As we outlined last week, the bursting of the bond bubble has begun.
CNBC and the financial media may spend 99% of their time talking about stocks, but bonds are the single most important issue for Central Banks.
When you consider everything in the context of the bond bubble, every Central Bank policy begins to make sense.
1) Central Banks cut interest rates to zero to make bond payments smaller.
Submitted by Vitaliy Katsenelson via ContrarianEdge.com,
How Investors Should Deal With The Overwhelming Problem Of Understanding The World Economy
“What the —- do I do now?” This was the actual subject line of an e-mail I received that really summed up most of the correspondence I got in response to an article I published last summer.
The Texas recession is only in its early innings, but we were pleasantly surprised to learn, courtesy of a reader, that it may not be as severe as some expect thanks to good samaritans such Houston-based Gramercy Cleaners on Richmond avenue whose compassion with the imploding energy sector is manifesting itself in service discounts.
When the shale crisis spills over to the banking sector, will we see New York cleaners likewise discounting services to laid off investment bankers? Somehow we doubt it.
Via Scotiabank's Guy Haselmann,
Markets need to retreat from dependency on central bank stimulus which they falsely believe provides the magical elixir that fixes all economic and financial market woes.
At some point during the past few years, central bank stimulus has gone from a net benefit to a source of financial market ailments. Investors who have rightly arrived at this conclusion have shifted from dip buyers in risk assets to sellers of up-ticks (see January 6th note ‘Down Side Up’).
Submitted by Lance Roberts via RealInvestmentAdvice.com,
Of the last several weeks, I have suggested that markets are oversold and that a bounce was likely. However, such a reflexive bounce should be used to sell into as it is now becoming clearer the markets have changed their trend from positive to negative. As I discussed earlier this week: