Global Macro Backdrop: Absolutely remarkable and historically unprecedented Developed market equity indexes are scorching higher across the board. New all-time highs or multi-decade highs are being reached nearly every day in the US, Japan, Germany, and elsewhere. Bond yields are constrained across the duration and risk spectrum near multi-decade lows. European sovereign 2-year notes in periphery nations such as Italy, Portugal, and Spain are negative and continuing to hit new lows. Bond spreads between Germany and the periphery are generally narrowing to new lows, pricing in similar levels of risk between EU nation states. European high yield bonds are trading below 2%. Equity, bond, and currency market volatility are all at or near historic lows. This is the least volatile […]
US Economy Is Increasingly Dependent on Elevated Stock Shares and Real Estate As Personal Saving Rate Hits Decade Low: “Central Bank Put” to Remain in Place if Core PCE Stays below 2%
The “central bank put” safety net for asset prices will remain in place because it is too late to do otherwise. Therefore, selling risk assets short will remain the equivalent of pushing an inflated basketball under water. We reiterate our call to accumulate equity index longs on any dips and trim position sizes on rallies until core PCE convincingly rises above 2%.
Central bankers have flat lined risk and investors have crossed to the other side expecting nirvana & free money forever.
“Revenge of the Savers:” The Real Reason Behind Demand for Bitcoin and Other Decentralized Digital Currencies
The main driver of cryptocurrency demand, which we describe as “revenge of the savers,” is what concerns central banks, governments, and too-big-to-fail banking behemoths such as JP Morgan Chase.
Venezuela: a tragic reminder of the follies of political corruption, unjustified increases in money supply, and heavy handed actions by central planners to cheat basic economics.