Kevin Duffy on bitcoin

I heard someone say bitcoin is 80% speculation and 20% hedge against the fiat money experiment blowing sky high. That sounds about right. While I’m largely agnostic on bitcoin, mainly because it is outside my circle of competence, the speculative forces are hard to miss. Exhibit A: MicroStrategy, a modest software business turned large-scale holding company for bitcoin, has been extremely aggressive with its buying lately. In the past at least, that’s been a sign of a top. 

On March 8, MicroStrategy (MSTR) issued $800 million worth of convertible notes paying just 0.625%, above the $650 million initially hoped for. The offering was so well received that, five days later, the company announced plans to raise another $500 million. The fact that investors are handing substantial sums of money over to MSTR on such favorable terms to go speculate in bitcoin is a clear red flag.

~ Kevin Duffy, "Mailbag," The Coffee Can Portfolio, April 15, 2024

Jim Grant on 2021: a record year of issuance

So far in 2021, a record $156 billion's worth of IPOs have come to market in the United States alone, not counting SPACs, which easily tops the prior, $97 billion record set in the bubbly year 2000.  Year-to-date issuance of leveraged loans and junk bonds ($613 billion and $461 billion, respectively) have similarly roared to records.

~ Jim Grant, "All except for the human beings," Grant's Interest Rate Observer, December 24, 2021

Larry Summers on the prospect of the U.S. Treasury issuing 50-year bonds

Doing that would be a major gift to all the fixed income trading desks at all the hedge funds, at the expense of taxpayers.  Given the way it's likely to be priced, it would turn out to be a major setup for arbitrage opportunity, so it won't happen anytime soon.

~ Larry Summers, interview on Bloomberg Wall Street Week, January 22, 2021

Almost Daily Grant's on the year in credit

A year to remember in credit, as the March panic has quickly given way to something resembling an opposing extreme.  Last week, the Goldman Sachs Financial Conditions Index reached its most accommodative level on record going back to 1990, while total corporate bond issuance foots to a record $2.5 trillion for the year according to Bank of America.  Thanks to that borrowing spree, gross leverage among investment grade and junk borrowers has reached record highs near four and six times Ebitda, respectively, the Financial Times reports today. 

Needless to say, the Federal Reserve’s March 23 announcement that it would, for the first time, directly purchase investment-grade corporate debt, loomed large in the bond market’s dramatic turnaround. Indeed, Jonny Fine, U.S. head of debt syndicate at Goldman Sachs, describes those interventions to the FT as: “the most important piece of central bank policymaking I have seen in my career.”

~ Almost Daily Grant's, December 22, 2020

Randall Forsyth on record corporate bond issuance

More than $1 trillion of investment-grade corporate bonds have been brought to market this year, at twice the year-earlier pace.  High-yield issuance is running more than 50% higher, at $180 billion.

~ Randall Forsyth, Barron's, June 20, 2020