![]() Even though US Treasury bond yields are now at 15 year highs, I believe they are headed higher as Powell's monetary break is not done slamming the US economy. Junk bonds now yield 9 to 10% but I would still not touch the asset class with the barge pole since default risk will spike during the recession. Any portfolio manager who let his client or fiduciary retain exposure to such an obscenely overvalued debt market should find new career opportunities in breeding pet doggies or making shawarmas, both socially constructive occupations for repentant private banksters. Jim Grant even called bonds an instrument of "return-free risk" in 2021. In retrospect, the bond market was grossly overvalued on the eve of the Powell Fed's monetary tightening last November. Economists estimate that $20 trillion has been lost in the bond market in 2022 alone. The global bond market bloodbath has triggered the biggest wealth destruction tsunami in the history of international finance. If UK sovereign debt, His Majesty's gilt-edged securities can lose 50% of their value, what hope is there for some poor UAE investor holding the paper of Egypt, Russia, Turkey, Zambia or other such sovereign kryptonite, let alone corporate debt from India which only trades by appointment and a TATA truck can drive through the bid-offer spread. Even unleveraged bond portfolios are down 25 to 30% and these losses could easily double in the next two years as the Fed's crusade against inflation will both be protracted and brutal since wages, services and rent need to collapse before CPI falls to 2%. The bloodbath in the bond market in 2022 will continue as long as the Powell Fed accelerates its anti-inflation pivot and reduces its balance sheet by $2.5 trillion in the next two years. ![]() I was aghast to see illiquid credit linked notes and sovereign toilet paper from names like the Democratic Socialist Republic of Sri Lanka or Pakistan in client portfolios when the client happened to be in his late 70's. I pleaded with my friends who had leveraged bond portfolios with European or local private banks to slash their risk exposure as their bankers were either ignorant or complicit in the colossal risk inherent in their accounts. In reality, the world bond markets are highly leveraged and subject to extreme volatility due to stratospheric interest rate/duration risk, liquidity risk, credit risk, FX risk, sovereign risk and central bank policy U-turn risk. In November Xing today announced its CEO Lars Hinrichs would step down and be replaced by Ebay Germany head Stefan Gross-Selbeck.I am always shocked when I hear friends in Dubai tell me that bonds are a safe investment instrument. Xing has over 6.5 million members, about 510,000 of which are paying about $90 per year for a premium account to get full networking functionality. And remember, LinkedIn can IPO anytime it likes. ![]() Xing currently has a market cap hovering at around $182 million, a fraction of LinkedIn’s reported $1 billion+ private valuation. ![]() EU managing director Kevin Eyres in London was hired last year to expand in Europe and that’s what he’s doing, apparently. UK traffic rose 40% in the last three months of 2008. Of course, during the economic crisis, those associated with financial and banking have gone up by 42%. LinkedIn now has 9 million European users, 30% are in IT, marketing and advertising and finance. It has 41 which are simply translated versions. This is the fourth of LinkedIn’s country-focused sites. It has a an existing 500,000 in Germany, 80% of whom are usinng the site for English connections. ![]() LinkedIn had significant growth with sites for Spain and France last year – 200,000 users in two months and France hit 700,000. LinkedIn is launching a dedicated site for Germany where local – and floated – business network Xing predominates. ![]()
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