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Infinity And The Bond Market Wormhole
Some well-timed observations from Bloomberg's Richard Breslow.
Infinity And The Bond Market Wormhole
The infinite loop continues.
Central banks ease, cajole, fluff up their feathers and push markets to where they don’t belong. Markets try to reprice themselves closer to normalcy (sanity). Central banks see their main equity index fall and panic. Central bank pushes more chips in and everyone has to cover. Central banks declare victory. Smart investor sells.
It is so utterly appropriate that in the definition of infinite loop on Wiki it is pointed out that a synonym is “unproductive loop."
Like any table stakes game, running out of wherewithal is a killer. What if the other player doesn’t value the keys to your car? It certainly feels that way when debating how clever it would be to juice inflationary expectations by increasing the inflation target, which will ignite the animal spirits of the economy, even though (wink, wink) we will pull back before it becomes a problem.
Another conceit being floated -- by the same central bankers who get night sweats thinking about the day after they raise rates some nominal amount -- is that their communication strategy has been so straight-forward and consistent that surely markets and the banks are on the same page.
Yes, it will be a “regime change,” but surely we are all seeing and evaluating the data the same way. That is code for, we don’t have a clue either, but we desperately can’t threaten the wealth effect of higher equity prices. This supposed wealth effect is used to celebrate (see a chart of Chinese equities) what in an alternative universe would be viewed as a bubble.
Bonds are down because they are overpriced. They use the elevator rather than the stairs because the conceit of getting out right before it gets ugly never works unless there is massive official support, but even that is not always enough, let alone appropriate.
The numbers out of Europe have been getting better. 1Q growth in Europe was better than in the U.S. or U.K. QE is working and the economy is building momentum. So explain to me again why 10-year rates should be negative? The EUR is up over a percent this morning. That may look nice, but that is precisely what they don’t need and shouldn’t want. Let the rally continue and we can dust off the negative yield talking points.
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Market Wormhole
Wow, there really is infinity?
Yellen and Bernanke are Conjoined Keynesian Twins joined by the asshole. ;-)
Looney
But the loss of faith and trust in the governments will soon be the major issue when all these Central Bank charades fail miserably.
It ain't gonna be pretty either.
It's already pretty ugly. Just lipstick on a pig is what we are looking at...
Hey Ori,
you think mary sherman's monkey was bizaar, listen to this.
https://www.youtube.com/watch?v=dQiYwBqZR6Y#t=2156
Expect the unproductive loop to continue for some time.
Doing the same thing repeatedly and expecting a different result............................
I think in 5 years the Central Banks will own 80% of everything...bonds and stocks.....then what??? That is the question.....
then what? well, it depends on the Central Bank, doesn't it? one of the strangest memes in some websites is that all CBs are created equal. it could not be further from the truth
one of them belonged to the Rothschilds, the Bank of England. after WWII, it was... gasp! nationalized. some are... gasp!... audited. some... aren't. some belong to their private stockholders but are subject to national laws, and even others belong to private banks, often the same banks that have the privilege to buy and sell bonds from the government
the Chinese Central Bank belongs to the People of China, for example, at least on paper. since it's still - at least on paper - a communist country, if all belongs to the CB it is the same as if it would belong to the government. I don't see the difference between the communism of "it all belongs to the goverment" and the communism of "it all belongs to the national bank"
I'm mentioning the Chinese CB because it's one of the biggest holders of US Treasuries. Is it better if that CB holds them or the FED? well, it depends, doesn't it?
it has been productive for crooks! The average guy is left ZERO Interest for his money and a bunch of stolen money for people that belong in jail! The large banks need to be broken up! Glass - Stegall reinstalled!
Negative interest rates are a crime- people should go to jail. People who cause neg rates are morally bankrupt.
This is not an unproductive loop....this is a fucking unstable loop....a PID loop with all the wrong tuning parameters and this reactor is going to go critical.
Bottom Line...this piggie is going lower.
Muppet...it's what's for dinner this week
Bonds are down because they are overpriced...
ERROR! WRONG!
Division by zero in a wormhole, is perfectly legal.
This will reach what is called a singularity, the virtual end of a spiraling loop. The Big Bang Theory begins with a singularity. Then it explodes.
We are running out of room to run. Close to the time where we will face the music.
To infinity and beyond.
QE is working in Europe and the eCONomy is building momentum?.... Lol. Does this guy even know what he is talking about? Negative yields are a result of QE you bungwhole.
A bundle of confetti in everyone's pot. Even those savage Indians with their gold lust.
"bonds are down because they are overpriced"
sure, why use logic and intelligent arguments when you can just use words and pretend they speak for themselves.
bonds are down because players in the futures market drove prices there on minimal volume - there was actually minimal volume liquidation in the cash market. the question that should be asked is why is this short term manipulation even allowed and not prosecuted. perhaps it has to do with the fact that central banks do players in futures markets, are interested in "influencing" long-term rates, and when they retire they go work for hedge funds... if that's not the biggest recipe for market manipulation, mispricing and corruption, i don't know what is.
It doesn't go to infinity, it goes to nothing.
When the basket carrying money is stolen, and the money is left behind. (Weimar)