The Institutional Risk Analyst

The good news of sorts is that the deflation of the AI financing bubble will probably see a continued decline in LT interest rates. If you work in banking or residential mortgages, the deflation of the AI bubble is very good news. For the past six months, LT interest rates have been pushed higher by the surge in financing for AI-build outs, both public and private, and also the interest rate hedging that finance providers have put in place to protect them from adverse market

How long will the wave of energy inflation coming towards the industrial nations last? Will this unanticipated surge inflation event cause consumers, companies and even nations to default? Below we ponder some asset allocation themes for subscribers to the Premium Service of The Institutional Risk Analyst as we prepare for our quarterly call on Thursday after the market close.

So bitcoin is paid for two things: disorder, and inclusion. It is not paid for order that excludes it. That is a very different claim from the ones usually made for and against bitcoin. Its supporters say it wins because governments fail. Its critics say it loses because governments prevail. Both miss the most likely case, in which governments prevail and choose gold.

Iran has not been defeated. We have to admit that. We have to admit, oh, actually, they've done very well. And it has to be admitted by people in authority. So those people in authority can then negotiate with their Gulf counterparts, including the Saudis. That’s how this thing gets fixed. Now, doing this before the October 27 Israeli election is going to be difficult to impossible, and also before the U.S. midterms, which means that before the U.S. midterms, things are going

When the short end obeys and the long end shrugs, that is not policy talking. That is premium, charging by the day. And the plan carries a twist it did not price: the investment boom that is supposed to pay the mortgage is, for now, bidding against the Treasury in its own bond market, hundreds of billions of buildout raised from the same institutional pool that must absorb the wall. The exit ramp charges a toll on the road that leads to it.

Len Tannenbaum, founder of Tannenbaum Capital, told Bloomberg's Carrol Massar that some BDCs could buckle as the pressure mounts, depending on how leveraged they are, their overall exposure to troubled loans and “how long they’ve swept things under the rug” using such methods as "payment in kind" or PIK to avoid default. “PIK is POOP — Principal On Outstanding Principal — and it doesn’t matter how much, POOP smells,” Tannenbaum said.