"This floating rate, rotating global bubble economy we’ve built since the early ’70s is one where speculation and luck are rewarded while work is scorned as a sucker’s bet...It is this system, more than anything, that is the source of our inequality issues and political turmoil."
Markets have been pricing in perfection, and have ignored every potential bad news item that came along... but here is a list of potential US events/developments that may shake things up in 2018.
Today's story may not be stocks, but rather rates as the 10Y Treasury yield is now climbing above 2.6% for the first time since March, a key psychological level and Gundlach's "redline": "We are going to change the regime probably within the next 2-3 months."
"A thunderdous tweet twitters around the globe as Tax Reform causes a gigantic flying saucer to descend from the sky, and alight upon the small Californian town of Cupertino. Let joy be unconfined as the crew announce they will pay $40 bln in taxes, spend billions on contracts to local suppliers, and create thousands of jobs across America."
"It’s become an enormously damaging industry that very few people are looking at seriously...Just as with ‘blood diamonds,’ the gold issue ... brings together money laundering, forced prostitution, drug traffickers, human trafficking and child slavery..."
When positioning and sentiment reach levels that were never seen before after the market has gone through a blow-off move for more than a year, it may well be that it means something for once.
"Many Americans today like to comfort themselves with the idea that 'I'm not involved in any threats to national security' and think themselves immune from government abuses... But Martin Luther King didn't present any threat to national security either..."
CHINEXT - China's index of small cap and tech stocks - has tumbled in the last few days (while the major Chinese indices have risen), as blockchain-related stocks across Asia have crashed along with the cryptocurrency carnage.
"We had a non-descript result in a period where it seems like most around us did much better. This must be frustrating to you, our Partners. It is certainly frustrating to us."
With US markets closed for holiday, it has been a quiet European session, with Asia similarly subdued, while continued USD weakness, now in its 4th consecutive day, has been the main focus as Bloomberg’s dollar index approached its lowest level in three years.
World stocks hit a new all time high on Friday with U.S. equity futures rising for the 8th trading day out of 9 in 2018 and the Dow is just a little over 300 points away from 26,000. The euro surged to a three-year high as Germany was said to reach a "grand coalition" agreement, heaping more pressure on the dollar before inflation data.
"What makes 2018 different from the prior 10 years? The answer is that this is the year the central banks stop printing and take away the punch bowl... This will not be a soft landing..."
Absent a recession, what truly ends happy days in credit? We think it requires an outbreak of hawkish and much less predictable central banks to end the great reach for yield. To our minds, four things could shatter the peace
