"Instead of taking our pain in the short-term, we have sold future generations as debt slaves... The best that our leaders can do for now is to keep the bubble alive for as long as possible, because what comes after the bubble is gone will be absolutely unthinkable."
European and Asian shares rise along with a jump in S&P futures which are pointing to a solidly green open on US payrolls day. The dollar, trading somewhat weaker against the euro was stronger against the yen, and was on track for its firth week of gains, while the rout in global Treasuries continued following a Mario Draghi conference that was interpreted as more hawkish than expected.
"Our highly levered financial system is like a truckload of nitro glycerin on a bumpy road. One mistake can set off a credit implosion where holders of stocks, high yield bonds, and yes, subprime mortgages all rush to the bank to claim its one and only dollar in the vault."
"There is quite significant uncertainty about what's actually going to happen, I don’t think anyone quite knows what’s going to come out of the process which involves both the administration and Congress in the deciding of fiscal policy and a variety of other things."
"The important point to note here is the historical deviation between exuberance and economic realities has generally NOT been resolved by reality catching up with fantasy. It has always been the other way around."
An unexpectedly bearish BlackRock Chief Executive Larry Fink said the U.S. economy is in the midst of a slowdown and financial markets could see a significant setback. "I see a lot of dark shadows," he said at an event hosted by Yahoo. "The markets are probably ahead of themselves."
“The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty... If things go wrong, we could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst...”
According to Mario Draghi, portfolio manager of the world's biggest hedge fund, it is not his gargantuan balance sheet equal to 36% of the eurozone GDP, nor the $14 trillion in global central bank liquifity that will be responsible for the next market crash, but that Donald Trump's deregulation of the banking industry has "sown the seeds of the next financial crisis."
"The ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB's and 45 basis point Bunds into 2.45% U.S. Treasuries.... I would venture a guess that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. economy would sink into recession."