u/Tallwhitedude123

So basically the US Treasury Department is using short dated T-bills to buy long dated US bonds in order to take the pressure off the 10yr and 30yr bond yields. This signals a STRUCTURAL PROBLEM in the debt markets and is only a BAND-AID to the problem. Also, essentially the US government has now replaced long term debt with more short dated debt that needs to be replaced more often. If short term bond rates rise because of higher inflation expectations then now the US government is payer HIGHER INTEREST on its short term debt.

This only buys time in my opinion and delays the inevitable. The timing of this change is starting Sept 9 and lasting until Nov 4. Hmmm, that just so happens to election time. So it seems Bessent is trying to delay a market until AFTER THE ELECTION…

The financial system is very complex but here’s what’s currently happening. Booming AI CapEx has fueled high valuations across areas of the tech sector and companies connected with the AI buildout. The CapEx has initially taken the attention away from what has been happening but is now reaching levels that can no longer be ignored.

What is happening? Sovereign debt levels of developed countries rising to all time highs vs their GDPs resulting in the bond markets being flooded with a huge supply of government bond debt. This has now happening at the same time as hyperscalers are turning to the debt markets to fund their AI CapEx creating an even bigger supply of debt in the bond markets. This new huge supply of corporate bonds are competing with the already huge supply (and rising) supply of government bonds. So where are the buyers coming from to buy this new massive supply of debt? For the past 30yrs Japan always bought our debt because they had negative interest rates but now the Japanese bond yield is almost 3%! This has resulted in not only the Japanese not buying our debt but even selling our debt to repatriate that capital back to Japan into their bonds. When you have a massive supply of debt and not enough buyers yields MUST GO HIGHER to entice new buyers. This is what’s currently happening with the US 30yr and 10yr treasury’s and no one knows how much higher they have to go. The Fed doesn’t control the long end of the curve.

Higher rates for longer is where the next problem lies. We are coming from a period of low rates. Many bad loans were made during this time. Private credit (shadow banking) is now larger than subprime. There loans are not fixed rates but FLOATING. Defaults in private credit are now estimated at 9%. Rates staying higher for longer will eventually trigger massive private credit defaults that then spread elsewhere. Nobody fully knows how interconnected private equity is with the overall financial system but what we do know is that if private credit defaults massively it will hurt banks, insurers and pension funds that will be forced to react in a way to sets in motion the next domino to fall. Contagion is the word.

In the past, when something like this happens, the Fed cuts rates and starts monetary stimulus. The problem today is that inflation is at 3.4%, way above target. So if the Fed intervenes, which they likely will, inflation will only go higher. Of course a potential oil shock is already looming to make matters worse.

This is where we are today folks. It sounds bleak, I know. The only thing to do currently is to take risk off the table right now and preserve your capital.

The only thing keeping this market alive is AI CapEx spending. THATS IT! I’ve done tons of research and someone correct me if I’m wrong but all the quality, wide moat business are FULLY PRICED OR OVERVALUED. I personally find long bond yields continued rise troubling because the bond vigilantes are essentially forcing the Feds hand as well as the government’s hand when it comes to fiscal policy. Can stocks continue to be at all time highs with these dynamics at play? It is tricky environment for sure because on one hand the AI CAPEX spending is REAL. On the other hand rising yields will eventually slow the economy. Also, money will eventually come out of the best performing stocks and go into bonds if yields become attractive enough.

Basically, in my opinion, I see bond vigilantes emerging after decades of easy monetary and fiscal policy has resulted in inflation that isn’t going away. Nobody in government has the guts to tame the inflation beast so the bond vigilantes are forcing their hand.

Timing the market is a fools errand but every day that passes I’m thinking it’s best to be mostly in cash. Of course most don’t want to do this because it’s been a losing bet for almost 2 decades now. Look at the VIX. It’s at extreme lows which to me is also another RED FLAG. It seems that people are not really in the market because they want to be but just because they feel like they have no choice. They must invest to continue beating inflation.

As I stated though, the bond vigilantes are now changing the dynamics. We all know that the Fed and US government has no intent to solve inflation so we invest in order to beat inflation since the government won’t do it. However, now we have the bond vigilantes doing the job the Fed and government has refused to do.

Of course it’s all very complex but I think the questions to ask are WHY DO LONG BOND YIELDS KEEP RISING EVERYDAY and WHAT DOES THIS MEAN?

10yrs ago I never seen anything like this. Now I hear it EVERYWHERE . For those unaware LBH means LOSER BACK HOME. Why is this becoming a thing now in the Philippines? In my opinion it’s because over the past decade it has been TONS MORE FOREIGNERS coming to live in the Philippines and it’s mostly due to one factor. Before, what most foreigners would do is get a Filipina and then take her back to America or the West. Most never considered living in the Philippines. Then the word got put out on the internet that bringing a Filipina back to the West was a bad idea because she ultimately divorce you and then be with more desirable men in the West which was the experience of tons of Westerners. So the new idea now became to just come to the Philippines, find you Filipina, and stay in the Philippines away from the West that way you never have to worry about her leaving you for more desirable foreigners in your home country.

So this is the playbook the last decade of so and it’s created an influx of foreigners into the Philippines who basically live. The younger generations of Filipinos are not stupid and they’ve figured out that most of these foreigners have no prospects and are lower class in their home countries.

Why do I bring this up? So many times I see in this forum foreigners thinking they are viewed as “special” by Filipinos. I think this only applies to the younger foreigners or female foreigners because Filipinos are more than use to seeing old, retired foreigner males. It’s a totally different dynamic than it was years ago.

I bring this up because I’ve seen several post here lately saying they heard Filipinos talking bad about them in their native language. I’m not fluent in Cebuano but I’m about 50 to 60%. I know enough words that when I hear them talking I have a general idea of what they are talking about. Now sometimes they might talk about me, but it’s not in a bad way. When I hear them talking about me I just respond back to them in Cebuano. They are shocked 🤣

The most common I hear though is they say, “Oh so tall”. They say “tall” in Cebuano. It’s easy to understand if you the know the words.

What find Filipinos actually good at is using their knowledge of the English language to manipulate foreigners. People talk about, go to Philippines because they speak English good. After living in the Philippines I now view them being able to speak English as a negative because as I say, they will use English as their tool to manipulate foreigners. Most foreigners don’t understand this…

I have lived in the Philippines many years now. Over the years I have known many expats and Filipinos too. Most of the expats I have known don’t stay more than a few years and then they pack up and leave. The ones who do stay I watch deteriorate in bad health. Honestly, I don’t see many happy expats in the Philippines. The ones who are happy only come to visit maybe 3 months out of the year to do some womanizing and then fly back home to their comfortable lives in Australia, Europe or the US. The ones I see staying are usually miserable. The common problems I see are they marry a young Filipina and they have nothing in common. One expat I know I seen and he looked upset. I asked him what’s wrong? He says, “All she does is stay on that damn Facebook all day long and it’s killing our relationship!” Now it’s about a 40yr age gap here.

Many of the ones I see so pumped up about the Philippines either haven’t lived there long (honeymoon phase) or they don’t live there at all. They simply visit every year but then go back home. The other group of expat in the Philippines is the one that has started a family. They have children in the Philippines but don’t have the money to bring them back home. Now many men abandon their children in the Philippines but many don’t. So they stay and make the best of it since they figure it’s better in the Philippines than returning home in the West with children and being poor.