Sunday, December 8, 2013

Credit Spreads Lowest Since October 2007

“The bottom line is that people have a lot of cash, and there’s a willingness to put it to work,” Mish said in a telephone interview. “I’m not saying that’s the prudent thing to do, but irrespective of the return forecast we have for next year, there’s a significant feeling that people need to earn more than zero.”

1 comment:

theyenguy said...

Many investors failed to invest in QE’s riskless trade, and having seen equity investments, such as Dividend Growth, VIG, and World Stocks, VT, grow in value, as well as credit investments, such as Junk Bonds, JNK, and Distressed Investments, FAGIX, increase in value, are expressing a desire for “return on investment”. Investors should consider that even “return of capital” is at risk, in what has been safe investments, such as Short Term Corporate Bonds, FLOT, and US Short Term Government Notes, SHY, as the bond vigilantes call the Benchmark Rate, ^TNX, higher from 2.86%.

During the week ending December 13, 2013, Global Financials, IXG, led Nation Investment, EFA, and World Stocks, VT, lower, as the Bond Vigilantes continued calling the Benchmark Interest Rate, ^TNX, higher from 2.8%, and steepening the 10 30 US Sovereign Debt Yield Curve. The volatility ETFs, TVIX,VIXY,VIXM, rose strongly higher as volatility, ^VIX, burst out.

The bond vigilantes in calling the Benchmark Rate, ^TNX, higher from 2.8%, and in steepening the 10 30 US sovereign debt Yield Curve, $TNX:$TYX, are effecting eight pivotal economic changes: 1) destroying Banks, IXG, worldwide, 2) destroying the sovereignty and seigniorage of nation states, EFA, such as debt impaired Italy, EWI, global trade South Korea, EWY, global industrial mining Australia, EWA, the current account deficit BRICS, EEB, 3 and 4) destroying global industrial production and global growth, 5) and are destroying yield investment in Real Estate, IYR, Global Real Estate, DRW, and Global Utilities, DBU, Utilities, XLU, Global Telecom, IST, Global Health Care, IXJ, and Health Care Provider, IHF, and Medical Devices IHI, as is seen in the ongoing Yahoo Finance chart of DRW, IST, PSP, DBU, IXJ, and IHI, 6) investment in consumer spending, 7) investment in infrastructure development, as is seen in the ongoing Yahoo Finance Chart of PKB, CHXX, INXX, BRXX, 8) energy production, XOP

And, the currency traders in selling currency carry trades reinforces the destructionism of bond vigilantes. For example, the currency traders have followed on the heels of the bond vigilantes by selling the Swedish Krona Japanese Yen cross, SEK/JPY, FXS:FXY, destroying nation investment in Sweden, EWD, and its consumer goods producer and automobile parts manufacturer, ALV.

In short the bond vigilantes, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.80%, and the currency traders by selling currency carry trades, have have introduced financial market risk, into what was under QE a riskless trade, and have pivoted the world out of the paradigm and age of liberalism and into that of authoritarianism. Their combined actions are unleashing waves of recession, and societal strife, commencing Kondratieff Winter.

The Elliott Wave 3 of 3 Up that commenced with the bond vigilantes calling the Benchmark Interest Rate, $TNX, higher from 2.48%, on October 23, 2013, seen in the Risk Off ETN, OFF, trading higher, has unleashed destructionism replacing inflationism, and has pivoted the world out of the paradigm and age of liberalism and into that of authoritarianism. The Elliott Wave 3 of 3 Waves are the most sweeping of all waves, they create the bulk of wealth on the way up, and destroy most of the wealth on the way down. This wave will make the bankers holding Interest Rate Swaps, that came as part of liberalism’s POMO, awesomely wealthy.