the raid violated their rights.
Eoin Treacy's view - The war on cash is an ongoing program by governments to control and tax every Dollar, Euro, Pound, Yen, Renminbi and Rupee in existence. The Reaganism “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” It is as true today as ever. In an effort to further that aim, governments want to know exactly where every unit of currency resides and to control how it moves.
Work From Home And The Office Real Estate Apocalypse
This report from the NBER may be of interest to subscribers. Here is a section:
We study the impact of remote work on the commercial office sector. We document large shifts in lease revenues, office occupancy, lease renewal rates, lease durations, and market rents as firms shifted to remote work in the wake of the Covid-19 pandemic. We show that the pandemic has had large effects on both current and expected future cash flows for office buildings. Remote work also changes the risk premium on office real estate. We revalue the stock of New York City commercial office buildings taking into account pandemic-induced cash flow and discount rate effects. We find a 45% decline in office values in 2020 and 39% in the longer-run, the latter representing a $453 billion value destruction. Higher quality office buildings were somewhat buffered against these trends due to a flight to quality, while lower quality office buildings see much more dramatic swings. These valuation changes have repercussions for local public finances and financial sector stability.
Eoin Treacy's view - San Francisco commercial real estate occupancy is below 40% while New York and Los Angeles are just higher than that figure. This is a looming issue for the owners of vacant properties, many of whom are pension funds and other private investors.
Speaking Engagements - World Money Show October 2022
I have agreed to speak at The World Money Show in Orlando on October 30th.
I will also be speaking on day 2 of the NAIMM conference on October 25th in Dallas.
Eoin's personal portfolio: profit taken on Index short October 13th
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.
This section continues in the Subscriber's Area.
The Chart Seminar London November 21st and 22nd 2022
We are living through fast moving markets so the next venue for The Chart Seminar will be November 21st and 22nd this year in London.
In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.
The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.