Ok, first of all, I appreciate the restraint, but the Euro is in major trouble, and its "salvation" is probably even worse. As soon as Greece "clears", Spain, Portugal or one of the others will tank. So its a dollar world for the long-short term. Actually, I think its probably be a dollar world for the long-long term: you're a portfolio manager for a multi-billion investment fund/pension whatever, you decide that the U.S. economy is fucked-who wants to be in Treasuries? So you take your lowest risk portion of your portfolio and put it in. Oh,oh, where do you put it? (thinking going on here) In short, if you actually believe in a doomsday scenario, or anything like it, you want to have your U.S. position. Trading is trading, but portfolio managers of global invested multi-billion funds need to preserve capital over the long term, so don't get caught too short. Hard U.S. assets, low leverage.
Charles Cecil
Opin Partners, LLC
Showing posts with label risk. Show all posts
Showing posts with label risk. Show all posts
2/20/2010
China is selling down US Treasuries exposure?
China is selling down US Treasuries exposure?
Charles Cecil
Opin Partners, LLC
- China's real position is best seen through the sum of their "visible" actions and HK
and UK actions: net position is increased, especially if viewed on a six month
average or over the post-crisis period.
- My sources in major continental banks are looking for the Euro to stabilize around 114
- China definitely needs the US to remain stable and will do whatever it can to prevent
a dollar flight. I mean, who else have they got that they
can actually rely on politically and economically (to the extent that we want to
separate the two!).
- So, $3 trillion or if you like, $7 trillion of US T is maturing in the near term, it
is useful here to think like a portfolio manager for a major
institutional investor: am I seriously suggesting that I am going to move my exposure
from US T to say... what? I mean, I have to balance
my risk globally right? If I move out of US T, I have to look at the country risk
weighting and what the implication for the globe's economies
if the US really does experience a major blow out. Net, net, I have to conclude that
apart from hard ownership (with very low leverage) of
commodity resources (and I don't mean through publicly traded securities), I want the
US exposure as the US remains the most vibrant
hothouse for creating wealth without political risk. Really, how many of you global
portfolio managers would be ready to move your
exposure from US T to the big growth engines of India, Brazil or China? No, you are
going to reallocate from some less appetizing
countries such as Russia, Italy, Spain or UK (oh wait, what's happening to
currencies?)
Charles Cecil
Opin Partners, LLC
- China's real position is best seen through the sum of their "visible" actions and HK
and UK actions: net position is increased, especially if viewed on a six month
average or over the post-crisis period.
- My sources in major continental banks are looking for the Euro to stabilize around 114
- China definitely needs the US to remain stable and will do whatever it can to prevent
a dollar flight. I mean, who else have they got that they
can actually rely on politically and economically (to the extent that we want to
separate the two!).
- So, $3 trillion or if you like, $7 trillion of US T is maturing in the near term, it
is useful here to think like a portfolio manager for a major
institutional investor: am I seriously suggesting that I am going to move my exposure
from US T to say... what? I mean, I have to balance
my risk globally right? If I move out of US T, I have to look at the country risk
weighting and what the implication for the globe's economies
if the US really does experience a major blow out. Net, net, I have to conclude that
apart from hard ownership (with very low leverage) of
commodity resources (and I don't mean through publicly traded securities), I want the
US exposure as the US remains the most vibrant
hothouse for creating wealth without political risk. Really, how many of you global
portfolio managers would be ready to move your
exposure from US T to the big growth engines of India, Brazil or China? No, you are
going to reallocate from some less appetizing
countries such as Russia, Italy, Spain or UK (oh wait, what's happening to
currencies?)
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