In the long run, as someone once said, we are all dead, but in the meantime, as BofAML's Michael Hartnett provides a stunning tour de force of the last 5000 years illustrates long-run trends in the return, volatility, valuation & ownership of financial assets, interest rates & bond yields, economic growth, inflation & debt...
By Don Quijones, Spain & Mexico, editor at Wolf Street.
Next Banking Scandal Explodes in Spain
Heading into last month's 10 Year auction, there was a surprising development: the 10Y paper was trading super special in repo as a result of pervasive shortages. This time, however, this did not happen and in fact after trading tight in repo, earlier today, 10Y actually had a positive sign suggesting perhaps some weakness going into today's auction.
As global growth expectations collapse, so do bond yields (now at new record lows for developed markets) but that doesn't stop equity 'investors' from piling into already richly-valued stocks on the hope that next year will be the year when global macro and micro hockey-stick projections will work out...
With a P/E of 21, global stocks have rarely (outside of the financial crisis) been as expensive... Which may explain why some investors are piling into bonds, no matter how low the yield.
After last Friday's disastrous jobs report and concurrent prior revisions, few were expecting any remarkable developments from "Yellen's favorite labor market indicator", the BLS' JOLTS, or Jobs Openings and Labor Turnover Survey, and yet there were two surprises.
First, when it comes to actual job openings, the number rose from a downward revised 5.675MM to 5.788MM, which meant the job opening rate remained flat at 3.9%, even if the actual number of job opening just matched the all time high of last July.