This is pretty straight forward but powerful information when it comes to ranking the relative strength of global government bonds. Click on the chart to be taken to the full article at Bespoke
Archive for the ‘Bond Bubble?’ Category
Great video by Peter Schiff who is always worth watching when he speaks. He accidentally states “November 2nd” as opposed to September 2nd at the outset – but unless he grabbed a flux capacitor from Michael J Fox and taped this Back In The Future, you can bet this is recent and hot off the press.
In addition to gold, he’s got some great commentary about US Treasuries, PIMCO and the US economy as a whole.
Whether you like rap or not, this is simply a great parody video. The words are great and the tune is actually catchy believe it or not. Not a bad tool for teaching younger people about what is going on.
“More unsustainable than my rap career” funny but frighteningly true
This CNBC guest and all the talking heads are making the case for no QE3. You should watch the video to understand their arguments and factor them into your decisions.
I personally find it hard to believe QE is coming to an end. Why? American small business continues to have no access to gazillions sitting in vaults of big banks, US housing is crashing (new home sales and existing home sales) and US consumer confidence is sitting at a 3-month low. If interest rates begin to rise from the lack of US bond purchases, things could get out of control pretty quickly.
DELAY TO QE3 IS MORE LIKELY … AND WOULD CAUSE HAVOC
The threat I do see comes from a delay in QE3. As things stand on the surface, Bernanke is going to find it difficult to get support for QE3 amongst other Fed Presidents. After all, the stock market is up and the White House is talking up a healthy jobs environment (bull). Moreover, inflation is on the rise even by a manipulated CPI view … how can Ben justify QE3?
He may not be able to. If not, look for the following effects:
- Climbing interest rates
- Stronger US Dollar
- Plunging Stock Market
- Plunging Exports
- Plunging Real Estate
- Plunging Consumer Confidence
- Plunging Gold
- …. QE3
Make no mistake about it, this is a real threat, unless you believe the true US economy (not the propaganda statistics) is ready to stand on its own two feet. I don’t see it.
QE2 comes to end on June 30th. The signals on QE3 will come loud and clear in the preceding two months, so be ready to act and adjust your portfolio accordingly.
UPDATE: This David Rosenberg Quote Via ZeroHedge Demonstrates Both The Risk Of A Delay AND Just How Fast The Markets Could Pull Back If QE3 Didn’t Materialize:
QE3 WILL COME BUT NOT AS EARLY AS MR. MARKET WOULD LIKE
Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that one-third of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation. How on earth will the Fed be able to do anything at all by then if headline inflation is running north of 4% and the other central banks of the world are either snuggling policy or moving in that direction ? unless the central bank really wants to trash the dollar. We are certainly not inflationists and still see deflation in credit, real wages and housing
David Stockman, Former White House Budget Director Under Ronald Regan, tells it like it is. As a test of his credibility, he doesn’t believe the new Republican Congress is going to solve the problem either …. though he does believe Ron Paul’s anticipated oversight of the Fed is going to finally lead to real debate.
Take 4:34 and watch this video.
WASHINGTON (MarketWatch) — The Federal Reserve pledged on Wednesday to start a controversial new billion bond-buying spree to rescue the economy from its current doldrums. The Fed said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, about $75 billion this month, in a strategy called quantitative easing.
This is the second time the Fed has engaged in quantitative easing, as it snapped up $1.7 trillion in mostly housing-related assets December 2008 and March 2010.
The Fed’s new move comes because the central bank disappointed with the slow pace of growth and worried that the high 9.6% rate of unemployment might put enough downward pressure on inflation to tip the economy into deflation or a period of a sustained drop in prices. The Fed said that the recovery has been “disappointingly slow.”
The Fed purchases are designed to bring down yields on government bonds believing that lower rates could always give the recovery a boost. More broadly, the Fed wants to prompt private businesses and investors to begin to act with more confidence and help get the economy’s juices flowing. “They are trying to break through the fear,” said J.P. Morgan Chase economist James Glassman.
Doubts persist about whether the plan will work, but many feel the Fed had little choice but to act.
The Fed’s favorite policy tool, the target federal funds rate for interbank lending, has been about as low as it can go, in a range between zero and 0.25%, since December 2008. The Federal Open Market Committee voted 10-1 to use the credit markets tools.
Still, some observers fret that the move will boost asset markets and not the broader economy.
Full Article At Marketwatch
WHY QE2 IS CLOSER TO $1 TRILLION
UPDATE: BusinessInsider.com added some great insight that makes QE2 Closer To $1 Trillion
“But there will also be a reinvestment of $250 to $300 billion from payments associated with other securities it already holds. That makes QE2 feel a whole lot bigger, and closer to the top end $1 trillion number that was mentioned.”
You simply have to love the fact that you can’t be at the New Orleans Investment Conference – yet you still have an ability to watch Peter Schiff provide commentary from his hotel room. Here is his latest 10-minute video. Grab a cup of coffee, sit back and watch. Leave me your feedback in the comments section below.
(Hat tip to Zero Hedge for putting us onto this story)
For some strange reason, Erin Burnett of CNBC blew a gasket today when Bond Bear Mike Pento made his case for a bubble bond market. She claims that he “was rude” but I just don’t see it. What I see is a “moderator” (what she called herself) that didn’t like hearing someone make the case for a blowup in the US bond market.
Given the fact a Bond Bull was also on the show at the exact same time, you would think that a moderator would love salivate over such a strong opposing opinion to make great TV.
Rather than sitting back and having the Bull and Bear go at it, Burnett decides to take the bull position by making a statement in the form of a question that challenge Pento’s bear position. OK, it’s her show …. but why does she blow a gasket when Pento begins – rightfully so – challenging her? He wasn’t rude in the least. He was firm in his position. I don’t care if you think the guy is right or wrong – you have to love the fact he is taking a position and backing it up.
So why does she blow a gasket? Cheerleaders don’t like the opposing team. Unfortunately, Burnett forgot she was the referee and the other team had already taken the field.
Am I wrong? You decide and let me know.