Excellent work Meyrick, thank you for all your effort in presenting a sound analysis. My thoughts go back to Reinhart & Rogoff:


IMHO there has to be a theoretical limit when the amount of borrowing required to pay debt interest exceeds income (zombies & unicorns). Of course a country cannot go the traditional Chapter 7 route (UK bankruptcy) but it will always impact the currency in the end which we have seen many times before (Yugoslavia comes to mind as a stand-out).

"The experts have always chimed, "this time is different" - claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters." "Carmen Reinhart and Kenneth Rogoff definitively prove them wrong and who provocatively argue that financial combustions are universal rites of passage for emerging and established market nations."

"While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur."

I am projecting that September will be a seminal month for the markets this year - fasten seatbelts! https://wallstreetonparade.com/2023/08/the-fitch-downgrade-of-u-s-debt-what-you-need-to-know/

Have a great weekend and forget all about it - the sun always comes up in the morning and a new day always offers more bids and asks!

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Aug 3Liked by Meyrick Chapman

Totally agree, one of the themes I have read consistently is that the yield curve never resteepens because long rates rise, rather it is always because the short end falls when the Fed cuts. however, given all the new features of the current economy, I have definitely become of the opinion that the 2yr at 5% and the 10yr at 5.5% - 6.0% is well within reason. My take is risk assets may not like that very much, but I could be wrong. Love your work, thanks

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