Saturday, December 13, 2014

Some Great Posts From Stagflationary Mark and Young Money

Stagflationary Mark is the only one of the 2015 predictions participants to exhaustively document his rationale for his predictions.

  • "Full year exports of goods to China will not increase from 2014 to 2015. I am now 80% confident and no longer feel that this prediction is my weakest link. Can exports go higher? Sure. As a conservative guess, I'd say there's a 20% chance."
  • "I predict that the 30-year treasury yield will be below 3% for all of 2015. In order for my prediction to come true the yield needs to say below the blue line for just a very small moment in time (that last little interval on this long-term chart that spans from 2015 to 2016). I was tempted to go with an average for the year, but this should keep the game more interesting."
  • Last three: "For the past 5 years, predictions about the Fed's ability to raise rates have continuously been way too optimistic. Now that oil has fallen, I'm going to stick with what works."
  • "As for department store sales, they've been in a downtrend since 2000. I just need a dollar! One dollar less. That's all I'm asking. Jeff Bezos, you got my back?"
  • "And lastly, ShadowStats is my ringer. If they raise their subscription price from $175.00 to $175.01 then all hope is lost for me. These predictions could all go very, very wrong!"
Making fun of ShadowStats for not raising its subscription price during a period of 90% probability hyperinflation is delicious.

Amazingly, Stagflationary Mark links to a report that "91% [of institutional investors] are bearish on Treasury bonds, and 95% see 10-year yields over 2.5% by the end of 2015 compared to 2.1% today." That means we are going to have to hold onto our treasuries for longer, even after the massive rally this year.

Young Money also has a new post up today. Highlights:
  • "Glenn Chan argues that investment managers' ability to identify scams is a good measure of their skill. [...] I don't follow Watsa closely, but his largest stock investments over the past decade are an all-star list of value traps: Abitibi, Canwest, Dell, Exco, Frontier Communications, Research in Motion, Sandridge, and Torstar."
  • "Taking the $77.979 billion that Canadian farmers owed in 2013 and dividing it by $53.890 billion (the total cash receipts which Statistic Canada reported Canadian farmers received that year) we get a ratio of 144.7 per cent... the U.S. ratio of farm debt to total farm receipts is much lower at 69.4 per cent."
  • "In Barron's, Anne Stevenson-Yang claims that 'Chinese corporations have taken on $1.5 trillion in foreign debt in the past year or so, where previously they had none. A lot of it is short term.' I haven't been able to verify the number, but it's ominous if true."
That much foreign ownership of China debt will have serious (like 2008) style consequences when the China ponzi unravels.

4 comments:

Stagflationary Mark said...

Making fun of ShadowStats for not raising its subscription price during a period of 90% probability hyperinflation is delicious.

Making fun? Me? This is serious work. ;)

ShadowStats seems woefully underprepared for their own predictions. From what I can see, they have not setup a barter system yet. I should be able to pay the subscription in canned goods! Why can't I send them 6 cases of horribly overpriced Stagg Chili? $5 per 15 ounce can? A bargain at any price! There are only 18 cases left in stock! Buy now or forever be priced out!

And crazy as this sounds, ShadowStats still accepts credit cards? Are they nuts?

Larry Myles Survival Guide to Hyperinflation

Hyperinflation will result in the emergence of the barter system in America. Credit cards would no longer be honoured, electronic payment systems would cease to function and trade and commerce would work only through barter and black market; the value of cash would quickly erode.

James said...

I think a big part of the reason people are so bearish on bonds is that they got burned by the housing/debt bubble and have vowed to themselves that they won't be fooled by the next one. Investing during a 32-year bull market has warped their valuations standards, so they don't realize that stocks have returned to bubble territory, but they look at endless government deficits and it seems so obvious...

James said...

Julian Robertson is the only bond bear I know of who predicted the housing crisis.

James said...

I take that back, there was also Peter Schiff.