Reality has begun to dawn across Wall Street’s Economists. This year isn’t going to go the way everyone thought. Even as late as last November and December, the optimism was still sharp about how what was taking place at that moment would be nothing more than a transitory soft patch. They still listened to Jay Powell. In its projections for [...]
Critics of government debt, a group which really should include every taxpayer, like to point out how governments prefer to pay back that debt with hugely inflated currency. You don’t pay it off so much as inflate it away. Change the convertibility number for your local currency and, voila, a much more manageable credit profile emerges. Only, there are often [...]
Over the last several years, we’ve been bombarded with mainstream stories about how interest rates have nowhere to go but up. Inflation, recovery, and most of all fundamentals. Who in their right mind is going to buy all this government debt! The supply is rising and, according to these people, the demand can only be falling. There is nothing in [...]
Maybe blame the ECB. On June 5, 2014, Europe’s central bank announced a change in monetary policy. Beginning June 11, their deposit account mechanism that acts as a hard floor for European money rates would be set below zero for the first time. It would mean any funds left on deposit with the ECB in this account would be “paid” [...]
On April 2, the benchmark 10-year US Treasury yield traded below 2.75%. It had been as high as 2.94% in later February at the tail end of last year’s inflation hysteria. But after the shock of global liquidations in late January and early February, liquidity concerns would override again at least for a short while. After April 2, the BOND [...]
BNP Paribas is apparently calling for an epic rout in German bunds. According to Bloomberg (who else?) it’s a mini-revival of Bill Gross’ ill-fated tweet advertising the “short of a lifetime.” In April 2015, the man many called the bond king said it was going to be better than the pound in 1993. https://twitter.com/JHIAdvisorsUS/status/590519759797530624 Gross advertised waiting until later in [...]
The yearlong wireless data plan nightmare is officially over. For the second month in a row, the CPI for Wireless Telephone Services, which includes any unlimited data at fixed prices, was more stable in its annual comparison. In April 2018, the index was nearly flat to April 2017; down by less than 1%. It was, for once, transitory. What that [...]
The only way to change the meaning of a word like “transitory” is to put together a constant string of temporary factors that when taken individually keep with the traditional definition but in combination completely obliterate it. Something happens to knock inflation off track, and then just as soon as that one thing is about to abate and inflation is [...]
The biggest risk to the bond bear case, that expressed by Bill Gross, Jeffrey Gundlach, and Ray Dalio, is, ironically, stocks. Convention has it that rising interest rates are bad for them, but what are falling stock prices for UST’s? Historically speaking, the introduction of risk and even liquidations is bond positive. When the last jobs report came out, Bill [...]
Ten years ago today, one of Carlyle Group’s mortgage funds, Carlyle Capital Corp (CCC), was seized by creditors. Precipitated by dwindling liquidity, the fund’s effective insolvency would amplify those global “dollar” pressures and lead to Bear Stearns’ untimely demise mere days later. The fund’s corporate parent issued a statement on March 6, 2008, that read: The last few days have [...]
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