‘the biggest bond bubble’ ever

DanHardy

http://www.marketwatch.com/story/why-hedge-fund-honcho-paul-singer-is-calling-this-the-biggest-bond-bubble-ever-2016-08-18

What will make it pop? "What’s the big worry? A sudden move in rates that in a crowded trade could leave investors with brutal losses." What would cause a sudden move in rates?

I'm not saying it won't happen I'm just looking for the signs it is on the road to happen.

The classical reasons - shortage of materials, labor, capital to meet demand are not there.
High oil prices? That has happened and there wasn't a ripple effect.

The only thing I can think about is a large war. Not like the 16 year we have been fighting - more like Vietnam.

Thoughts?

davidrmoran

You know this about perma-inflation Singer, right?

https://www.washingtonpost.com/news/wonk/wp/2014/11/06/heres-the-latest-dumb-argument-from-a-billionaire-that-will-hurt-the-economy/

DanHardy

davidrmoran said:

You know this about perma-inflation Singer, right?

Thanks - I got suckered in. The need for news organizations to feed the pipeline really throws out a lot of junk.

hank

Think of this as several different bubbles expanding and than popping inside of bigger and bigger bubbles. Etc. Etc.

So ... these bubbles will not pop all at the same time. Expect a wild ride as that process slowly unwinds over many years.

Caveat: I don't know anything about bonds, but markets seldom move in a straight line.

Regards

AndyJ

davidrmoran said:

You know this about perma-inflation Singer, right?

Ah, so he was the one; I was telling someone about the terrible Hamptons r/e inflation the other day and couldn't remember what caricature of a clueless zillionaire had said it.

Good writing, too. Any writer who refers to Scrooge McDuck to make a point has my vote!

Old_Joe

"Any writer who refers to Scrooge McDuck to make a point has my vote!"

@AndyJ- for sure! Even better, though, would be The Beagle Boys, Scrooge's long-time nemesis (nemesi?).

johnN

maybe better to look at oil vehicles or oil reits [??already bottomed], instead of bonds

catch22

@johnN
Have you a suggestion for such an investment? What oil vehicles?
Already bottomed probably already arrived more than 6 months ago, eh?

AndyJ

Old_Joe said:

"Any writer who refers to Scrooge McDuck to make a point has my vote!" @AndyJ- for sure! Even better, though, would be The Beagle Boys, Scrooge's long-time nemesis (nemesi?).

Hey Joe, as a wee lad, I'd check the pharmacy's comic book stand for the new Uncle Scrooge every day at the start of a quarter or whenever it was that the new quarterly issue came out. I'm pretty sure the one about SE Alaska (blueberries the size of grapefruit) was at least subconsciously responsible for getting my butt up North for a 20-yr. adventure of a lifetime.

DanHardy

catch22 said:

@johnN
Have you a suggestion for such an investment? What oil vehicles?
Already bottomed probably already arrived more than 6 months ago, eh?

http://www.marketwatch.com/story/not-even-opec-can-save-the-struggling-oil-market-now-goldman-says-2016-08-23

Libya, Iraq and Nigeria — which all have suffered from severe supply disruptions — last week started to show the first signs of ramping up production, seen as halting oil’s nascent recovery, according to the bank.

davidrmoran

REXX is a play, solvent and productive but extremely cheap, 61 cents or so, but it may take awhile, esp if NG pricing goes even lower. I am thinking the downside is nearly nonexistent.

msf

AndyJ said:

davidrmoran said:

You know this about perma-inflation Singer, right?

Ah, so he was the one; I was telling someone about the terrible Hamptons r/e inflation the other day and couldn't remember what caricature of a clueless zillionaire had said it.

Yes, but that article was two years ago. These days the Hamptons are so déclassé that Starbucks even has a mug for them:


The Hamptons Housing Market Is Getting Clobbered by Wall Street Jitters:
http://www.vanityfair.com/news/2016/04/hamptons-housing-market-wall-street

Old_Joe

"déclassé"

Sounds like something my wife would call me...

AndyJ

Now I want a Hamptons t-shirt with the mug design. I think I could afford that ... altho I'm a little worried about the rampant inflation in the t-shirt market.

VintageFreak

davidrmoran said:

You know this about perma-inflation Singer, right?

https://www.washingtonpost.com/news/wonk/wp/2014/11/06/heres-the-latest-dumb-argument-from-a-billionaire-that-will-hurt-the-economy/

nice job there vilifying the guy (not saying he shouldn't be no love lost here) by saying in the main article he makes his fortune sewing countries with bad debt, then correcting it at the end of article with * saying only 2% of his funds do that. No one is going to read that footnote.

davidrmoran

if you know the details of his LA debt lawsuits and outcomes, rightly so, one supposes

linter

davidrmoran said:

REXX is a play, solvent and productive but extremely cheap, 61 cents or so, but it may take awhile, esp if NG pricing goes even lower. I am thinking the downside is nearly nonexistent.

DM, from dec 2014, when price was around $5/share: "I don't know how anyone is going to lose buying REXX now --- financially solid, just takes patience. Awfully low. Just one example."

i really do have to admire your tenacity. i think you've bought more all the way down. have you held onto all your shares? at some point REXX is going to take off and hopefully make you rich beyond words. I might have to throw $500 at it, just to join you in my own small way. should it go back to $5/sh, that'd make me $4k happier.
or, it could just go to 1 cent and join certain marijuana stocks i bought in 2014 and that still clutter up my monthly statements.
anyway, how financially solvent do you think the company still is?

davidrmoran

Thanks. Idiot reminder!

Ha, not rich beyond words, but it should recover at some point. I have studied their figures, and talk regularly w a local geezer friend (rich) who knows the CFO well, who reports they are quite solvent and just biding their time.
I certainly should shut up about it, though, at least the stupider speculations!

In other words it is not like some biotech where there turns out to be nothing there.

He said.

$500 sounds about right .

Why did your dope stocks tank?

linter

My pot stocks were all up at one point, by 25% to 300%. I sold enough to make 20k even if everything else went to zero ... which is what happened. i shoulda sold, not held. but, i still came out ahead, though not by as much as i could have, by a long shot. sigh.
I remember looking at REXX when you first mentioned it and bought a bunch of different oil stocks instead, none of which have done too well either. I might put in a small limit buy order at .50 and see if it gets hit, just for snicks and giggles. hopefully in a few months we'll be laffing about it together, all the way to the bank. stranger things!
i get free trades at merrill, which is always a prodding factor when it comes to fliers like this one. i mean, with any commission at all, i'd pass. but free? ha!

davidrmoran

re ML, exactly. I do the same there w etfs. They will not do VXX, thank goodness.

20k is good.

Doubt you will get a bite at 50 cents. He said.

You might want to do some dd on COG. I have made some money with it but given it all back as well.

linter

COG looks interesting. Thanks!

Old_Joe

Well, somebody's been buying for the last couple of years. Is all of that you, David?

davidrmoran

haha, maybe; I do play a little bit trading ups and downs, rich-friends' tips and such, biotech and oil and a REIT or two, also CLF, also Acacia, and had a good string of years until starting a couple of years ago, and since then probably have coughed it all up, gah, gah, gah.

In retirement I am trying to curtail my stupidity and manage my greed, with only partial success.

Old_Joe

Tell me! I'm currently muttering to myself about Gilead. I think that I'll wait until that hits 57¢ along with REXX before buying more.

davidrmoran

ha, well, you can always delve ETRM, XOMA, and ARWR as well, promising (:)) outfits where I have made and then lost semiserious moneys.

LewisBraham

@Davidrmoran Three factors to consider with energy stocks now:
1. Balance sheet strength--those with least debt or manageable debt with distant maturity dates will survive.
2. Marginal cost of production.
3. Geopolitical risk of well locations.
Many energy stocks are over-levered so even if their common stock shares seem cheap, they will be worthless in a bankruptcy as the debt holders get everything.

davidrmoran

That's correct.
Rexx:
https://finance.yahoo.com/quote/rexx/financials?ltr=1
http://www.investopedia.com/articles/investing/072815/oil-companies-near-bankruptcy.asp --- says REXX to fall; this was over a year ago. Still. So I could lose $3500 more.
Locations:
http://www.streetinsider.com/Corporate+News/Rex+Energy+(REXX)+Updates+on+Moraine+East,+Appalachian+Basin+Operations%3B+BSP+Elects+into+Additional+Wells/11758150.html
So I dunno. They just completed a big sale in Illinois. I am not buying more.

linter

hey david: i forgot i'd put a limit order in on REXX and, by God, it hit today, at 50 cents/ share, so we're in this together now (unless you've bailed). Go REXX, ha ha.

davidrmoran

wow
no, not bailed
I wish you luck!