Gary Shilling on the DailyTicker

Gary Shilling, the author of the Age of Deleveraging was interviewed on DailyTicker. This two segment interview covers:

  1. In the first part, the coming banking crisis due to the second major leg down in the price of houses. I am not sure whether the cause and consequences are not inverted here, as I would say that it is the banking crisis that will make the price of houses fall, since banks are unable to lend while consumers behaviour shows the mania is not over yet.
  2. The second part discusses the opportunities Gary Shilling is seeing: be cautious, as it's very tough, particularly in the long side. He is still bullish on the 30 year Treasury bond, the USD and the CHF.


Tiho said...

He won't be right. Treasuries bull market is coming to an end!

pej said...

We'll see...

Japan was simply ahead of the rest of the world.

I think you don't need a cristal ball to see where we are headed. You just need to open a japanese newspaper from 20 years ago.

Tiho said...

Nope, that's completely wrong.

US is nothing like Japan. You should do some more research and history reading mate. Don't just listen to people who get things wrong half the time, like Gary. He is good, but not THAT GOOD. I'll give you a little help...

1.) When Nikkei burst the bubble in 1989, Japanese Government Bonds were in a huge bear market which was about to end. Deflation in stocks and property just started and was going to last 20 years, signalling a JGB secular bull market.

2.) On the other hand, Treasuries in the US have been in a bull market for 28 years before the Lehman event. When 2008 crash occurred everyone jumped into Treasuries by the end of 2008. There was a huge spike which signalled a blow off top. After 30 years, Treasuries are now ending their secular bull.

Tiho said...

And as you always preach yourself, but don't seem to follow... the news is always the best at the top!

Well since Treasuries thrive on deflation, slow growth, recessions and fear... you would notice that the news is now "the most favourable" for Treasuries. Just look at your blog, its full of fear of the next "Lehman Collapse"

If commodities rallied for 30 years I would we shit scared! If stocks rallied for 30 years I would be shit scared. It is so funny how after 30 years bull market in Treasuries, people today are pilling in and justifying it by economic data... haha you are all about to get taken to the cleaners in the next few years.

Keeping that in mind, Treasuries could stage one final rally, but it will be a false rally. I hope I'm smart enough to short that final rally when it happens over the next few weeks or next few months or whatever, as that will be THE END!

pej said...

My points are the following:

1) Its not because they have been in a bull market for 30 years that they cannot rally for a couple more years for example — quite the opposite actually, given that long trends like this have a very big momentum

2) If you believe The Bernank will print, he will support treasuries and low rates.

3) The next leg down in equities will probably see a replica of what happened during the 2007-2008 leg down: a massive flight in the USD — which is still very much shorted by almost everybody you can think of — and into the treasuries which might have the same kind of impressive rally as they had back then.

4) I'm not saying that treasuries will rally for another 30 years. But they can probably still rally for another year or two.