Nice recap. Point 10 reminds me of a podcast I was listening to recently (Hidden Forces Episode 243 w Russell Napier - paywalled) where the guest makes the point that, with US governments need to fund itself we're likely to see regulation steer money away from particular areas of the economy and into US treasuries in a form of credit rationing, i.e. expensive credit for xyz purpose but cheap credit for the US gov. One area he thinks credit will be steered away from is any industry that is in the business of levering up existing streams of cash flow as opposed to creating to new ones, and private equity will be at the top of the list. So, to Dimon's point, this guests prediction is that indeed the US will NOT continue incentivizing PE. On the other hand, you might guess that industries such as renewable energy, electric vehicles, and domestic chip making factories will continue to get access to cheap credit, and those might be fertile industries to hunt for longs.
I wonder, what is the rationale behind saying the inversion in the yield curve may be linked to prior QE instead of an aniticipated recession? That people have got so used to QE that they don't believe QT is for real and that soon the Fed will start buying Treasuries again, driving the yield on them lower? That that's the new game of the Fed and they will soon be at it again, irrespective of a hard landing or not?
Nice recap. Point 10 reminds me of a podcast I was listening to recently (Hidden Forces Episode 243 w Russell Napier - paywalled) where the guest makes the point that, with US governments need to fund itself we're likely to see regulation steer money away from particular areas of the economy and into US treasuries in a form of credit rationing, i.e. expensive credit for xyz purpose but cheap credit for the US gov. One area he thinks credit will be steered away from is any industry that is in the business of levering up existing streams of cash flow as opposed to creating to new ones, and private equity will be at the top of the list. So, to Dimon's point, this guests prediction is that indeed the US will NOT continue incentivizing PE. On the other hand, you might guess that industries such as renewable energy, electric vehicles, and domestic chip making factories will continue to get access to cheap credit, and those might be fertile industries to hunt for longs.
Good colour here Zak, appreciate you sharing this!
Thanks!
I wonder, what is the rationale behind saying the inversion in the yield curve may be linked to prior QE instead of an aniticipated recession? That people have got so used to QE that they don't believe QT is for real and that soon the Fed will start buying Treasuries again, driving the yield on them lower? That that's the new game of the Fed and they will soon be at it again, irrespective of a hard landing or not?
Some good points there Simon. I am not really sure of the answer myself, but it was an interesting comment from Dimon.
Great summary. Thanks for sharing!
Pleasure, glad you enjoyed it Jack!
Jamie Dimon is one of a kind. I enjoy him. Thanks Conor! 🫡
No problem, Nick!