MarketWatch/Steve Goldstein/6-20-2022
“It’s been a 35-year bond bull market, so that’s going to be a big shock that is going to test I think financial institutions who’ve been hedged, who’s been writing derivatives they shouldn’t write, who’s been stepping out to take greater risks in their portfolio, because if you can’t make it in bonds, people try to make it somewhere else.” – Seth Klarman, Baupost Group
USAGOLD note: Buried toward the bottom, Klarman says he sees value in gold “for safety … it does have the history, it’s very hard to extract, it’s random that somebody settled on gold and that we couldn’t get more than this very limited supply that we have.” MarketWatch refers to Klarman as an “investment legend.”
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“I had a call the other day with our mutual friend Lacy Hunt of Hoisington Management. And as you know, Lacy is an expert on these matters, monetary policy. And his view — and this has been my view, but coming from Lacy with his credentials — I think strengthens the point, is that there’s been so much liquidity created over the last couple of years between the growth of M2 and handouts to consumers during the pandemic, easy fiscal policy, that we have built up such an amount of liquidity that may take two years to get back to trendline. I think in the world of politics, two years is like an eternity, and the ability to keep the hand on a hawkish policy isn’t there. I am in the camp that the Fed is likely to cave in and pivot probably before the end of the summer.”