Bill Gross March Letter
Gross is still stating the negatives of the levels of credit in the US and China. Here are my favourite snippets and the link to the rest of the letter
- My lesson continued but the crux of it was that in 2017, the global economy has created more credit relative to GDP than that at the beginning of 2008’s disaster. In the U.S., credit of $65 trillion is roughly 350% of annual GDP and the ratio is rising. In China, the ratio has more than doubled in the past decade to nearly 300%. Since 2007, China has added $24 trillion worth of debt to its collective balance sheet. Over the same period, the U.S. and Europe only added $12 trillion each.
- One mistake can set off a credit implosion where holders of stocks, high yield bonds, and yes, subprime mortgages all rush to the bank to claim its one and only dollar in the vault. It happened in 2008, and central banks were in a position to drastically lower yields and buy trillions of dollars via Quantitative Easing (QE) to prevent a run on the system.
Source: Janus
don
Thanks very much for sharing, Pon. In addition to this, there seems to unrealistic levels of exuberance in the markets, based on expectations of Trump’s political leadership skills/abilities. Which are very very small, imho.
Further afield – The Guardian reported on the troubles at Deutsch Bank, the laundromat, re monies flowing in from Russia. Coincidentally, the Guardian raises the question of how no one has figured out how the bank wrote off part of a $350 million debt loaned to Trump….and then loaned him (and his family) hundreds more millions. My favourite poet (Yeats) come to mind: ”surely the Second Coming is at hand. And what rough beast, its hour come round at last, Slouches towards Bethlehem to be born?”
The question I have, is; if I continue to liquidate 75% of my SET position, I will have 3-4 mill in cash; how solid are the Thai govt deposit guarantees, esp. since it is kinda broke? thanks. Don
Xavi
Not a bad time to be liquidating with the SET at these levels and very little upside. I wouldn’t be thinking Thai govt bonds or any other long term financial instruments here…I have my long term non stock money tied into Aus corporate, bank and govt treasuries and bonds..not great returns but beats inflation with extremely low risk which is probably what you’re after?
don
Yep. That is very kind of you to let me know your thoughts. Can you buy on the Aus (or Canadian) market via a Thai broker.?
Otherwise, getting the mpney out is impossible; except for a portion of my Thai baht, which I have BOT approval to export to CAN$.
Pon
you can only buy funds through the local thai institutions
transferring money out isn’t impossible. As long as you show you 1) Earned it here or 2) transferred that amount in Thailand.
Pon
local banks guarantee deposits up to thb 1 mn, it used to be higher but this was adjusted 1-2 years ago.
trump rally – more in the US than rest of the world.
DB – It’s effectively bankrupt, just a question of when not if it will be nationalized (unless they find ways to massively recap)
don
Thanks to both of you for the advice. Don.