Ad Hoc Commentary – Paulson, making enemies at the wrong places?

Did someone forget to call John again? Or did he made the wrong enemies for starting a fund to help rich customers “reduce the amount they owe to the US government”:

John Paulson to Start Fund to Reduce Clients’ Tax Bills

Paulson Loses More Than $300 Million as Gold Declines

Gold is now sub-1500 and is selling off again this morning – now 1440. Let us watch John as we did when gold traded sub-1600 back in February:

Ad Hoc Commentary – Paulson, the Hunt brothers of our time?

The sovereign debt crisis is upon Japan. Despite all their talk about inflation targets etc, the bond markets are the biggest intimidator out there.

“…I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody…”
James Carville, lead strategist of Bill Clinton’s successful 1992 presidential campaign, Wall Street Journal (February 25, 1993, p. A1)

Just look at how Kuroda comes out of the closet and say that the inflation target that they had been clamoring about is now flexible?

Target Is ‘Flexible,’ Says Japan Bank Chief

Or for that matter, how across the pond, the Americans decides to warn Japan on Abenomics:

U.S. Warns Japan on Yen

Why didn’t they warn them at the G20? Perhaps it is because the JGBs were happily humming along then. And the Europeans love to hear that the Japanese will buy European government bonds with all those Abenomics money. However, when Abenomics brought 10y JGB yields from a low of 32.5bps on Apr 5 to 63bps today, the Americans start to be concerned.

As we said before, once the bond vigilants are done with Japan, they will be coming for Uncle Sam. They will be coming for France too thanks to Hollande’s self destructive policy. That is why despite US 10y yields falling 30bps in the last month, yours truly still believes the low in US yields had been seen in 2012. Capital are flighting developed nation sovereign bonds en-masse. And that perhaps why we are having this attack on the rich with offshore accounts. They need to tax dollars to keep the bond markets alive. Forget hyperinflation. The fear of bond market implosion will keep taxes up and printing down. No wonder James Carville wants to be reincarnated as the bond market.

Yours truly is waiting for the Dow to come off so that we can get a buying opportunity. It will be interesting how much longer it can withstand the barrage of bad economic numbers. For, gold we will need to wait for Paulson to throw in the towel first.

Good luck preserving capital in the markets.