contraxism

Julian Robertson Bets the Farm on Inflation

I don't buy the inflation story just yet and I am worried that too many wealth managers with people’s savings are acknowledging this inflation story, and investing/speculating accordingly to protect the erosion of savings, artificially driving up the price of commodities and stocks in light of weak fundamentals to support these price levels. This is causing an additional negative drag on the ability of the US consumer in particular to restructure his/her debts. Unfortunately, under the current global economic conditions there really is no safe haven with a better alternative than US Treasuries to park large foreign reserves - China realizes this crystal clear.

China is light years behind opening up free markets that are even remotely capable in reciprocating any sizable consumption to benefit US production and the US is heading down a dangerous social path itself. US production is restructuring, and relocating to be more competitive and US job losses continue at the rate of 600K monthly.

Where is the demand in the US economy going to come from to support sustainable inflation? The only recovery I see possible at the moment is for the trade surplus countries to continue supporting US Treasuries, allowing sufficient time to recapitalize and restructure. The biggest unknown is how much and at what speed will US consumption pull back in light of the inflationary forces that is currently driven by the velocity of the global savings glut instead of the demand for trade.

I also think it is in the best interest of countries holding US Treasuries to engineer and coordinate with the Fed, a suction of liquidity from the commodity and stock markets to shore up their US Treasuries when required to stabilize the USD.

Julian Robertson Bets the Farm on Inflation

I don't buy the inflation story just yet and I am worried that too many wealth managers with people’s savings are acknowledging this inflation story, and investing/speculating accordingly to protect the erosion of savings, artificially driving up the price of commodities and stocks in light of weak fundamentals to support these price levels. This is causing an additional negative drag on the ability of the US consumer in particular to restructure his/her debts. Unfortunately, under the current global economic conditions there really is no safe haven with a better alternative than US Treasuries to park large foreign reserves - China realizes this crystal clear.

China is light years behind opening up free markets that are even remotely capable in reciprocating any sizable consumption to benefit US production and the US is heading down a dangerous social path itself. US production is restructuring, and relocating to be more competitive and US job losses continue at the rate of 600K monthly.

Where is the demand in the US economy going to come from to support sustainable inflation? The only recovery I see possible at the moment is for the trade surplus countries to continue supporting US Treasuries, allowing sufficient time to recapitalize and restructure. The biggest unknown is how much and at what speed will US consumption pull back in light of the inflationary forces that is currently driven by the velocity of the global savings glut instead of the demand for trade.

I also think it is in the best interest of countries holding US Treasuries to engineer and coordinate with the Fed, a suction of liquidity from the commodity and stock markets to shore up their US Treasuries when required to stabilize the USD.