Authored by Caleb McMillan via Mises Canada,
"Beneath the symbol
We’ll all assemble
Oh how we’ll fly
Oh how we’ll tremble”
— Captain Beefheart, “Ice Cream for Crow”
If interest rates are the symbol beneath which we all assemble, then there are some bad times ahead.
But Canada’s “leading economists,” say interest rates are “too blunt a tool” to cool the housing market.
At the end of 2016 we reported that the formerly invincible London home market had suffered its biggest crack in years, when home prices plunged the most in six years according to Rightmove. Asking prices in London dropped 4.3% in December with inner London down 6%. Meanwhile, the most exclusive neighborhoods, like Kensington and Chelsea, recorded even sharper declines at nearly 10% as home buyers migrated to cheaper areas of the city.
Authored by Jim Quinn via The Burning Platform blog,
Donald J. Trump has taken credit for making America’s economy great again. He’s been crowing about all the jobs being created, the soaring consumer confidence and record highs in the stock market. It’s all because the Donald has inspired Americans about our glorious future.
But, a funny thing has been happening in the real world. The economy has gone into the shitter and GDP will be lucky to reach 1% in the first quarter of his presidency.
Over the last several weeks, two years after Howard Marks first brought attention to the topic with a letter in which he asked "What Would Happen If ETF Holders Sold All At Once?" some investors have once again quietly voiced concern about the inordinate and rising influence passive investing in general, and ETFs in particular, exert on stocks but especially on fixed income securities, including illiquid bonds and loans.
While global interest rates have risen from all time lows, starting around mid-2016 when the China (not Trump) reflation trade hit and has since fizzled, in the process cutting the amount of negative-yielding debt by almost half, the reality is that rates still remain painfully low; so low that many banks have recently issued pieces asking if the world - awash in record debt - can handle a sizable increase in rates.