WEB claims that thinking about macro is waste of time. However, he spends a few hours per day reading newspapers (vaguely remember that it could be even 3-4 hours daily). Somehow I cannot force myself to pay for content when there are plenty of free quality content and I would simply have no mental processing capacity to read more if I buy additional daily readings. I spend roughly 2 hours per day on "newspapers" and X. It took me more than 20 years to figure out what is useful to read and definitely it is different for every person. Those few hours is probably 70% macro, 30% business news. A few days after reading I do not remember almost anything what I read but still hope that something is sticking to the wall. You really need only one or two good insights per year.
Times are unclear and hopefully not nuclear. So far so good. The storm is coming - since 2009. In 2020 seemed like it's here. Still, bank strategists are very afraid of 2000 and 2008.
For those with ADD, fiscal policy so far is winning:
[QT + Interest Rates] < [Budget Deficits + FED's talks]
Longer version:
QT (-$1.4T from peak, $7.5B remain) + Interest rates (net interest for non financials in Q4/24 hit Q2/99 level and going down) < $2T budget deficit (NOW, in $23T economy) + Fed's talk (vague promise to cut acts as "Powel's Put"). Mr. Market is saying that if troubles start surfacing, QT/interest induced constrains are easily removable. Major central banks are shrinking balance sheet at roughly annual 8-10% pace. With success.
Last few weeks have brought a number of very good posts on bi-polar facts, which well explains no need for rate hikes. Last week the FED/ECB "promised" something in June. My take is that June will become September. Cuts were promised and priced in, therefore, there should be - at least 1, though it's 50/50. It's the election year.. In 2007, circumstances were different but the first cut was in September, after 9 no action meetings, 15 months after maxing out. In 2023, the last increase was in June.
Essence is always in risk vs. reward and position sizing. My take is that probably now we have a similar probability of sustained 20% jump and 30% fall in S&P (even 50% would be understandable in the latter case but so far nobody came up with a bull thesis and bear is simply not working). The US health for the next 6 months seems perfectly intact.
5% risk free is a very good deal at the moment. 10%+ listed 1x leveraged senior/junior portfolios also look attractive (OCSL and similar). I also like dry powder they have for any dislocations. Leverage now simply pays for the high management fees.
I cannot do much because 2/3 of money are tied in private investments but 1/2 of the remaining 1/3 is yielding safely (almost) 7-8% weighted. It's good that I do not have to solve another 1/3 problem.
