hermgamma.bsky.social
Former fixed income options trader. International family. It will only work out if you plan for it go wrong.
1,255 posts
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1,255 following
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Vermutlich schon. Ich wohne in England und da gab es eine relativ große Auswahl. Ich bin nach dem System gegangen, da es den größten Kostenpunkt darstellt. Mit war es wichtig, dass man auch im Winter die Kosten niedrig halten kann, somit braucht man effizientes V2H und eine hinreichende Batterie.
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Ich habe mir den Batterie- und Wechselrichterproduzenten ausgesucht und dann passende Installateure angeschrieben. Für mich war ein DC bidirektionaler Lader für das EV wichtig, da dieser die Batteriekapazität vervielfacht.
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… redistributive fiscal reform, to come to some sort of bond stabilisation mechanism for the coalition of the willing. The latest MAGA agenda by the govt appears to have been propelled by the bond market sell-off earlier in the year. So they might feel pressured into action by weak long end Gilts.
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Sometimes I wonder whether Labour thinks it has a choice. There appears to be a hygiene criterion in British politics since Brexit which is that a govt can do what it wants as long as it keeps Tufton Street happy. That does limit policy options somewhat. The answer would be, subject to sensible..
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What the stock market does is in a way irrelevant. Many valuations are so far removed from reality, little can be gleaned from any price changes. The key is whether non buy-to-hold players with risk limits are accumulating UST. That will define the market skew.
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How much debt will be at risk and who owns it?
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There is also an optimisation question regarding orientation, solar output, battery storage. The output of west facing panels can produce into the evening peak which reduces the battery capacity required for internal load shifting.
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Theoretically, a capital efficient transition would optimise dCO2/dEUR. So getting some carbon credits for replacing coal with solar around the tropics makes sense. It would also remove the incentive for silly CCS schemes and allow for a gradual replacement of methane.
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The trajectory is similar a to a heavy airplane barrelling down a runway which is too short and followed by an abyss. There are two inflection points. O: the U.S. comes to its senses. K: the inertia of the dynamic makes it impossible to be stopped in time. So it’s either OK or KO.
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A Carney win would also be good for the U.S.. He will have a clear idea about the self-destructive trajectory the U.S. govt currently find itself on and can hopefully build an international consensus to find a way out.
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One has to consider not only the safety of an asset but also where it is parked. If it can be re-hypothecated or otherwise encumbered, then it may be difficult to get hold of should something happen. It’s like wearing a seat belt. Very unlikely that it is needed but useful just in case.
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.. custody. If you hold an asset with a brokerage, who book it with a custodian who pass it on to a sub-custodian, then there will be a whole lot of layers to go through to get to your claim. Direct investment is preferable.
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I don’t think that the US is going to default, eventually they will do the right thing. The cost will go up until they do, though. There won’t be enough money around to bail everyone out. So boring corporates with low leverage selling recession safe products might work. Another consideration is…
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But somehow, it magically is where it needs to be when it matters.
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The US is an immensely powerful nation. If it decides to direct its power against itself, it will do immense damage to itself.
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Is that per tCO2? Offering offsets in terms of replacing 1kW of coal with 10kW of PV and 40kW of batteries around the tropics ( ie 2 for 1 ) would make a lot of sense both for the environment and financially given the prices.
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That makes sense. Battery only load balancers will drain and supply electricity at a much wider range in an inelastic market than producers and consumers bounding the market with their own batteries.
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I’m thinking about a diversified portfolio of equity only, no debt in the capital structure, renewable energy investments across EM with FX translation of returns. Diversification reduces risks, profitable w/o debt service, operating cost low and revenues should roughly float with fx forward points.
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Tariffs, crypto, tax cuts, rule of law, Mar el Lago ‘accord’, ignoring basic economic principles, dismantling state institutions, favouritism, cosying up to Russia, threatening allies with invasion, manipulating the political process of allies, calling creditors names … a bond investor’s purgatory.
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The government might ignore this hiccup and take comfort from things calming down somewhat, but sooner or later it must come to the conclusion that the only way out is to make people comfortable about holding on to UST. That will require a substantial change in behaviour and rethinking of priorities
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There is no clear logical automatism that a move away from manufacturing towards services will increase income disparity. The effect is wanton via corporate lobbying. It is thus a shortcoming of the political process.
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Es ist dennoch eine Erleichterung, dass sich ein wenig Vernunft in den Koalitionsvertrag eingeschlichen hat. Wieviel ist für das Carbon Capture Projekt vorgesehen? Das ist leider verschwendetes Geld.
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It would be an interesting if at some stage there was sizeable selling action of non-listed assets in the open market. There may be a difference between marking something to model and finding a proper bid at which risk actually clears.
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The velocity of the U.S. administration’s outright disorganisation and incapacity to assess its many and impactful actions ex ante will likely lead to spectacular failure followed by a Congress imposed more toned down somewhat more rational approach.
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If it is the policy of the current administration to bring down bond yields, then they are approaching it in a rather unorthodox manner.
Re previous administration, it would be interesting to see an analysis about the investment efficiency of their spending.
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I agree, they were very accommodative in their fiscal policy and issuance profile. I’m wondering whether they could drum up enough domestic demand to roll some of the bills into notes and bonds. The current policy implies even more bills as they keep other issuances stable in absolute terms.
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I thought some of it may have been them trying to make the long end better bid to avoid the SVB episode from cascading. Anyhow, it now requires a very steady hand from the government.
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What do you think is the reason? Is it because there was not sufficient demand for longer dated paper?
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It feels a bit odd that the regulators would impose all sorts of funding restrictions on banks, e.g. liquidity coverage ratio and net stable funding ratio, only for the Treasury to go on an epic curve rodeo ride.
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An additional risk factor is the U.S. government’s heavy reliance on short-dated debt which means that they have to find buyers for ca $2trn of paper per month. Borrowing short is tied to event risk.
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The US’ actions are highly irresponsible and de-stabilising. There are a parallels to the Opium Wars which nobody should want to create. It will allow Xi to paint the response as a national struggle garnering support and make Taiwan look like a threat to China’s access to the sea. Incomprehensible.
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Joint issuance for defence and infrastructure makes sense, subject to good accounting, fiscal prudence by participants, tax and lobbying reform, and the ability to instil incremental pain on those who stray. Europe is going to need some form of fiscal stimulus soon, might as well do it sensibly.
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Amongst tariffs, taxes, crypto and rule of law each single subject on its own could tip the markets over. Taken together, they are overwhelming. The economic and social consequences will be dire, much worse than getting primaried, for example.
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The battery supply appears to be saving around 7.5GW of peakers with the remaining residual demand expressed as a reasonably constant vector. That does look like a capital efficient base point to scale up solar. What is the price elasticity for battery attachment/detachment?
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It is a bit concerning that the instinct of former Fed staffers to a leverage induced risk factor is to underwrite and allow more leverage. A more direct answer would be to floor haircuts at let’s say 15% for the 10y Note, and let the basis widen to the point that folks will buy the bond outright.
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Maybe the US could just spend less, borrow less money and save more. The logic is the wrong way around. The US leveraged the USD’s status as a reserve currency to embark upon a partially foreign funded debt-binge and is now looking for ways to walk away from its obligations.
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There is ample evidence that there is too much paper around. Both the Fed and the Treasury were actively contravening the tightening cycle by holding on to QE bought paper and biasing issuance to the front end. In addition, the odd reaction to the SVB episode was geared to keep UST in the banks.
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The underlying and systematic problem with UST is that there are too many and not enough safe places to put them. This is a function of budget deficits and the market structure. Trump’s action both degrade the trust in UST and increase supply via tax cuts and foreign selling. There are no easy fixes
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At this stage a substantial financial crisis including US sovereign risk is baked in. It cannot be solved by the current administration or the U.S. by itself. The question is when survival instincts kick in, to demote Trump to a purely ceremonial role and hand decision making to grown-ups.
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The problem with US CDS is that it is difficult to find a counterparty which will still be around when it triggers. It is a toy for funny money to play with but its performance in case of a credit event is far from certain.
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.. and the thing trumps then you get recovery on the bond but have to pay back the loan in full. You will also have to fund the mtm gap if the bond sells off. Swaps spreads are full of the slings and arrows of funny money but there is an underlying credit dynamic.
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Treasury yields should be higher than the fixed rate on an OIS swap, balance sheet and haircut cost aside. A repo is in effect 2nd to default risk, albeit correlated, of the borrower and the collateral, subject to both being alive at reset. If you buy a Treasury finance it via continuous 1D repo…
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It could be a fascinating book in which the American century comes to an end, not due to outside influences, but on account of the incapacity of its citizens to sacrifice even a bit of their personal interests to the interests of the whole. Trump is but a farcical projection of irresponsibility.
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Foreign institutions currently hold $8trn of UST and are adding shy of $800bn annually. For markets to be stable, bonds need a good home, for example, with insurances or annuity businesses. Leveraged accounts a fickle. Domestically, the US may not have enough space to park additional paper.
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Who is going to buy that debt? The whole street is already stuffed with bonds. The tax cut is untenable and they know it.
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If options, and many other financial products/strategies for that matter, were a car, it would be built without brakes, steering or wheel nuts. Slight course correction can be done by rubbing one’s foot against the tarmac and the Fed and taxpayers are there for everything else.