|
Sep 2, 2018, 11:55 PM (20 hours ago)
| |
| |
"The excitement is in the air as is the concern of the 2 - 10 year note spread which has been down to 19 basis points recently and as Deutsche Bank noted late last week, The USA 2 - 10 spread fell below the Japanese 2 - 10 spread for the first time since November 2007... and the Great financial crisis went into high gear shortly there after. The FED is going to invert the yield curve when the September rate hike of .25 % occurs.... the reason that the US 10 and 30 year Sovereign debt has rallied this past several weeks is the wise Family offices, the pension funds like Calpers scaled back US stock exposure in Q4 of 2017... Mark Cuban is sitting with more cash than in 10 years... as is Warren Buffett
The really big operators have to scale out of stocks before the final high due to their tremendous size.... Dr. Fleming and Mr. Walker can attest to this truism ."
JP
------------------------------------------------------------------------------------------------------------------------------------
The Credit SuperCycle as presented on the World Economic Forum website
The 72 year master cycle in the US 30 year Treasury bond --- The US entered a secular bull market in yield (interest rates are going higher) and bear market in bond prices on July 8 2016. We are now in the
wave of advance that the general Wall street and global financial community comes to the mass realization
that interest rates are going up.
THE 30 YEAR US TREASURY BOND WEEKLY CHART FROM LATE 1979 TO SEPTEMBER 1982
THE High in Yield was 14.59% on Oct 12 1981.
we have a number of global central banks taking steps to normalize interest rates, which means to raise them and since we have had 8 years of global Zero interest rate policy, on short rates in the US, the ECB, the BOJ, the SNB - swiss national bank, the swedish Riskbank, the BOE was very accomodative...
and so it's a brave new world of the reduction of monetary stimulus and we have already had 3 or 3 Fed Fund increases here in the US.... are we up to 4 already? We have another coming in Dec.
and we have never seen the global central banks in this position, We have the FED, the Bank of England, the Reserve Bank of Australia, the central bank of Canada, and the European Central bank all in tightening
mode....... .. they have never been in this position and in central banking land.... mistakes in the movement of the short term borrowing rates can occur, especially when you have multiple countries doing the same thing... It sets up uncertainty in the Long dated FX market.... creates uncertainty for Banking, Insurance, Reinsurance companies as to how to hedge and value their long dated commitments.
Endowments, pension funds , soverign wealth funds are also all impacted by this grand experiment.
as Hyman Minsky famously said "stability is Destabilizing" that has always been the case and
will always be the case...we have been through a long period of stability which has let lots of all of the
above market participants, companies, hedge funds.... take advantage of very cheap credit by issuing a vast
ocean of it.... we shall find out who is over levered..... and then their are exogenous shocks and black swan
events.
--------------------------------------------
Paul Tudor Jones was interiewed on CNBC back on Jun 8th as he was preparing to launch a new
sustainable ETF with one of the major firms..... I believe GS.
he commented that he thought there would be a little summer lull followed by a very rambunctious
Q3 and Q4 in US equities and global equities..... he mentioned that we could see a version of the
euphoria that we saw in 1999...... I see no reason why that will not happen........
and the summer lull was played out by the end of June.... or 1st week of July.
with 9 billion of Soverign debt still having negative interest rates, and the US witnessing a Fed Funds rate
maybe 100 to 150 basis points below inflation .... it's an incredibly generous monetary environment that
should see equities easily be able to hit Tony Dwyer's 3200 SPX level.........unless there is some
major sequence of the wheels coming off the apple cart in terms of US political events..
Tony Does not see it so ...probably no reason to expect it......... unless.... some unforeseen storm clouds
were to develop.
right now the election in Nov..... is the most salient geopolitical event on the horizon..... |
