Belief in Reserve Currency getting broken…it will get reduced but will not go for sure..then what’s the alternative..? Under Biden, Debt was getting higher but panic was there…
2 Likes
US 30 year bond yield and Japan 30 year bond yield difference has narrowed down to 1%, accounting for cost of currency swap between USD Yen, two things will happen, no hedge fund will raise capital from Japan, second, Japanese investment from US treasury will be sold at a faster pace, spiking bond yield further. US Govt has failed to raise money from bond market in last 6 months due to no demand from external investors. In that case, US Fed has no option other than to print more dollars which will circulate locally in US and inflation will sky rocket which is already high due to tariffs. Its a vicious loop where dollar depreciation will continue untill it crash, process has been accelerated, need to see when is the d day for USD. For any fiscal prudence, US Govt need to reduce military budget which will never happen. Its deglobalization at every front, new alignments, new trades, new leaders.
22 Likes
Nikhil Kamath post today on MTF
MTF (margin funding) has grown ~5X in 4 years to ₹110k+ crores, especially after F&O margins and STT increases. But there’s something nobody’s talking about: there is no real risk model in play for brokers. 
Regulations allow up to 5X leverage (20% margin) on many stocks. Competition forces every broker to offer maximum permissible leverage. If you don’t, you lose business. Classic race to the bottom.
Unlike F&O, MTF has several risk multipliers:
Clients hold positions for months vs days
1,300 stocks (many illiquid) allowed vs only the top 200 in F&O
All buy positions vs two-way flow in F&O, making risk management much harder
Much harder to manage risk, given all the above.
By the way, this leverage from MTF becomes insane when you accept stocks as collateral. So, with Rs 1 lakh of stocks, you get a collateral margin of Rs 80k (20% haircut), and with this Rs 80k, you could buy Rs 5 lakh of MTF.
The structural problem: Indian equities have decent liquidity when markets rise, but it completely dries up during drawdowns. Minimal short-selling (SLB) means almost no natural bid when things reverse. Forced liquidations become self-reinforcing, especially in non-F&O stocks.
SEBI caps MTF at 50% of broker networth + borrowings (or up to 5x networth) to prevent broker defaults. But this potentially protects the system from broker failures, not brokers from client defaults.
With MTF growing 5X across the industry and everyone at maximum leverage, the next major correction could trigger synchronized liquidations.
We haven’t seen a 2008, 2015, or COVID-type event since MTF scaled up. When we do, it will cause mayhem—not because any broker fails, but because forced selling into illiquid markets will cascade.
This will be significantly worse beyond the top 200-300 stocks due to lower liquidity.
Someone asked me what the risk model is. I said there is none. I mean, there is—if “praying” that stocks don’t fall counts as a model. 
My gut says a lot of what’s being earned as interest income, and possibly some capital, of brokers, will all be given back when the market does a quick move down.
16 Likes
This is the most probable path ahead..
-
Print dollars and inflate the asset and production value
-
Cap the interest rates at 2%
-
This inflates the denominator - GDP and normalises the Debt to GDP ratio. This was done earlier also post world war II.
2 Likes
Daddy Powell won’t let that happen. Sell in May (Powell retires) and go away
1 Like
Not necessarily. That’s the normal case, but these are abnormal times.
They can simply default and reduce their debts. Yes, I mean it! Not default like a normal defaulter but find an excuse. Like “Give me Greenland, or else I will not pay back your money. Get lost” (or something similar). It has happened before. That is how the Gold Standard ended in 1971. If Nixon could do it, Trump is by all accounts worse.
Or they can announce a new Gold Standard once again. If that happens, global liquidity will come gushing back into the Dollar once again, interest rates will fall dramatically, and the federal debt can be rolled over.
Of course, none of these options are foolproof, they all have implications. But then, we are anyway in uncharted territory. Tighten your seatbelt… it’s going to be a hell of a ride.
26 Likes
On lighter note, 40x of overall portfolio in around 5 yrs is in no way a normal feat imo specially if ones networth is heavily skewed towards equity. Had it been normal in such cases, then job market would have been excellent as most would have turned into full time investors or gone on full time vacation !
16 Likes
Out of 1500+ stocks with MTF exposure, less than 100 have more than 1 lakh Cr market cap.
Total MTF book ~ 115000 Cr
Large Cap MTF book ~ 25000 Cr
Take Nazara Tech for example-
MCap ~ 10200 Cr
Free float ~ 6275 Cr
Traded value ~ 122 Cr
MTF outstanding ~ 1000 Cr
Even 20-30% forced unwind can overwhelm normal market liquidity. Far too many SMIDs carry such risk but since large caps are abundantly liquid, it doesn’t show up in aggregate data.
8 Likes
As far as health of US debt is concerned, an important perspective to look at it is how are auctions of US treasury maturing this year, are coming up.
Are there any takers of US debt and if there are how many of them are foreign? So let’s look at the auction of 10-years which were conducted on 12-Jan-26.
Detailed Results for CUSIP 91282CPJ4 (Jan 12, 2026)
-
Auction Date: 01/12/2026.
-
High Yield: 4.173%.
-
Bid-to-Cover Ratio: 2.55 (This is the “2.55x” demand figure).
-
Total Public Bids: $99,591,873,200 (Investors offered nearly $100 billion).
-
Total Amount Accepted: $39,000,009,000 (The government took $39 billion).
-
Price per $100: 98.607166.
-
Indirect Bidder Percentage (Foreign bidders): 69.5%
-
Total Amount Accepted from Indirects: $27,109,470,300 (out of the $39 billion total).
Source - https://treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20260112_4.pdf
As far as this auction was concerned, there were enough takers - $100B bids for $39B worth of bonds, 70% of bidders were foreigners.
Yes, yield was high and that could create may be (may be) some problem in far flung future. I don’t think any human has foresight to look what will happen 5-10 years down the line.
As of today US is ok and their debt is easily manageable for foreseeable future.
10 Likes
Do you have any details on who these foreign bidders were? I have heard from my friends who work as Wall street traders that once China started dumping US treasuries in favour of gold, the US “convinced” its smaller allies such as Japan, South Korea, UK and EU countries to absorb the extra supply as there wasn’t enough domestic demand. This “convincing” was done as a part of trade negotiations. If even the European countries stop absorbing this supply then the US will have a hard time doing these auctions at reasonable yields.
Yesterday the Danish pension fund threatened to dump US treasuries in response to tensions over Greenland. Donald Trump, apparently, has backed off from Greenland and any additional tarrifs on EU countries for now fearing spike in treasury yields.
The debt looks manageable so far, but I fear the yields will spike further as sovereigns diversify away into hard assets such as gold, silver etc. Amid global gold rush, India and China are dumping US treasuries.
8 Likes
In my personal opinion, the whole “Stable Coin” fad (and subsequent US regulatory approvals) has been created for the sole purpose of ensuring that US treasuries have enough buyers.
Also in my personal opinion, the decline of foreign ownership (non-US allies) cannot happen overnight, it will be slow and gradual over time. But directionally its clear that BRICS in particular are cutting down US treasury over time.
Just my 2 cents!
4 Likes
Made 52X frrom Covid lows, ATH Jan 25, withdrew 10% capital last year and bought a small property in hills which has appreciated by 100%, sitting on 40X gains, MTF was a boon in 2020-2024, paying back rightnow. Its getting difficult. Two bets Force motors and AB capital gave a thumping boost to PF. Missed whole Gold and Silver rally, now confused if entry is right or wrong.
23 Likes
- As per latest media reports ( from WION ), US has taken over control of military bases in Greenland
- Putin said in Public - Let US have Greenland. We have nothing to do with it
- US - Russia - Ukraine - Presidents are scheduled to meet shortly in UAE ( Ukraine’s division / partition is the only likely outcome - IMHO )
- Military build up against Iran is only increasing. Regime change in Iran may not be too far away. American puppet PM shall then be imposed
- Once US has control of Greenland + Venezuela + Iran ( Oil + Minerals ) - trade deals shall follow - is my best estimate
- It’s more than clear that dumping of US Treasuries is only gonna accelerate. Hence the control of Iran, Venezuela, Greenland was necessary to cushion the blows on USD. Expanding QE programs by US should be the way forward
- We r entering a new Global order
- At present, can’t think of any other loser except EU
- Views r personal. Have studied these things in some detail ( but can be completely wrong )
- Rally in precious metals doesn’t look like fizzling out. Rally in EMs - shall follow on dollar weakness + trade deals
25 Likes
Person like him, bullish on Gold but not so on Silver. But Silver always gets some rub-off effect.
1 Like
Agree with first 2 paras
Have completely opposite view wrt 3rd para. In 1971, US Debt / GDP was 35 pc or so. Today it’s 130 pc. Liquidity won’t come gushing back into the dollar. It ll go gushing back into non USD assets like EMs
In 1971, there was no EU. Size of Russian economy was no where near American economy ( that holds even today. Japanese military was toothless ( holds even today ). At present, Chinese economy and Russian military are 2 things that US just can’t fix / suppress. Even the EU economy is comparable ( there was no EU in 1971 ). Once they default via devaluation - it would be game over. Who would buy US treasuries after a default ??? US treasuries were literally forced down the throats of Japan, European countries, Australia, NZL, Canada etc in 1971 and countries like Russia, India, China, South Korea etc did not matter. Basically - 1971 and 2026 are two different worlds
After a default, why non buy Indian, European, Russian, Chinese, Korean ( etc etc ) treasuries vs US treasuries ( if everything is backed by Gold ). Current size of American gold holdings vs their treasury mkt is 1: 100 - aprox
On interest rates - they r likely to remain capped via yeild curve controls ( there is hardly another option ). Inflation in West shall run hot. That’s a side effect that’s inevitable
Disc: sharing my thoughts. I may be right / wrong. Please form and follow ur own opinions
15 Likes
On the base metals side, he seemed very bullish on Copper
Since countries are getting rid of US Treasuries, Is it wise for general public like NRI’s to hold savings in USD’s (for medium to long term) especially when people plan for their children’s education which might be a decade or an half away?
Yield curve controls r the most likely outcomes. No point holding USTs ( IMHO )
Has your view on Silver changed with the recent fall in price of Silver? Or are you still bullish irrespective of its volatility?
3 Likes