Don’t confuse brains with years of insane monetary policy.
We will continue to be your single source of truth.
“There has been no historical precedent where a Central Bank has taken responsibility for its total failure, and then adapted.” - David Murrin
A $1 Billion Junk Bond Down 38% in Less Than a Year Shows Just How Much the Market Has Changed I buy bonds for the capital gains, and stocks for the dividends!
“In a world economy turned upside down, a search for answers in the bond markets” (sounds like the tagline for a bad horror movie). It gets worse:
If capitalism were a sprawling family, the bond market would be the character who scrimps today to have enough to survive tomorrow
No! The bond market is the ne'er-do-well middle-age trust fund guy who blew his inheritance years ago and his entire life was always stealing the family silver to support his crack habit until his rich uncle started bailing him out again and again.
As for Capitalism, what capitalism?! Larry Fink style corporatist fascism?
Come on. There’s been no real price discovery since the LTCM bailout (odd how Bear and Lehman were the odd men out, years later.)
All I see is 15 years of historically insane global central bank debt monetization:
Almost every bond trader alive has lived - not only during a 40-year period of falling rates - but also has had the full support (at least post-Greenspan) of omnipotent entities with the ability and the desire to buy your bonds at any price with unlimited funds!
Oh, now that rates have gone from 0% to 2.9%, things are getting hard?
It has been a good run for firms like Pimco, which provides jobs to otherwise unemployable former and future FOMC members, at least until recently.
“The 25 eurozone rate-setters meeting in Amsterdam last month…”
Rate setters? You mean “price-fixers”?
"The Fed is in the business of price-fixing. It fixes interest rates and then tries to predict the future. " - Jim Grant
Will the plan be legally and politically contested?
Yes, probably both. There has been a guarded response from the German and Dutch finance ministers, who insist the ECB must not encourage fiscal lassitude among member states or stray into “monetary financing” of governments, which is against the EU treaty.
The ECB’s previous purchases of sovereign bonds have been challenged repeatedly in Germany’s constitutional court and most analysts expect similar moves against its latest plan.
Imagine - a High Priestess like Christine Lagarde having to deal with elected politicians, or the legality of what she does! It’s outrageous!!
Since when have central bankers cared if something they do is legal?
Many think that the Fed buying Intel bonds, for example, was illegal. Poppycock!
Our elites are not bound by law, they rule by the divine right of central bankers.
Bloomberg December 2020: Get Ready for the Great U.S. Inflation Mirage of 2021
Bloomberg Tuesday: Inflation Is Here to Stay and That Makes a Recession Inevitable
With the recent 20% drop in the GSCI commodity index, it’s time to check my simple back-of-the-envelope commodity inflation source. Note that the items in red seem to be mostly things you don’t need every day, while the green stuff you mostly do.
Another view, of the commodity index vs the S&P 500:
The Cost of Sand Has Spiked 150% in Texas “Frack sand, which gets blasted through shale rocks to unlock oil and natural gas, is at about $55 a ton, up from $22 at the end of 2021”
Yes, but after hedonic-quality adjustments, the BLS math PhD’s have determined that the sand is actually better sand, now worth - in their model - $75 a ton, and since you’re paying $20 less than that, in effect there’s been 90.9% drop in the price of sand from $22, hence the deflation Dave Rosenberg keeps warning us about. (If none of this makes sense to you then you’re fine.)
Under President Nixon, the Economic Stabilization Act of 1970 set up a "Cost of Living Council" responsible for wage & price controls. The first director of this agency was none other than Donald Rumsfeld, and his Assistant Director for Operations was Dick Cheney. The council was established in October 1971 and abolished in April 1974.
The CPI over the life of the Cost of Living Council went from 3.8% to 10.7% (which is still lower than we really have today, because they calculated housing and other things more realistically in the CPI back then.)
Heckuva job, guys.
The ignorance - it burns.
George Washington’s Farewell Address Great overview from one of the smartest folks on the interwebs.
Today’s subtitle is from the great Jacinda Ardern.
This seems screamingly bullish. When was the last time you saw Gartman in the wild?
Dealmaker Sam Zell can't make a deal “At 80 years old, Zell doesn’t need more deals to burnish his reputation or add to his $5.8 billion fortune, as estimated by Forbes magazine. But it’s notable nonetheless that Zell, a creative contrarian who describes himself as a “professional opportunist,” hasn’t found opportunities for the two companies. That’s especially true for Equity Commonwealth, which has been hunting for a big deal since at least 2017 in the industry Zell knows best: real estate.”
Learning From Las Vegas: Tony Hsieh’s Big Gamble “I’ve traveled around for decades in search of answers to what makes something work in one location and not in others. What I’ve learned is simple. These grand projects are like tattoos, body piercings, and trendy hairdos. If you’re attractive you don’t need them. If you’re ugly they don’t help.”
Now, listen Mr. President
Congressmen too
You got me all frustrated
And I don't know what to do
I'm trying to make a dollar
I can't even save a cent
It takes all of all my money
Just to eat and pay my rent
I've got those inflation blues
Blue as I can be
I don't think I could get through the craziness without laughter. Thanks for continuing the financial funnies, post Twitter.
Your comments about “the past 40 years” and “if you haven’t made money in the bond market since the 1980’s, you’re a moron” bring up a good point. These money managers who lived thru this time think the abnormal is normal (Fed put, but the dip). The coming turmoil is going to completely undo them, financially, mentally, spiritually.