#191: STRIP FREEZE

micksonmatch
December 02, 2024

S2N Spotlight

I thought it would be good idea to go into December with a sense of how we are doing this year relative to past years. Statistics provide us with probabilities, not certainties. The only one on pace for a record year is gold. What I found interesting is Bitcoin +132% YTD is on track for an average year

S2N Observations

A lot of friends of mine are going to be pissed off with me for saying this, but I think private credit is just a passing fad. Don’t get me wrong, this sector of the financial sector will always exist as it has always existed, but why has it enjoyed the enormous growth it has over the past decade? Clearly, a near-zero interest rate environment has had investors searching for yield. I remain unconvinced that the risks associated with loans that are often the ones rejected by the major banks are being priced and monitored as well as they should be.

I am not an expert on private credit, and my comments put me on the wrong side of Blackrock, who announced today the acquisition of HPS for $12 billion as they try and get a bigger footprint in this space. I want to see how this industry stands up to a credit crunch, and then I will reconsider my views if they return investors 100 cents on the dollar.

On the subject of debt, the governments interest payments on the mountain of debt (+$36 trillion) equate to 35.6% of tax receipts. We are above long-term averages, but we have been in worse shape before. This is going to be really interesting to watch, as I have no doubt this number will climb higher.

Finally, I am ending my observations with the fact that the S&P 500 last week made yet another all-time high, its 53rd for the year. It feels like it has become so regular that it is almost expected. There have been years with more highs, and I suspect we will see a few more record highs before the year is over. I am bearish but probably will be more bearish in the new year.

S2N Screener Alerts

There were only 3 symbols with 2-sigma monthly moves across more than 100 symbols. MicroStrategy (MSTR), Coffee Futures (KC), & Natural Gas Futures (NG).