Solid Ground Strategy Report “The Mass Socialisation of Credit Risk: A Recession With Rising Bond Yields?

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Russell Napier will be travelling in the US next week: 
New York 17th & 21st April
Boston 18-April 
Toronto 19th/20th April 
There are still some meeting slots availability so if you would like to meet him let me know.

Ahead of the trip Russell Napier's Orlock Advisors has just published his latest Solid Ground Quarterly Strategy Report  

 “The Mass Socialisation of Credit Risk: A Recession With Rising Bond Yields?’

Recent interventions by the governments of Switzerland and the USA to guarantee the liabilities of their banking systems reduce the prospects of a credit crisis but increase the prospects of a public debt crisis. 

To the outstanding Swiss government debt of USD208bn is now added a contingent liability of USD1,206bn, being the Swiss commercial bank assets that back liabilities. If the recent bailout of large scale depositors at SVB, Silvergate and Signature are a de facto commitment by the US government to guarantee all US bank deposits, then the US state now has a USD12.7trn contingent liability to add to its debt pile of USD25.9trn. 

The government debt markets of Switzerland and the USA have taken this deterioration in sovereign balance sheets in their stride, presumably on the basis that these are contingent liabilities that will not crystallise. However, with total non-financial debt-to-GDP in the developed world at near record highs and interest expense rising rapidly, investors should expect governments to have to provide support for their financial systems. 

Already governments are transferring funds to their commercial banks as pay-outs on the credit guarantees they provided on bank loans made during the COVID-19 pandemic. Already governments are transferring funds to their central banks to add capital depleted by the decline in the valuation of their assets as the value of their liabilities rises. 

It is unrealistic to expect the acceleration of the socialisation or private sector credit risk to come risk-free. 

The Solid Ground expects the cost to be that developed world sovereign bond yields can now rise as economic growth and inflation slow and private sector credit quality deteriorates. The response to the infection of public sector credit quality will be to force savings institutions to buy government bonds at yields governments can afford – financial repression".

The full 31page report is now available to institutional Investor subscribers

If you would like to consider a full subscription, you can get access to the report as part of, or in lieu of a 3-month free trial.

Annual Subscription Service Overview & Pricing 
The Solid Ground Quarterly Strategy Report is analysis and commentary on the key macro-economic variables which impact asset markets. It has a focus on money and credit as key drivers of asset prices and emphasizes the role of financial history in understanding how these factors will impact on asset prices. Following each report’s distribution, an opportunity is provided to all recipients to join a general conference call with Russell to discuss its contents. These general conference calls are recorded so that those who were unable to join may request a recording. 

The Solid Ground also issues approximately two newsletters each month, these are free of charge to those who subscribe to one of the two main packages outlined below, or alternatively priced separately as shown below. 

The Solid Ground Package 1 
In-depth Global Macro Strategy quarterly reports • Quarterly subscriber group conference calls; Q&A at the end of the call and/or by email. • The Solid Ground Newsletters, typically published bi-monthly • The annual cost of this package is £15,000 and that is available throughout the subscribing organisation for up to 25 recipients globally on the distribution list. 

The Solid Ground Package 2 
Subject to availability & currently only offered in Boston, Edinburgh, London, New York and Toronto • Quarterly meetings in subscribers offices • In-depth Global Macro Strategy quarterly reports • Quarterly subscriber group conference calls; Q&A at the end of the call and/or by email. • The Solid Ground Newsletters, typically published bi-monthly • The annual cost of this package is £30,000 and that is available throughout the subscribing organisation with up to 40 recipients globally on the distribution lists. 

The Solid Ground Newsletter Only Subscription 
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