Safe-Haven Status

[stpeter]

According to a new working paper (which I haven't read yet but plan to soon), long-term Treasuries might be losing their safe-haven status, with the result that investors are rotating to short-term Treasuries and gold. More here: https://www.nber.org/papers/w34640

[boglerdude]

china hitting middle income trap. They're pissed that growth is slowing and tariffs mostly targeting CCP is poking the (pooh)bear. Now we find out if they'll simmer down like Japan did after their bubble. Or try to grab resources...

[ppnewbie]

According to a new working paper (which I haven't read yet but plan to soon), long-term Treasuries might be losing their safe-haven status, with the result that investors are rotating to short-term Treasuries and gold. More here: https://www.nber.org/papers/w34640

Definitely feels like we could be losing safe haven.

[Xan]

The big question is, how much is temporary and how much is permanent?

[stpeter]

The big question is, how much is temporary and how much is permanent?

WWHD? (What Would Harry Do?)

It does seem that there are both short-term and long-term (secular) trends involved, but personally I don't know enough to tease out the factors. However, I do think it's something to keep an eye on. If one of the four pillars of the Permanent Portfolio starts to wobble, then the gyroscope won't be as reliable going forward...

[seajay]

According to a new working paper (which I haven't read yet but plan to soon), long-term Treasuries might be losing their safe-haven status, with the result that investors are rotating to short-term Treasuries and gold. More here: https://www.nber.org/papers/w34640

Definitely feels like we could be losing safe haven.

That was lost when Russia was sanctioned, revealed to one and all that SWIFT international trade settlements solely being controlled by the US not only could be turned off - but actually was selectively turned off. Repeatedly the US has broken promises - where Trump has pushed toleration over the red line. Hence the rise in gold/silver, countries that have surplus dollars (trade) now prefer to swap out those dollars for the likes of gold/silver (use the dollars to buy COMEX contracts for gold/silver and demand physical gold/silver settlement). Gold in their vaults is safer than lending to the US and where the US has in effect defaulted on that (if Russia can't access their money then so also could that be applied to any other country). Made worse by Trump also distancing from former allies, where EU, UK, Canada, Japan, Australia ...etc. are also being pushed by Trump towards adopting a alternative such as BRICS-PAY.

Formerly the US could print more dollars to spend on space, military, whatever, where other countries then also had to print more of their own currency to buy more US debt or otherwise see their existing debt being devalued. Absent the ability to export inflation the US wont be able to spend the same on space/military/etc. which is a delightful position for China who have sufficient surpluses to spend on/build up military might/space exploration etc.

[seajay]

The big question is, how much is temporary and how much is permanent?

WWHD? (What Would Harry Do?)

It does seem that there are both short-term and long-term (secular) trends involved, but personally I don't know enough to tease out the factors. However, I do think it's something to keep an eye on. If one of the four pillars of the Permanent Portfolio starts to wobble, then the gyroscope won't be as reliable going forward...

US stocks presently make up something like 60% of global share, many of the big stocks have global business/earnings exposure. That's changing and like during the 1970's the US could see its share decline to sub 25% levels, or given that was just predominately driven by Japan and this time its more everyone else - potentially down to 10% levels. US stocks with global business are inclined to see raised barriers or outright bans (reciprocations against US tariffs). Whilst current/former S&P500 might have been considered somewhat like a global stock fund/holding that may change. Swapping that out for a global stock fund that's more equal weighted/distributed may be all that is required. Global stocks + gold as combined 50% 'foreign', along with 50% domestic (bonds) is FX (currency) neutral/balanced. A factor there however is that access to global stocks by Americans is also inclined to see barriers being erected. France for example has historically imposed 75% withholding taxes against investors in 'unfriendly' states; More recently and Americans attempting to open bank accounts in the UK is more inclined to be declined, as is it considering banning X (followed perhaps by Google, Microsoft ...etc.). A transitional suck up to Trump until alternatives have been established.