Grey Value Management

10/05/2026

𝗪𝗵𝗮𝘁 𝗘𝘂𝗿𝗼𝗽𝗲𝗮𝗻 𝗨𝗻𝗶𝗼𝗻?

A quick reminder following Sumitomo Mitsui DS' recent wholesale regurgitation of its position in French government bonds:

𝗧𝗵𝗲 𝗲𝘂𝗿𝗼 𝗮𝗿𝗲𝗮 𝘀𝗵𝗮𝗿𝗲𝘀 𝗮 𝗰𝘂𝗿𝗿𝗲𝗻𝗰𝘆 𝗮𝗻𝗱 𝗮 𝗰𝗲𝗻𝘁𝗿𝗮𝗹 𝗯𝗮𝗻𝗸 - 𝗶𝘁 𝗱𝗼𝗲𝘀 𝙣𝙤𝙩 𝘀𝗵𝗮𝗿𝗲 𝗮 𝘁𝗿𝗲𝗮𝘀𝘂𝗿𝘆.

At the end of the day, the European Union isn't so unified.

(This is stating the obvious.)

What is less obvious is why they chose to move the money into Bunds.

Fundamentally: keep euro duration, cut French sovereign risk. But they chose Euro duration over USD duration.

𝗛𝗮𝘀 𝗱𝗲𝗺𝗮𝗻𝗱 𝗳𝗼𝗿 𝗨𝗦𝗚 𝗱𝗲𝗯𝘁 𝗳𝗿𝗼𝗺 𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗿𝗲𝘀𝗲𝗿𝘃𝗲 𝗺𝗮𝗻𝗮𝗴𝗲𝗿𝘀 𝗽𝗹𝗮𝘁𝗲𝗮𝘂𝗲𝗱?

If one so suspects, mind the gap.

The convenience yield is partly why the US can borrow cheaply, so its erosion feeds into a higher term premium and more sensitivity to fiscal news - particularly when it comes to the hedge funds, pensions and insurers that are now a much bigger share of the holders.

Translation: Ignore that tremor you just felt at your own financial peril.

(And bring on the inevitable flood of articles re. the basis trade)

09/17/2026

𝗔𝗜-𝗺𝗶𝗻𝗴 𝗟𝗼𝘄 𝗼𝗻 𝗔𝗜 𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆

In an excellent article from FT financial commentator and next James Bond Robert Armstrong, he writes “Trust is built on accountability, but the AI companies — from hyperscalers like Google to model builders like OpenAI and Anthropic — have been unable and unwilling to make themselves accountable.”

It's perhaps more accurate to say that they have been unwilling to be fully transparent.

I draw the distinction because 𝗮𝘂𝘁𝗵𝗲𝗻𝘁𝗶𝗰 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝘀 𝘀𝗼𝗺𝗲 𝗲𝘅𝘁𝗲𝗿𝗻𝗮𝗹 𝗲𝗻𝗳𝗼𝗿𝗰𝗲𝗺𝗲𝗻𝘁 𝗺𝗲𝗰𝗵𝗮𝗻𝗶𝘀𝗺.

By way of example, the National Transportation Safety Board (NTSB) has the legal authority to investigate civilian aviation accidents. It is legally responsible for civil aviation accident oversight.

While the NTSB still maintains final authority and oversight, it frequently delegates initial fact-gathering or field investigations to the Federal Aviation Administration (FAA).

But the FAA also has the legal regulatory power to ground aircraft, issue emergency airworthiness directives, or suspend pilot certificates.

𝗪𝗵𝗼 𝗵𝗮𝘀 𝘁𝗵𝗲 𝗽𝗼𝘄𝗲𝗿 𝘁𝗼 𝘀𝘂𝘀𝗽𝗲𝗻𝗱 𝗔𝗜 𝗺𝗼𝗱𝗲𝗹𝘀 𝘁𝗵𝗮𝘁 𝗵𝗮𝘃𝗲 𝘁𝗮𝗸𝗲𝗻 𝗱𝗮𝗻𝗴𝗲𝗿𝗼𝘂𝘀 𝗮𝗰𝘁𝗶𝗼𝗻𝘀?

Nobody.

And until that gap in oversight is addressed, any talk of accountability in the AI industry is just that - talk...

Here's the link to Rob's article: https://www.ft.com/content/f5325951-7049-4d3a-97e4-cbe34f9058d8?accessToken=zwAAAaCvY8BokdP1MllRcElNOtOX5MvjT5BY2A.MEUCIFS_D-gdSth-nCGWCaa5CEM-W_2r36UUw0tO2tXjPdYIAiEA0VO-9CsQIEH4dW5esb1ZqsokM3c8MLauGfG3N8JN7qk&segmentId=e95a9ae7-622c-6235-5f87-51e412b47e97&shareId=b63376a8-1751-4e04-b514-3b62ec3174fc&shareType=enterprise&syn-25a6b1a6=1
OpenAI Anthropic Claude Community Mistral Meta

09/15/2026

𝗧𝗵𝗲 𝗜𝗻𝘀 𝗮𝗻𝗱 𝗢𝘂𝘁𝘀 𝗼𝗳 𝗜𝗻𝗱𝗼𝗻𝗲𝘀𝗶𝗮

I had a really interesting exchange with Ruth Carson at Bloomberg yesterday regarding recent developments in 's economy and financial markets, which we have for many years followed and invested in at Grey Value Management, LLC.

As I related to Ruth, the administration needs to continue to address investor concerns if they're going to have any credibility with the financial community, but I think it's important to view their situation in context.

𝗠𝘂𝗰𝗵 𝗼𝗳 𝘁𝗵𝗲 𝗴𝗹𝗼𝗯𝗲 𝗵𝗮𝘀 𝗱𝗲𝘃𝗼𝗹𝘃𝗲𝗱 𝗶𝗻𝘁𝗼 𝗮 𝗸𝗶𝗻𝗱 𝗼𝗳 𝗠𝗼𝗻𝗲𝘁𝗮𝗿𝘆 𝗮𝗻𝗱 𝗙𝗶𝘀𝗰𝗮𝗹 𝗠𝗼𝗻𝗼𝗰𝘂𝗹𝘁𝘂𝗿𝗲.

The debt, deficit, and monetary policy profiles of a striking number of countries - including many of the largest developed nations - have converged.

Yields on US, British, French and German long-dated bonds have all reached levels not seen in more than a decade, and Japanese 30-year yields are close to an all-time high. And the swaps markets indicate globally synchronized rate hikes going forward.

Indonesia has its own unique issues, many of which can be traced back to the massive infrastructure spending during the Joko Widodo regime.

Financial pressure has for some time been building in the SOEs, as well as the state-owned banks that are exposed to them. We expect DANANTARA INDONESIA will be pulled into that financial clean-up effort.

But 𝗶𝗻 𝗺𝗮𝗻𝘆 𝗿𝗲𝘀𝗽𝗲𝗰𝘁𝘀 𝗜𝗻𝗱𝗼𝗻𝗲𝘀𝗶𝗮 𝗶𝘀 𝗷𝘂𝘀𝘁 𝗮𝘁 𝘁𝗵𝗲 𝗳𝗮𝗿 𝗲𝗻𝗱 𝗼𝗳 𝗮 𝘄𝗮𝘃𝗲 𝘁𝗵𝗮𝘁 𝗶𝘀 𝗶𝗺𝗽𝗮𝗰𝘁𝗶𝗻𝗴 - 𝘁𝗼 𝘃𝗮𝗿𝘆𝗶𝗻𝗴 𝗱𝗲𝗴𝗿𝗲𝗲𝘀 - 𝗲𝘃𝗲𝗿𝘆 𝗻𝗮𝘁𝗶𝗼𝗻.

And the more pressure the aforementioned global trends exert on their economy, the more difficult it will naturally be for them to rectify their financial and economic issues.

is a truly fascinating place. If you're interested in learning more, "Indonesia Etc. - Exploring the Improbable Nation" by Elizabeth Pisani is a fantastic introduction. It's on Amazon.

𝙎𝙚𝙢𝙤𝙜𝙖 𝙨𝙪𝙠𝙨𝙚𝙨, 𝙄𝙣𝙙𝙤𝙣𝙚𝙨𝙞𝙖!

Read Ruth's piece - it's very good:
https://www.bloomberg.com/news/articles/2026-09-15/prabowo-s-economic-team-overhaul-leaves-investors-wanting-more?srnd=undefined
Pandu Sjahrir

08/27/2026

08/27/2026

Per the recent Bloomberg article by Olivia Fishlow, "the limited appetite to exit suggests that investors may be making peace with lower-than-promised returns, rather than taking an immediate hit to their holdings."

However, 𝘄𝗵𝗮𝘁 𝗶𝗳 𝘁𝗵𝗲 𝗼𝘂𝘁𝗰𝗼𝗺𝗲 𝘁𝗵𝗲𝘆'𝗿𝗲 𝗱𝗲𝗹𝗮𝘆𝗶𝗻𝗴 𝗶𝘀𝗻'𝘁 𝗹𝗼𝘄𝗲𝗿-𝘁𝗵𝗮𝗻-𝗽𝗿𝗼𝗺𝗶𝘀𝗲𝗱 𝗿𝗲𝘁𝘂𝗿𝗻𝘀, 𝗯𝘂𝘁 𝗽𝗲𝗿𝗺𝗮𝗻𝗲𝗻𝘁 𝗹𝗼𝘀𝘀𝗲𝘀?

They may not want to take the immediate hit, but in how many cases will their first loss wind up being their best loss?

08/26/2026

Again...

Interest rates may be rising, but they're not skyrocketing, they're 𝙣𝙤𝙧𝙢𝙖𝙡𝙞𝙯𝙞𝙣𝙜.

If interest rates this low cause fiscal and market conniptions, the problem isn't the interest rate level...

08/24/2026

𝗪𝗵𝗮𝘁'𝘀 𝗡𝗼𝘁 𝗡𝗼𝗿𝗺𝗮𝗹?

Are mortgage rates abnormally high?

At about 6.6%, the rate on a 30-year mortgage may be 𝘩𝘪𝘨𝘩𝘦𝘳 than it has recently been, but it is by no means high relative to our recent history (1st chart).

Total public debt exceeding $40 TN is abnormally high.

A federal budget deficit of $2.1 TN in fiscal year 2026 is abnormally high.

A trade war with your closest allies (and neighbors) is certainly abnormal.

But not current mortgage rates.

As the effects of all of the above (and other factors) begin to push interest rates higher, lifting mortgage rates with them, owning a home will become further out of reach for the average American.

But 𝘄𝗵𝗮𝘁 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗼𝗱𝗱𝘀 𝘁𝗵𝗮𝘁, 𝗮 𝗳𝗲𝘄 𝘆𝗲𝗮𝗿𝘀 𝗳𝗿𝗼𝗺 𝗻𝗼𝘄, 𝘄𝗲 𝘄𝗶𝘀𝗵 𝘄𝗲 𝗰𝗼𝘂𝗹𝗱 𝗿𝗲𝘁𝘂𝗿𝗻 𝘁𝗼 𝗼𝘂𝗿 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗰𝗶𝗿𝗰𝘂𝗺𝘀𝘁𝗮𝗻𝗰𝗲𝘀?

08/16/2026

𝗔𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗨𝗻𝗱𝗲𝗿𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗶𝗻𝗴

Over the decade through June, just 13% of active large-cap funds outperformed their benchmarks.

As Jack Pitcher discusses in his The Wall Street Journal article, investment pros are saying that AI disruption has created a stock picker’s market.

But they're still struggling to pick the right ones.

Active equity mutual funds have had outflows every year consistently since 2015.

But active managers argue that higher interest rates have ended the cheap-money tide that lifted all boats, just as AI is set to mint huge winners and losers, making security selection crucial.

𝗖𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗺𝗮𝘆 𝗳𝗮𝘃𝗼𝗿 𝗮𝗰𝘁𝗶𝘃𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴, 𝗯𝘂𝘁 𝗺𝗼𝘀𝘁 𝗮𝗰𝘁𝗶𝘃𝗲 𝗺𝗮𝗻𝗮𝗴𝗲𝗿𝘀 𝗮𝗿𝗲 𝘂𝗻𝗰𝗼𝗺𝗳𝗼𝗿𝘁𝗮𝗯𝗹𝗲 𝗺𝗮𝗸𝗶𝗻𝗴 𝗰𝗼𝗻𝗰𝗲𝗻𝘁𝗿𝗮𝘁𝗲𝗱 𝗯𝗲𝘁𝘀. 𝗜𝘁'𝘀 "𝘁𝗼𝗼 𝗿𝗶𝘀𝗸𝘆."

But to state the obvious,

𝗧𝗵𝗲 𝗼𝗻𝗹𝘆 𝗿𝗲𝗮𝘀𝗼𝗻 𝘁𝗼 𝗽𝗮𝘆 𝗮𝗰𝘁𝗶𝘃𝗲 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗳𝗲𝗲𝘀 𝗶𝘀 𝗶𝗻 𝗿𝗲𝘁𝘂𝗿𝗻 𝗳𝗼𝗿 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝘁𝗵𝗮𝘁 𝘁𝗮𝗸𝗲𝘀 𝗿𝗶𝘀𝗸 𝗮𝗻𝗱 𝘀𝗸𝗶𝗹𝗹 𝘁𝗼 𝗮𝗰𝗵𝗶𝗲𝘃𝗲.

Beta is free, but alpha must be earned.

08/11/2026

𝙉𝙤 𝙀𝙭𝙞𝙩?

In a market environment where public equity valuations are surfing all-time highs, "𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝗲𝗾𝘂𝗶𝘁𝘆 𝗳𝗶𝗿𝗺𝘀 𝗮𝗿𝗲 𝘂𝗻𝗮𝗯𝗹𝗲 𝘁𝗼 𝗲𝘅𝗶𝘁 𝗮 𝗴𝗿𝗼𝘄𝗶𝗻𝗴 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀 𝗮𝘁 𝘃𝗮𝗹𝘂𝗲𝘀 𝘁𝗵𝗲𝗶𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗿𝗲𝗾𝘂𝗶𝗿𝗲."

If you can't get a sufficiently attractive valuation when public equity valuations are 𝘵𝘩𝘪𝘴 𝘩𝘪𝘨𝘩, something is financially out of synch.

08/06/2026

𝗖𝗼𝗻𝗰𝗲𝗻𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗠𝗼𝗺𝗲𝗻𝘁𝘂𝗺, 𝗔𝗱 𝗡𝗮𝘂𝘀𝗲𝘂𝗺

Jon Sindreu recently did a great piece for Reuters Breakingviews on the impact of risk concentration on valuation in the equity markets (link below).

More than half of the S&P 500's market capitalization is represented by companies driving the AI wave.

Korea and Taiwan, central to the tech supply chain, account for 51% of the MSCI Emerging Markets index.

This has nurtured a 𝗴𝗶𝗮𝗻𝘁 𝘁𝗿𝗲𝗻𝗱 𝗼𝗳 𝗯𝘂𝘆𝗶𝗻𝗴 𝘀𝘁𝗼𝗰𝗸𝘀 𝘁𝗵𝗮𝘁 𝗮𝗿𝗲 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗴𝗼𝗶𝗻𝗴 𝘂𝗽.

The MSCI USA Momentum index outperformed broader equities to an unprecedented extent between March and June, and has now plummeted just as quickly (see below).

Yet 𝗮 𝗹𝗼𝘁 𝗼𝗳 𝗶𝘁 𝗿𝗲𝗳𝗹𝗲𝗰𝘁𝘀 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗿𝗼𝘁𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲𝗶𝗿 𝗺𝗼𝗻𝗲𝘆 𝘄𝗶𝘁𝗵𝗶𝗻 𝗮 ‌𝗰𝗹𝗼𝘀𝗲𝗱 𝗰𝗶𝗿𝗰𝘂𝗶𝘁 ⁠𝗼𝗳 𝗵𝘆𝗽𝗲𝗿𝘀𝗰𝗮𝗹𝗲𝗿𝘀, 𝗰𝗵𝗶𝗽𝗺𝗮𝗸𝗲𝗿𝘀 𝗮𝗻𝗱 𝘀𝗲𝗿𝘃𝗲𝗿 𝗳𝗮𝗿𝗺𝗲𝗿𝘀, which are furiously competing to spend as much as possible in the hopes that all of them will simultaneously make good on the investment.

Investors aren't blind to this risk: the Nasdaq 100 trades at a lower multiple of its constituents’ earnings than it did at the start of the year.

It’s just that valuations in the rest of the world and among lower-growth "value" stocks are also flat or lower. Neither benefited from the recent outflow from AI themes, suggesting that 𝗶𝘁'𝘀 𝗺𝗼𝘀𝘁 𝗼𝗳 ⁠𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁, 𝗻𝗼𝘁 𝗷𝘂𝘀𝘁 𝘁𝗲𝗰𝗵, 𝘁𝗵𝗮𝘁 𝗵𝗮𝘀 𝗵𝗶𝘁 𝗮 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗰𝗲𝗶𝗹𝗶𝗻𝗴.

Read the full article, it's very good:
https://www.breakingviews.com/columns/considered-view/theres-no-escape-ai-whipsaw-2026-07-31/