The Debt Party is Over . . . .

[errolanderson]

Group . . . What we may be witnessing in markets this week is a total shift in global debt mentality. Failure in the U.S. bond market last week set off an earthquake in equity markets..

Bond markets are effectively debt markets. Given the market washout, Trump is scrambling to place the blame on the U.S. Fed for hiking rates at the wrong time. But the real culprit for recent market implosion (IMO) was likely Trump’s draconian tariff strategy (IMO). Yes, central bank policies built this global debt bomb. But tariff strain may be the lighter fluid for it to blow.

There is no way China will back down even if it lowers their standard of living. This ensures a possible multi-year trade war that may be impossible to win.

If I sound pissed, I am . . . . Our so-called leaders and their egos are now threatening to impale global economies in a serious prolonged recession, if not a depression.

The stock market is now imploding and bond markets are imploding . . . This is an extremely rare situation.
What it means is . . . The debt gig is up.

Interest rates can’t go up despite all the banker rhetoric. And the easy street for bank profits may hit a serious detour. Realize, my opinion may not be your opinion, but we are all impacted by decisions of our elected leaders.

Regards
Errol

[GDR]

So if equities are taking a beating and bonds falling apart where are the big guys going to park the money? Will gold reverse it's direction and become the safe haven it used to be or has China's currency problems affected golds future too much. Can't sit on cash very long but where do you invest it in an uncertain time?

[iceman]

Alway enjoy reading your posts Errol.

So many questions about how something will operate in a bear market. Ie passive ETFs, Algos, central banks. Now we have trades wars. Maybe even that little yellow currency will get its day in the sun again.

Interesting times we live in.

Iceman

[iceman]

Also Errol.
Do you think we will see any tightening in the credit?

[Rareearth]

Good post Errol
I’m not so sure that interest rates can’t go up though, ? It doesn’t make sense I agree, but...

[errolanderson]

Also Errol.
Do you think we will see any tightening in the credit?

Iceman, thanks . . . An opinion, but yes, credit will no-doubt tighten. It may not be from rising rates however. Sense a whole paradigm shift coming in credit as rules for credit are apt to stiffen.

[grassfarmer]

Alway enjoy reading your posts Errol.

Ditto.

[macdon02]

Group . . . What we may be witnessing in markets this week is a total shift in global debt mentality. Failure in the U.S. bond market last week set off an earthquake in equity markets..

Bond markets are effectively debt markets. Given the market washout, Trump is scrambling to place the blame on the U.S. Fed for hiking rates at the wrong time. But the real culprit for recent market implosion (IMO) was likely Trump’s draconian tariff strategy (IMO). Yes, central bank policies built this global debt bomb. But tariff strain may be the lighter fluid for it to blow.

There is no way China will back down even if it lowers their standard of living. This ensures a possible multi-year trade war that may be impossible to win.

If I sound pissed, I am . . . . Our so-called leaders and their egos are now threatening to impale global economies in a serious prolonged recession, if not a depression.

The stock market is now imploding and bond markets are imploding . . . This is an extremely rare situation.
What it means is . . . The debt gig is up.

Interest rates can’t go up despite all the banker rhetoric. And the easy street for bank profits may hit a serious detour. Realize, my opinion may not be your opinion, but we are all impacted by decisions of our elected leaders.

Regards
Errol

Not to take away from your comments but only to add I'm with you on Trump being wrong on rates, they've been going up since Q4 '15 so its not the increases that are causing the setback. I'll call it a setback for now until we take out the lows earlier this year in Jan/ Feb. I see it as the final flush to get everyone offside and will be watching nasdaq to lead out of the hole. IF this is the launchpad hold on as i see a bitcoinesque final push coming that'll break USA. The only thing keeping me thinking this way is the troika all broke from highs in different months and there is Nowhere else to go. I suspect tarrifs aren't the cause as when beans got hit wheat and corn for the most part ignored it. This is just another flush in equities but make no mistake there'll be govts defaulting on this bond deal. It's the end of a 34 yr run going back to'85. Cue the inflation after default. The bonds are the key and that's bigger then Trump or any leader imo ...... bonds are not a market i ll ever short but I'll buy equities before yr end because when it comes to them you buy fear

[furrowtickler]

Not surprised at all , the cost of everything was getting way out of touch with reality coupled with way too much cheap credit = financial bomb

[macdon02]

DJ +320 at 1230am .... Think there's money pouring in as it looks cheap from across the pond? Or are the shorts getting it? This is nutz ... totally awesome but nutz. Need another 400 points to call it over. If this is foreshadowing what's to come in grains, if you don't have an order in you'll miss out. HAVE A NUMBER IN MIND WHERE IT'S TIME TO REDUCE RISK!! Your long next year's production unless your in the Ritchie bros catalog. I'm not saying fwd sell what you don't have but if you got something in the bin know where you want out ahead of time then stick to it. This environment provides opportunity but it'll cut you down just as fast. I don't think any number we've seen in the last 5 years is out of the question between now and July. Volatility is like a pendulum, the faster it gets moving the opposite reaction is more exaggerated. I suspect this'll ripple through every market as bonds come undone. It's just too much money through a very small door. This won't happen again in our lifetimes