저자: Kevin · 외국인
요약 보기
현재 채권시장의 고금리는 중동 리스크·유가 상승 등 인플레이션 요인에서 비롯된 비정상적 상태로 본다. 워시(Warsh)의 연준은 대차대조표 축소와 긴축 성향이라 금 등 인플레 헤지 자산에 불리하다고 주장. 연준이 결국 마이너스금리 쪽으로 가며 디플레이션 위기가 올 가능성이 있고, 그때 장기 국채와 부동산(특히 미국 캘리포니아 해안)이 유망하다고 함. 현재 AI 버블은 완전히 꺼지지 않았지만 위험 신호(고용시장, AI 데이터센터 금융)가 있어 단기 주식 비중은 일부 유지하라는 입장. 채무는 최소화 권장.
다듬은 글
It may seem crazy, but the best investment for the next 8-10 years is what I think we're going to talk about now. First, it is the opposite approach to the madness we are witnessing now. This madness we are currently seeing in the bond market is not sustainable. In my opinion, and in the opinion of many others, this is largely due to the problems you have in the Middle East.
TS Lombard just published a big piece saying that we're not facing some crazy financial crisis, but the reason we're seeing these crazy bond yields is, in their opinion, just oil prices and an economy that's doing well and growing right now. Perfectly. So with the skyrocketing oil prices and the instability in the Middle East, and of course there is hope for a deal with Iran, which would probably indicate peak profitability.
What then becomes the best possible investment for the next 10 years? Well, bonds look very attractive at these levels, but it's hard to predict when bonds will peak because there could always be another rate hike. There can always be another shock, until , of course, economic growth stops, and then you find yourself in a deflationary depression .
Before we talk about what might be the best investment for the next 10 years, it's always worth remembering which is better: inflation or deflation. In general, we think: deflation is a decrease in prices, and inflation is an increase in prices. So, of course, we want prices to go down. But when we have deflation, it is usually associated with a crisis in the economy, some form of recession or depression.
Google it yourself. If you just google periods of history with deflation, that's literally all you'll see. You don't even need to add any biases. You get the Great Depression, when prices fell 7% due to bank failures and a reduction in lending. The Long Depression of 1873, when prices fell by almost 3% each year.
Then the depression after World War I of 20-21, when prices fell by about 18%. And, of course, the Great Recession of 2007-2009 with a brief period of deflation. By the way, this is why the Federal Reserve is encouraged to maintain inflation at 2%. So every time there's an indication that ...it helps us understand: OK, what is the Fed going to do and how does that affect investment?
Whenever the Federal Reserve thinks inflation is falling below its 2% target, they try to get the printing press going. They are deliberately running the printing press, as Ben Bernanke, Elizabeth Warren, and Jerome Powell did in 2008 through QE1, 2, and then QE infinity, because it keeps inflation at the 2% target.
inflation over the last 15 years before COVID, or rather about 12 years before COVID . During that period, inflation remained consistently below trend. We didn't have an AI boom, and we did n't have that inflationary stimulus . We didn't have a war in Russia and Ukraine. We didn't have a war in Iran.
We had no tariffs. We didn't have some of these serious inflationary problems, oil shocks, supply chain problems through the Strait of Hormuz, the Red Sea or whatever. So, we didn't have many of these inflationary factors . Of course, the AI investment boom has been very inflationary, which is normal, as it usually causes significant inflation in the initial stages.
But ultimately what happens is that when inflation falls below 2%, the Federal Reserve says, we need to stop deflation, because if we slide into deflation, people might stop spending, and that would create a self-perpetuating deflationary spiral. People stop spending. If people stop spending because they're saving because prices will be lower next year, then the economy spirals into a tailspin, profits fall, companies and stock markets underperform , the market crashes, people lose their jobs, and you know what?
They are forced to spend even less. So, typically, Federal Reserve officials argue that a small level of inflation is necessary, ideally 2 %. But you don't want deflation because that's even worse. So they have to perform this delicate balancing act, and that's why the printing press works. The problem is, now we have a new boss in town.
We have a new regime in town. We'll talk about it right here. This is called " worst case scenario". Project 2025, which to some extent contributed to the election of Donald Trump, essentially led to the imposition of a person like Kevin Warsh on us. Kevin Warsh, in 2008, 2007, and 2009 , when he was at the Federal Reserve, argued that the Fed, by printing money, was about to cause rampant inflation.
And that in the midst of the 2007-2008 crisis, we should have actually raised interest rates because it would have helped prevent inflation from printing money. So this guy is kind of born to be against the printing press, even when we're in the middle of a deflationary crisis, where, you know, ideally people want to get help, and, you know, we could argue separately about whether we should just let everyone go bankrupt, right?
That's not the point . I just want to clarify. I am neither campaigning for nor against money printing . I just want to know what awaits us so that I can understand how to invest. So, Kevin Walsh, a big opponent of money printing, is right here. Very much against printing money. We know this. Why? Because he is very concerned about inflation.
And, to be fair , we are currently dealing with high inflation. So right now he's probably the best person for the job. Mr. Myron, who is also a Trump supporter, wants to offset the balance sheet reduction by cutting rates to accommodate the Fed's shrinking balance sheet. The Fed's balance sheet is also part of this discussion.
The Fed's balance sheet. You can take a look at the Federal Reserve's total assets right here. And you can see that the balance sheet has shrunk significantly since COVID, from almost $9 trillion, but now it's started to rise again from a low of about $6.5 to about $6.7-6.8 trillion. So, we've grown up a bit.
What is happening? This is what Kevin Walsh wants to reduce. They don't want the Fed to have all this on its balance sheet. They want to see a lower reserves regime, going back to what it was before. Maybe before COVID or even earlier. I mean, in the early 2000s, the Fed's balance sheet was less than a trillion dollars.
I mean, at one point it was zero. And, if you look back at the era of endless quantitative easing, you can see how the balance sheet actually grew to about $4.5 trillion, and then doubled during Covid, which is just crazy. So now we have someone like Walsh who wants the balance sheet to be cut. And he appointed several different members to the working groups.
Historically, he hates printing money, but now he has accomplices in the working groups. I like to call them his accomplices. I just listed most of their names to make it easier because I do n't think you're really interested in their last names. You can find them yourself. But out of the 12 people in his work groups, or probably closer to 16...
So about half of them. The other half, which I didn't mention on this list , by the way, is very interested in new methods of collecting inflation and jobs data. They don't really have their own opinion on balance. These are venture capitalists and techies like Andreessen Horowitz, those are the people there.
So it turns out that they don't have a clear position on balance. They are here to provide data, ideas about AI, technology, or something like that. That's why I added the names of those who have their own opinions on the balance sheet: whether they want money printing or not. And these people help us understand exactly what kind of Fed Kevin Warsh is trying to create.
We already have a clue from Mnuchin, who is not on the task forces but is part of the Trump administration . We know that Warsh was appointed by Donald Trump. And we also have these people. Mr. Thomas argues that deficits are bad, and not just fiscal ones, but also the printing of money by the Federal Reserve.
Greg literally published articles saying that the Fed should use negative interest rates instead of printing money. In other words, forget about zero rates in case of any shock. We should just move to negative rates, and that will stimulate the economy. You may ask: how can there be negative rates at all?
Europe has been through this. You're just charging people for their savings. Imagine every time you open your SoFi bank account, it says, “Hey , your $10,000 or $1,000 in the account is uninvested, you get the idea. "You've just been charged two or twenty dollars, depending on the amount, for your money sitting around, and we'll charge you again next year." Like, it's better to invest them in a business, stocks or something.
It's better to contribute to the economy. That's why people say negative rates can work. So you have someone who says printing money is bad. Someone who says we need negative rates. Then there are those who say that quantitative easing is very bad. That is, money printing and quantitative easing are so harmful that we should simply let failing companies die.
You don't have to save them. Just let them die. Allow the economy to enter deflation. To hell with everything. Send them to hell. Okay, all of this boils down to what I consider to be the best investment. There's also this guy, Raghuram Rajan. I don't know how to pronounce his last name, but in any case, quantitative easing makes banks dependent on reserves, and that's bad.
Next we have Karen who wants to help them reduce their balance sheet, she is a financial specialist from the Obama era. That's roughly what her name is. We also have Mervyn King, one person whose full name I gave because he is well-known in central banking circles. They are literally saying that quantitative easing leads to a dangerous dependency of the entire economy.
Very bad. Then there's this guy Peter, who has written dozens of papers about how harmful quantitative easing is. And then there's the guy at the central bank of Brazil who has restored confidence in the Fed by introducing inflation targeting and a ban on printing money to bolster his authority . These are all people who have comments on the balance sheet, and you may notice that not a single person on the working groups is saying that we should expand the balance sheet and print money.
None of these people. Myron says we should have lower rates. There is literally a negative rate advocate out there. None of them want to expand the balance sheet, and they all support Kevin Warsh, which makes sense because he elected these people, and Trump elected this guy who was probably pushed by Project 2025 to essentially destroy the Fed.
Well, okay. So, we don't know when some crisis will arise that the Federal Reserve will have to respond to. But the Fed's typical strategy in response to a crisis is to cut rates to zero and start the printing press. In fact, Mike Wilson of Morgan Stanley literally states that the Fed should generally ensure stable financial conditions, in other words, start the printing press at the “first sign of trouble.” This is what the Fed usually does.
And Mike Wilson believes that's exactly what the Fed will do. But I disagree. I don't really think the Fed will start the printing press at the first sign, because if you study what the Fed is preparing, they are not preparing for a money printing regime . They are preparing for negative interest rates.
And negative interest rates require a completely different type of investment. And this is the type that benefits from the lowest market rates. So, how does it work? And I intentionally said market rates, not Fed rates. It looks like I messed it up a bit because it's a little faded, but it doesn't matter.
Okay, my handwriting isn't that good. Come to terms with it. If the Federal Reserve doesn't print money, and we know that printing money causes inflation. And when the economy weakens, the Keynesian approach to economics is that you print money, keep it low, right? Printing money compensates for deflation.
We would probably have had years of deflation by now if we hadn't printed money . But could this lead to a self-perpetuating spiral of economic recession and slowing growth? Yes, probably. You know, people don't take out loans in deflationary conditions because such debt becomes more expensive to pay off.
Debt becomes easier to pay off in times of inflation. That's why you often see bubbles inflated by debt. Debt is a big problem. So if you didn't print money, people would probably rush to buy bonds because you're not increasing their supply, which means you're limiting the supply of bonds, which increases their price.
And in deflationary conditions, these bonds become more expensive over time. We are currently seeing crazy highs in the bond market, and I mean yields are extremely high, which means the value of bonds is ridiculously low. So, there is an inverse relationship between bonds and returns. We already know this, but essentially, when you hear about high yields, it means that bonds have fallen sharply in price.
What's interesting is that this potentially sets up a low- leverage future if there's some kind of disaster, recession or something else in the next 10 years, which I expect there will be. A recession is always just around the corner . We don't necessarily know exactly what it will be, but we suspect it will come again, as it has always done throughout history .
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You need to have minimal debt or no debt at all . This is one of the first things we want to start with. In a deflationary regime, debt is bad. Debts are becoming more expensive and harder to pay off. So going into big debt now is probably a bad idea. I would be very cautious about taking on debt, you know, between now and the next crisis.
Yes. So I think having little debt and paying it off is a good idea. This is where I would actually argue that making extra payments on your mortgage, even if you have a rate of three, four, five, six percent—it doesn't matter what it is—making an extra payment, well, every few months or whatever, helps reduce some of the debt; it just gives you more protection.
Of course? So, being debt-free is a tool. The second thing that's really useful, and this is the hardest part , is bonds, but probably ones that you're willing to hold to maturity, or bonds with a maturity date. I say this because if you buy a 30-year bond now, and another shock occurs between now and some future crisis , you may want to sell them at a loss.
But if you hold the bonds until maturity, it doesn't matter what happens to their value until then . You will receive your income from now until maturity. So, let's say, for example, you go and buy a 2- year Treasury bond, which you can buy, well, on Treasury Direct, #non-advertisement. You can't ...I don't even think you can get government sponsorship for that.
But if you look at 2-year Treasuries on CNBC, you know, for some reason they always make it so difficult to find, their search function is just garbage. It never shows anything when I type "2 year olds". But in any case, it's about 4.5%. So the yield on 2-year Treasury bonds. Okay, here they are. Yield on 2- year Treasury bonds.
Oh, she's even taller now. This is amazing. This is almost 5%. Look how she's flying up now. You can literally lock in 4.94% right now on 2-year Treasury bonds, and if you hold them to maturity, it makes absolutely no difference what happens to the valuation of those bonds every day. You will eventually get your approximately 5%.
This is 4.9. So, let's say you invest $10,000 and get your $500 back. One year, two years, and then you get your money back. So you get $11,000 back, right? About. That's pretty cool. So, there is little debt, the bonds are held to maturity. But bonds are a bit boring. People sometimes don't like bonds, but this is starting to look like a really good deal, especially in an inflation-fighting regime.
This benefits enormously from stopping the printing of money. Do you know who doesn't benefit from stopping printing money? Gold. This is literally the anti-gold Fed. I sincerely believe this. I don't think it's a coincidence that gold peaked when Kevin Warsh was elected, because people who are paying close attention understand that this is an anti-gold Fed, and bonds are probably going to be the big winners here compared to gold once we get through an inflationary crisis like the oil crisis and we get a deal with Iran or something like that.
The last option is the hardest to get, but I think it's my favorite because I can really find good deals here. And you can too. The last option is the most difficult. This is real estate. The problem with real estate, however, is that you have to buy in areas with a low level of development. The best case scenario is to buy where...this is not politics, I'm just saying it straight.
You buy property where overly liberal left-wing governments and nimbism make building new homes almost impossible for developers. This artificially limits the supply of housing. When you limit the supply of housing, prices stay stable longer. But the best deals are those that can be made below market value.
For example, you are buying a house for renovation: a property appears on the market for $700,000 . It needs repair. Need $50,000 for paint, carpeting, cosmetic repairs, some bathroom furniture, maybe a kitchen countertop or something, plumbing fixtures, and light fixtures. And it's in an area where homes cost $900,000.
Now you have an additional $150,000 in capital. You have actually strengthened your capital even more. You don't pay taxes on this gain in value. And you know what benefits from stopping the printing of money? Real estate. Wait, Kevin, why does real estate benefit from stopping money printing? This is madness that I think people don't realize.
But mortgage rates are closely tied to 10- year Treasury yields, which are at the highest levels we've seen in a very long time. I mean, look at this. Now we are at 5.28. This is madness. This continues to grow. There is still no deal with Iran. In the short term, this looks crazy. But the higher they rise, the higher mortgage rates become.
If the Fed cuts rates to zero, fine. Maybe 10-year bonds will fall to 3.5%. What a difference. But if the Fed doesn't print money, and a crisis occurs, people will buy 10- year Treasury bonds because they want that 3.5%. They'll say, "This is a better deal. I'll take that 3.5%." So what happens when that 3.5% keeps buying and people say, "You know what?
Kevin's right. We're going to buy bonds. We're going to buy bonds. Bonds, bonds, bonds, bonds, bonds." The more people buy these 10-year Treasury bonds because they believe the Fed is not printing money. Let's buy bonds." The more people buy them, the lower the 10-year yield actually falls , eventually reaching levels lower than ever before.
Because people start thinking, "Oh, it's 2%. But don't give a damn. The Fed doesn't print money. There is no inflation. 2% is better than nothing, and it's risk-free." And they're being snapped up. They're being snapped up. They're being snapped up. At some point, there will be depositors who say, "If I put my money in a savings account, I'm going to have to pay, let's say, minus 0.5% per year.
I would rather buy a 1-year or 10-year Treasury bond with a yield of 0% or 0.25% because that bond will preserve my money or generate a profit. Whereas the money in the savings account will bring me losses. This is what happens under negative rates. So now you have essentially an infinite number of people buying 10-year Treasury bonds.
And that's how you get mortgage rates that are lower than anything that's ever existed in the history of this economy. In other words, in the 250 years of the United States, I think there's a chance that in the next crash, home mortgage rates will be lower than we've ever seen. People have this idea, "Oh, I have a 2.7% fixed rate, you know, 30-year fixed mortgage." Perfectly.
Me too. Perfectly. Perfectly. In the future they will be even lower. Now that sounds crazy. Like, oh, you can have a mortgage at 1.7%. Yes, it sounds like I'm from a madhouse, but if you look at Europe, that's exactly what happened there. You had a low inflation regime. You had a regime of limited money printing.
Why couldn't they...Why couldn't Europe print money? Through PIGS (Portugal, Italy, Greece and Spain). You should have studied this in 2013-2014 . I studied this in detail. Uh, in 2013-2014 there was this debt crisis in Portugal, Italy, Greece, and Spain. Huge debts, austerity measures instead of stimulus to support economies that were suffering.
They said: "Let everything fall apart." So what happened? Market rates fell sharply. So for a while before COVID, you had negative rates because there had been decades of deflation and austerity, no spending. I mean, mountains of garbage were piling up in Athens. Maybe you remember some of those shots.
In any case, the point is that it already happened. This happened in Europe. This same scenario played out in Europe. Of course, then COVID came, and you know it messed everything up a bit, but that was the scenario in Europe. This is actually quite remarkable because I think the Federal Reserve is preparing for exactly this scenario again.
And that's why people say, "Oh, Kevin, you're like a fan of buying stocks on dips now or something ." This is true. I'm a fan because I think we'll get a good deal, and I don't think the AI bubble has burst yet. I think the AI bubble has risks, and we call them " canaries in the coal mine." These canaries are the labor market.
And, of course, everything related to the creation of data centers. So whether it's Anthropic, which is actually using these data centers, or the financial stability of companies like CoreWeave or Nscale, which are going to go public -- if any of those start to crumble, the whole cyclical financing system collapses, and you end up in a recession or a depression, which is really bad.
But I think—and I've said this before, so sorry for repeating myself—that if we're in a cycle, the AI cycle is about here right now. It's something like an AI cycle. So it's like, you know, 10:00 PM at a drunk party. Of course? It feels like the party is just getting started, right? But we have already made significant progress.
Whereas you're probably in that zone, depending on where you are in terms of bonds, uh, and real estate, especially in Florida. In Florida, honestly , in terms of real estate, you're probably still here. You are still falling. This is pretty bad. But this is an oversaturated market. That's why I said unfinished.
And that's hard for people to understand, because they say, "But I don't want to invest in California." Okay, I understand. In fact, it is one of the best places for real estate investment. Real estate on the California coast is where people want to live because the weather is amazing. So, real estate on the coast of Southern California.
I mean, even higher up the coast of the state it's pretty good. Uh, and construction departments don't want to build. So you literally have a built-in put option thanks to the city. You should literally call the city government and say, "Thank you for being my free put option." And then they calculate your property tax based on the price you purchased the property for, not its market value.
This means that if you profitably purchase a property for renovation, you literally get a tax rate below the market rate, which almost never increases or adjusts to the level of inflation. This is incredible. Unlike Hawaii, where you get re-evaluated every year. In any case, this is very interesting.
Because if this party ends—or the labor market stalls, or, you know, the debt costs of artificial intelligence— then interest rates will plummet. They will cut rates to zero, but then there will be a bond and real estate cycle. I think this will happen within the next decade. Actually, I think it will happen by 2032, but I'm humble enough to admit : I can't say exactly when it will happen.
That's why I think the best strategy right now is to have some share of the stock. I'm fine with that. I'm not against a certain percentage of shares, because, listen, it's a big deal. You can still make money here. Okay, we can still make money, dears . But, you know, is now a good time to pay off some of your debts?
This is a good time to think: maybe while everyone else is hating it, this is where the next cycle is headed, because the Federal Reserve is telling us outright: bonds and real estate will be the better investments after this AI bubble . Not gold, not stocks, but them. Can they change their minds later, realizing they 've created too many problems?
Can they turn around and start printing money again? Yes, they can. I'll go even further. Do you know what happens after they turn the printing press back on? Once they start the machine again, that's when you start looking at the debts again. But not before. It's crazy, but you don't look at the debts until the printing press is up and running.
When it turns on, that's when you buy stocks. That's when you leverage again. Because when they turn the machine back on, you expect inflation to start rising, and that again helps make your debt cheaper to repay. But the Fed is nowhere near that right now. We are on the opposite side. The Fed is just starting to turn on its balance sheet vacuum cleaner again.
So first you have to go through this whole cycle. Here is your action plan for the next decade. Okay, that was loi.
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