In a striking interview with Goldman's Allison Nathan, legendary trader Paul Tudor Jones argues that US inflation is set to accelerate sharply, making bonds a very poor investment, and that the Fed must act swiftly to tackle financial bubbles created by prolonged monetary easing.
Joining such luminaries as Bill Gross and Ray Dalio, who have both claimed the bull market in bonds is over, PTJ joins the choir and warns that "markets disciplined Greece for its budget transgressions; it’s just a matter of time before they discipline us" and as a result he sees the 10-year yields rising to 3.75 percent by year-end as a “conservative” target amid the now traditional and widely discussed bogeymen: supply outweighing demand, economic momentum outpacing the monetary policy response, and "glaring" bond valuations. Oh, and central banks ending the party, of course:
Beginning next September, when the ECB concludes its asset purchases, the aggregate balance sheet of the main central banks will start contracting after nearly a decade of expansion. That will be a major data break, making it a horrible time to own bonds.
PTJ also pours cold water on the repeated suggestion that higher yields will lead to more buying from pension funds: "Bond pension buying, for example, is very pro-cyclical. When stock prices rise, pensions reallocate their capital gains from stocks into bonds. As we’ve seen, this depresses the term premium and fuels more gains in the stock market. If and when the Fed raises rates enough to stop and reverse the stock market rise, that virtuous circle predicated on increasing capital gains will reverse, and bonds and stocks will decline together like they did in the 1970s."
The biggest factor, however, which is preventing PTJ from owning any risk assets is today's unnaturally low rates: "with rates so low, you can’t trust asset prices today. And if you can’t tell by now, I would steer very clear of bonds."
There is another reason PTJ is not deploying capital: last month's vol shock was just the beginning:
In my view, higher volatility is inevitable. Volatility collapsed after the crisis because of central bank manipulation. That game’s over. With inflation pressures now building, we will look back on this low-volatility period as a five standard- deviation event that won’t be repeated.
When would Tudor buy stocks? "When would I want to buy stocks? When the deficit is 2%, not 5%, and when real short-term rates are 100bp, not negative"... in other words not for a while.
So what is he buying: "I want to own commodities, hard assets, and cash... The S&P GSCI index is up more than 65% from its trough two years ago. In fact, relative to financial assets, the GSCI is at one of its lowest points in history. That has historically been resolved by commodities putting on a stunner of a show, stoking inflation. I wouldn’t be surprised if that happened again."
In other words, PTJ and Gundlach agree on two things: stay away from bonds, and buy commodities.
But the most notable part of the interview, and where PTJ's most apocalyptic sentiment shines through, is his description of where he sees Fed Chair Powell right now: as General Custer before the Battle of Little Big Horn, a battle which - at least in the history books - was lost.
Let me describe to you where I think Jerome Powell is right now as he takes the reins at the Fed. I would liken Powell to General George Custer before the Battle of the Little Bighorn, looking down at an array of menacing warriors. On the left side of the battlefield are the Stocks—the S&P 500s, the Russells, and the NASDAQs—which have grown, relative to the economy, to their largest point not just in US history, but in world history. They have generally been held at bay and well-behaved, but they are just spoiling to show their true color: two-way volatility. They gave you a taste of that in early February. Look to the middle and there waits the army of Corporate Credit, which is also larger than ever relative to the economy, as ultra-low rates have encouraged it to gain in size, stature, and strength. This army is a little more docile right now, but we know its history, and it can be deadly when stressed. And then on the right are the Foreign Currency Fighters, along with the Crypto Tribe, an alternative store of value that only exists because of the games central banks are playing; the opportunity cost of Crypto is so low, why not own some? The Foreign Currency Fighters have strengthened by 10% over the past year. Compounding the problem, they have a powerful, ascending leader, the renminbi, to challenge the US dollar’s hegemony as the reserve currency. All of these forces have been drawn to the battlefield because of our policy experiment with sustained negative real rates.
So Powell looks behind him to retreat. But standing there is none other than Inflation Nation, led by the fiercest warmongers of them all: the Commodities. He might take comfort that he is not alone on the battlefield. But then he looks over at the Washington, DC, fiscal battalion and realizes they are drunk on 5% deficit beer. That’s what Powell is facing, whether he recognizes it or not. And how he navigates this is going to be fascinating to watch.
* * *
His full must read interview is below:
Interview with Paul Tudor Jones
Allison Nathan: You’ve said that you would rather hold a burning coal than a 10-year Treasury. Why?
Paul Tudor Jones: The bear market in bonds is the natural upshot of the bull market in monetary and fiscal laxity. My view on bonds is based on three major factors. First, there is a huge flow of funds imbalance with supply overwhelming demand. We are in a unique historical situation with the Fed stepping away from the market while the US government is significantly increasing its auction sizes. I assume bonds will fall until the peak in full Treasury auction sizes, which I don’t think will be before 2Q2019. At the current pace, next February we might have a quarterly auction of $20bn 30-years vs. $15bn recently. That is so big it will only clear at substantially lower prices.
Second, economic momentum is now overwhelming the pace of the monetary policy response. We’re in the third-longest economic expansion in history. Yet we’ve somehow managed to pass a tax cut and a spending bill, which together will give us a budget deficit of 5% of GDP—unprecedented in peacetime outside of recessions. This reminds me of the late 1960s when we experimented with low rates and fiscal stimulus to keep the economy at full employment and fund the Vietnam War. Today we don’t have a recession, let alone a war. We are setting the stage for accelerating inflation, just as we did in the late ‘60s.
Finally, and most importantly, adverse valuations are becoming more glaring. Bonds are the most expensive they’ve ever been by virtually any metric. They’re overvalued and over-owned. Valuations haven’t been that relevant in recent years because of central bank manipulation outside of the US, but with the Fed in motion and the US economy in fifth gear, they start to matter a lot. I believe we’re at that critical threshold right now.
Allison Nathan: Inflation expectations have been very well-anchored; does that make history a less useful guide?
Paul Tudor Jones: No. I think we’re experiencing a hysteresis effect in global groupthink, led by the Fed, believing that we can depress term and risk premia without consequences for inflation or financial stability. That may have been the case for the past six to seven years. When it comes to inflation, you need to be careful what you wish for. At the end of other big asset price booms—Japan in 1989 or the US in 1999—inflation did not increase in a measured way. Rather, it accelerated in a non-linear fashion until the central bank had to come in and stop it with substantially higher real rates than we have today.
Allison Nathan: Is the market underestimating commodity-related inflation today?
Paul Tudor Jones: Absolutely. The S&P GSCI index is up more than 65% from its trough two years ago. In fact, relative to financial assets, the GSCI is at one of its lowest points in history. That has historically been resolved by commodities putting on a stunner of a show, stoking inflation. I wouldn’t be surprised if that happened again.
Allison Nathan: Some argue that it will be difficult to overcome structural deflationary forces, like technological progress or demographic change. You don’t agree?
Paul Tudor Jones: On technology, what I’ve seen during this disinflationary period is the concentration of economic power into a few corporate hands. Once they have cleared the playing field of their competitors, they could ratchet up prices to decompress margins. So I am not sure these technological disruptions will continue to bring disinflation. In terms of demographics, economists at the Bank for International Settlements (BIS) have shown that it is the relative size of the working-age population that influences long-term trends in inflation. Unlike the prior decade, the share of the working-age population globally is beginning to shrink, and that would argue for inflation trending up.
Allison Nathan: Does all of this just boil down to the Fed being behind the curve?
Paul Tudor Jones: Central banks love to look in the rearview mirror. They typically operate by waiting for the most obvious moment they can to make a decision to fight yesterday’s battles. Heck, the ECB hiked rates in July 2008! It is why price targeting is such a bad idea in rate decisions, as is its first cousin, gradualism. There is little in human nature that is linear, so why should rate policy be that way?
But the elephant in the room—the most important point that doesn’t get discussed enough—is the level of real interest rates. The peacetime 10-year real interest rate that has determined the efficient allocation of capital averaged 3½% since 1790 and 2½% in modern times. Yet in 2018, with the economy operating at full employment, our real 10-year rate is 0.64%, well below historical averages. Why? It seems the reason is the Fed is trying to bring core inflation from a smidge below 2% to a smidge above it. But since 1790, US inflation has averaged 1.3% in peacetime. And yet somehow we have this magical 2% inflation target. It’s a unicorn we keep chasing at the expense of everything else.
Sitting where we are today, this grand experiment with negative real rates might seem successful: We have the strongest economy in 40 years, at full employment. The mood is euphoric. But it is unsustainable and comes with costs such as bubbles in stocks and credit. Navigating these bubbles will be one of the most difficult jobs any Fed chair has ever faced.
Allison Nathan: Is the Fed up to the task?
Paul Tudor Jones: Let me describe to you where I think Jerome Powell is right now as he takes the reins at the Fed. I would liken Powell to General George Custer before the Battle of the Little Bighorn, looking down at an array of menacing warriors. On the left side of the battlefield are the Stocks—the S&P 500s, the Russells, and the NASDAQs—which have grown, relative to the economy, to their largest point not just in US history, but in world history. They have generally been held at bay and well-behaved, but they are just spoiling to show their true color: two-way volatility. They gave you a taste of that in early February. Look to the middle and there waits the army of Corporate Credit, which is also larger than ever relative to the economy, as ultra-low rates have encouraged it to gain in size, stature, and strength. This army is a little more docile right now, but we know its history, and it can be deadly when stressed. And then on the right are the Foreign Currency Fighters, along with the Crypto Tribe, an alternative store of value that only exists because of the games central banks are playing; the opportunity cost of Crypto is so low, why not own some? The Foreign Currency Fighters have strengthened by 10% over the past year. Compounding the problem, they have a powerful, ascending leader, the renminbi, to challenge the US dollar’s hegemony as the reserve currency. All of these forces have been drawn to the battlefield because of our policy experiment with sustained negative real rates.
So Powell looks behind him to retreat. But standing there is none other than Inflation Nation, led by the fiercest warmongers of them all: the Commodities. He might take comfort that he is not alone on the battlefield. But then he looks over at the Washington, DC, fiscal battalion and realizes they are drunk on 5% deficit beer. That’s what Powell is facing, whether he recognizes it or not. And how he navigates this is going to be fascinating to watch.
Allison Nathan: So, what should Powell do?
Paul Tudor Jones: Unlike his predecessors, he needs to be symmetrically fearless. Policy unorthodoxy needs to be reversed as quickly as it was deployed. After Alan Greenspan ignored the NASDAQ bubble, it crashed and led to this incredible foray into negative real rates. That created the mortgage bubble, which was initially ignored by Ben Bernanke and ultimately spawned the financial crisis, leading us to fiscal and monetary measures that were unfathomable 20 years ago.
Today, we need a Fed chair who is proactive, not reactive. Policy-wise, that means moving as quickly as possible to raise rates and restore appropriate risk premia so as to promote the long-term, efficient allocation of capital. While this will hurt a bit in the short run, it is better than the intergenerational theft that is being perpetrated now with the combination of low rates and high deficits. And it definitely will promote a more stable long-term economic equilibrium.
It also means having honest discussions about financial stability. A “symmetrical” way to signal that our policy path is unsustainable is to conventionally use what has now become an unconventional tool through its disuse: raise margin
requirements on stock borrowing. Whether you’re an individual or a corporation, now is not the time to be aggressively leveraging your balance sheet. In fact, for individuals, given the record-low personal savings rate, now is the time to be doing the exact opposite. Remember, saving is the seed corn of future investment and worthy of as much discussion as inflation. If the Fed doesn’t change its course, the systemic threat to the economy will only increase, making the eventual unwind that much more painful.
Allison Nathan: You’ve repeatedly mentioned fiscal policy. Can you elaborate on your views on that?
Paul Tudor Jones: I think the recent tax cuts and spending increases are something we will all look back on and regret. And I lay them firmly at the feet of the Fed for encouraging such a fiscal transgression by pursuing this experiment with negative real rates at full employment. With central banks globally experimenting with negative rates, zero rates, quantitative easing, and price targeting, it is easy to see how central governments could feel green-lighted to pursue unconventional fiscal policies. Certainly, central banks are not in a position to criticize them… If real rates had been at their long-term averages, would we have enacted a $1.5tn tax cut? My guess is the Congressional Budget Office’s scoring of the increased interest burden would have nixed it.
Allison Nathan: In this context, what do you want to own?
Paul Tudor Jones: I want to own commodities, hard assets, and cash. When would I want to buy stocks? When the deficit is 2%, not 5%, and when real short-term rates are 100bp, not negative. With rates so low, you can’t trust asset prices today. And if you can’t tell by now, I would steer very clear of bonds. Just think, Greece will have a budget deficit below 2% of GDP by the time ours grows to 5%-plus. The markets disciplined Greece for its budget transgressions; it’s just a matter of time before they discipline us. I think that time could be starting now with 10-year Treasuries rising to 3.75%, and 30-years to 4.5%, by year-end, and those are conservative targets.
Allison Nathan: Won’t easier monetary policy in Europe and Japan cap the rise in US yields?
Paul Tudor Jones: I don’t think so. Beginning next September, when the ECB concludes its asset purchases, the aggregate balance sheet of the main central banks will start contracting after nearly a decade of expansion. That will be a major data break, making it a horrible time to own bonds.
Allison Nathan: Won’t rising yields attract some buyers?
Paul Tudor Jones: No. Bond pension buying, for example, is very pro-cyclical. When stock prices rise, pensions reallocate their capital gains from stocks into bonds. As we’ve seen, this depresses the term premium and fuels more gains in the stock market. If and when the Fed raises rates enough to stop and reverse the stock market rise, that virtuous circle predicated on increasing capital gains will reverse, and bonds and stocks will decline together like they did in the 1970s.
Allison Nathan: You are well-known for calling Black Monday. Is the recent surge in volatility behind us?
Paul Tudor Jones: In my view, higher volatility is inevitable. Volatility collapsed after the crisis because of central bank manipulation. That game’s over. With inflation pressures now building, we will look back on this low-volatility period as a five standard- deviation event that won’t be repeated.
Comments
He can't stop the big horizon event coming. Hide your cash.
"Women & Children (((bankers))) first!"
The rest of you steerage class, get down below & wait for further instructions.
In reply to He can't stop the big… by VAL THOR
More doom porn again? Man, when is this movie going to end?!
In reply to "Women & Children (((bankers… by DillyDilly
This has to be one of the few corners of the internet where most people involved actively want and will celebrate the collapse of our financial and political system.
99% of the population it'll be the end of the world when it eventually happens. For us ZH'ers, WolfStreet, 4Chan, 8Chan and a handful of other "holes" ... we'll be partying like its 1999.
In reply to More doom porn again? Man,… by kralizec
nah they'll all be broke too... if they arent already
In reply to This has to be one of the… by Haus-Targaryen
If what this guy says is true, it explains why (((they))) allowed a gentile to take the reins at the Fed, and thus, the blame when it finally goes down in flames.
In reply to nah they'll all be broke too… by dark pools of soros
Few know what is about to happen in the markets. As I speak with friends, family, coworkers, strangers I chitchat with, none of them know what is going on.
It will totally blindside 98% of the country. I have prepared my retirement investments to watch a market meltdown from a safe distance. Most have not, nor would they be able to even if they knew.
Whom the gods would destroy, they first make mad.
In reply to If what this guy says is… by J S Bach
"... we'll be partying like its 1999."
Not me, Haus. Granted, I would feel a sardonic glee watching the grasshoppers scamper frantically about as we ants shut and lock our doors to their folly. But, the knowledge that all of this was so avoidable is what makes this scenario so tragic to me. It isn't as though we all innocently wandered down a dangerous path unknowingly. No. We were LED here with malice aforethought by the (((eternal nation-wreckers))) who have as their ultimate goal the destruction of Western Civilization and the ascendance of their Talmudic ruling empire on earth.
In reply to Few know what is about to… by divingengineer
The financial side of this is a direct result of the banking system and social welfare system that has placated the population for far too long.
This has to be uncomfortable for it to change anything.
In reply to "... we'll be partying like… by J S Bach
The only reason to root for the collapse is because the sooner we get it over with, the better off we'll be.
But let's not get confused about this fact: some will get hurt worse than others, but it's going to suck for everybody.
In reply to "... we'll be partying like… by J S Bach
Geez-us, everything under the sun is not about racial, ethnic or religious groups despite the Tudor guy’s gripping historical analogy. He thinks cryptos are an accidental market, born solely due to the marriage of quantitative easing and inflated stocks, but he still thinks people with extra money should buy some, just because it does not require much risk to get into that market. Otherwise, he thinks the dreaded fiat is better than stocks. He likes cold-hard cash, commodities and hard assets. Is real estate a hard asset? This guy seems whip-smart, but isn’t the real-estate market pretty brutal or perilous right now? For certain types of non-leveraged sellers in bubbly markets, it could be a lotto, but for people who must borrow, it seems like the exact opposite.
In reply to If what this guy says is… by J S Bach
In reply to nah they'll all be broke too… by dark pools of soros
With buckshot.
In reply to This has to be one of the… by Haus-Targaryen
I’m an 00 man, myself.
But there is an argument to be made for 000, especially the magnum loads.
Alas, so many choices in life.
In reply to With buckshot. by dark fiber
".. we'll be partying like its 1999. "
Yup; and like 1999, the party will be very short lived ...
careful what you wish for because the next downturn is going to be measured in decades.
In reply to This has to be one of the… by Haus-Targaryen
I appreciate this, but I am as financially prepared as I can be and I'd prefer this to happen sooner rather than later, as I have more time to "rebuild" thereafter.
In reply to ".. we'll be partying like… by curbjob
Can't happen soon enough......
In reply to This has to be one of the… by Haus-Targaryen
Commodity prices have been driven by the explosive growth in China. If China slows down there just won't be an investment opportunity anywhere.
In reply to This has to be one of the… by Haus-Targaryen
Farmland and smaller "homesteads" outside of major metropolitan areas.
In Germany, we have great examples such as this, this and this which I am always recommending as great places to park cash.
In reply to Commodity prices have been… by Stuck on Zero
2-15--DO NOT WASTE MONEY BETTING AGAINST STOCKS-HERE'S WHY=
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I have a good friend/colleague who works at big public pension fund. He did a “stress test” study with the data available to him on all big public pensions. He concluded that, based on the current stated amount of underfunding at every big pension fund, if the Dow/SPX declined 10% or more over a sustained period of time – where “sustained period” is defined as 3-4 month – every public pension fund in the country would collapse.
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The Fed added $11 billion to its SOMA account for the week ending yesterday. It purchased $11 billion in mortgage securities directly from banks. This injects $11 billion into the banking system. Cash is “high powered” money, meaning it can be leveraged 10x (banks need to hold 10% in reserves against “high powered” money. $11 billion is $110 billion of leverage for the banks to use for activities such as propping up the stock market.
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This certainly explains why there appears to be another “V” recovery in the stock market after a near-10% drawdown in the Dow and the SPX. This is very similar to the 10% market plunges in August 2015 and January 2016, both of which were followed with highly unusual “V” recoveries.
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You’ll note in the graphic above that the three 10% drops in the Dow since August 2015 were followed with sharp, “V” recoveries. Each one encompassed 10% drawdowns which were remarkably brief. The latest 10% plunge has been met with an equally forceful recovery, with the 10% decline allowed to persist for less than three trading days.
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These factors discussed explain why the Fed will not let the stock market sustain a meaningful sell-off
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In reply to More doom porn again? Man,… by kralizec
Powell says everything is so great the Fed is normalizing its balance sheet and it is going "smoothly".
Meanwhile, they sold 40 billion off the 4,000 billion+ balance sheet over the last year, meaning it will be normalized sometime around 2120, or over a hundred years from now, assuming nothing "unforeseen" happens.
https://www.federalreserve.gov/releases/h41/current/h41.htm
In reply to "Women & Children (((bankers… by DillyDilly
100 year bonds on deck ...
I think I'm turning Japanese. turning Japanese. I really think so.
In reply to Powell says everything is so… by eclectic syncretist
Why are we locked down here? Water is seeping through. Let us out...
In reply to "Women & Children (((bankers… by DillyDilly
Isnt cash illegal?
Oh not yet
In reply to He can't stop the big… by VAL THOR
let me guess, gold will surge . . .
we've heard this script before
Not at first, there will be a massive sell off. Paper positions will collapse. Cash will be king until the market is flooded with paper. Then it will crash as well. We are reverting to the 500 year mean. There will come a time when you can buy 16 hours of labor with a single silver eagle.
In reply to let me guess, gold will… by pliny the longer
There's something unusual about the market this morning: bonds are getting bought big time but stocks are set to open down. Normally they would be going up as interest rates drop........
Something else to keep an eye on :)
In reply to Not at first, there will be… by Cloud9.5
With no QE, wait for the dreaded federal deficit. It will be out of this world.
Instead of cutting to the core of the government, in the media and market driven deficit emergency, social security will be the target. This will be after the congressional elections, Trump will take a GOP win in the congressional elections as a mandate of his governing. A social security reform to "save" social security will be a cover to gut it of the $3 trillion in federal bonds.
The end is near, fiscal suicide will leave the rest of the country in the gutter of life.
Wait for the drama of the federal deficit emergency. The whole show will be to gut social security to pay for the tax cut.
Did you know, workers are actually getting only 6% of the tax cut? This gang has to pay for the tax cut, where will they get the money since they made the budget deal with the democrats to increase social spending?
These deficits can't be sustained, a significant percentage of the government would have to be cut and we can see this will not happen, so if the government and social programs aren't going to be cut, then where's the money?
In reply to There's something unusual… by eclectic syncretist
I would prefer being paid in silver eagles...at least I would have something tangible for my labor and not some paper joo bux or digits on a computer somewhere.
In reply to Not at first, there will be… by Cloud9.5
I prefer hard money as well, but the general population has been conditioned not to recognize it for what it is. It is only after the paper collapses, that that the people will come to appreciate precious metals. Even then, the local serfs may be paid in script. Banks printed their own money in the 19th century. There is no reason a municipality could not float a local bond and print their own paper after the collapse.
In reply to I would prefer being paid in… by runswithscissors
One denarius was equivalent to about 3.7 g silver and was the daily wage for unskilled labor and Roman soldiers (200 BC). This converts to a "paycheck" of approximately 1 troy ounce of silver every two weeks.
In reply to Not at first, there will be… by Cloud9.5
"Volatility collapsed after the crisis because of central bank manipulation. That game’s over."
Don't call the bets off on this cornered rat. There are still stupid monetary policies up their sleeve. What can be guaranteed is that when they do lose control it will be like nothing we have ever seen.
Gold Bitches! (sorry, just had to.)
I no longer believe any of these clowns, the us central bank and other central banks will control the world until nukes hit the us and NATO, then the crash will happen.
Actually that would be bullish. Sorry.
In reply to I no longer believe any of… by Davidduke2000
this guy needs to lay off the pharmaceuticals.
Someone needs to wake this clown up and tell him the 70's ended 38 years ago.
Commodities will not rise while the stock market is falling. The stock market is a much larger component of household net worth now than it was in the 1970s that the negative wealth effect of a falling stock market is far more a driver of economic activity than ever before. In the 1970s, business news took up about fifteen seconds of the nightly news, when Cronkite would tell you what the Dow did that day., Today you have several all day and night business channels, and people spent far more time consuming financial news. Their 401k holdings are their retirement savings and at least 60% if not more are held in stocks. So if stocks start falling for whatever reason, consumption across the board contracts, and that's bad for commodity prices.
Second, if there could possibly be anyone who gets hurt worse than the US when the financial system melts down, its China. The entire nation's economy depends on selling what's made in their factories to the rest of the world. That scheme does not play too well when the world is reducing consumption. At the margins, China gets hurt worst of all because its a one pony show, and their currency will reflect the destruction of their economic base. And this is before any tariff walls go up against them, which historically has been every country's reaction to depressed economic times. Create jobs at home for the unemployed ! That's what the voters will be shouting., Another nail in the Chinese coffin.
Third, stock and bond prices will fall together as they rose together, that much of what he said is true. His error is that the correlation will be seen over the course of years, not day to day. Eventually five years from now, we will see drastically lower bond and stock prices. Buy these two markets will take different courses to arrive at the destination. As stocks fall in a very consistent pattern, bond prices initially ill rise sharply as capital rotates out of stocks and into bonds in a massive flight to safety. Its only after the economic destruction that a stock market cut in half causes that investors will awaken to the idea that the US may not be able to pay off its debt. That's when the ultimate credit crisis hits, and bond prices drop from their record highs, resulting in an eventual effect of both stock and bond prices having fallen during a five year period. Jones' view does not recognize how the correlation will be uncorrelated in its development, a shocking ignorance of what we have seen for the last thirty years every time the stock market has taken a dive. For the Jones' hypothesis to make sense, you would need a condition as in the 1970s where inflation rose sharply as stock prices fell, and hence stock and bond prices fell simultaneously. That situation will not happen today, because of what I described above. Stocks and commodities are too well interconnected today whereby the stock market cannot fall precipitously and not create a negative wealth effect that is deleterious for commodities. Hence, inflation will follow stock prices down, and bond prices will rise as stocks fall due to the deflationary aspects of a stock market losing half its value., The bond market prices eventually will fall, but it will be from a credit crisis, not an inflationary one.
In reply to this guy needs to lay off… by buzzsaw99
He has to be a member of the Deep State, the CFR, Illuminati, and the secular Jewish global financial conspiracy to utter such misinformation, lies, and bullshit.
The FED is ALWAYS in control.
The Custer metaphor is really interesting.
One of the reasons Custer got slaughtered, in addition to a certain amount of arrogance( he actually was a good commander IMO), was because the Army went from the lever action repeater to a longer range single shot bolt rifle. As long as the indians were far away they did just fine, but when they got close it was over.
Remind you any of the F35 and the Zumwalt?
Custer graduated at the bottom of his class at West Point. The reason he excelled during the Civil War was that he lived under the delusion he could not be killed. He won fights because he had three times the numbers and he was up against a barefoot half-starved army. He left his Gatling guns in the rear because he thought they slowed up his advance. He went up against a superior tactician with superior numbers, Sitting Bull, and he lost. It is a simple as that.
In reply to The Custer metaphor is… by Mustafa Kemal
"Custer graduated at the bottom of his class at West Point."
So did I in undergrad, but I appeared to have blossomed quite well just afterward.
I remember reading of a scene, I think at Manassas 1, where I dont think they were in bare feet yet, where Mclellan was stumped as to whether they would be able to cross a stream. They thought , and thought and figured. No motion. So Custer rode down there and goes out into the middle of the stream and yells " its just fine" or something like that. Of course, saying he had more sense that McLellan doesnt say much.
Anyway, re
" He left his Gatling guns in the rear because he thought they slowed up his advance. "
They do do that. The question is the tactical advantage of speed versus power.
"He went up against a superior tactician with superior numbers, Sitting Bull"
No argument there.
" It is a simple as that."
I dont think you made good case for that.
In reply to Custer graduated at the… by Cloud9.5
I went to an art museum today and was looking at a painting I thought was strange, the painting was of a bunch of native American peoples all naked and screwing, above them was a large fish, and above the fish was a large golden halo, could not for the life of me decipher the meaning until I read the caption at the bottom, in small print,
Custer’s last words……….
“Holy mackerel look at all those fucking Indians”
In reply to Custer graduated at the… by Cloud9.5
Just waiting for somebody at the FED to play the jew Card.
Unlike a Get out of Jail Free Card, you can only use it once, but the Jew Card never expires. You can use it as many times as you like.
So ... As bad as it probably won't get, certainly not yet, they will still be in charge as it won't be their fault.
They will probably just invent a new FIAT currency.
They already have.
We have eclipsed Weimar Germany debt levels, except this includes the entire planet. We're done. Period. They are simply prolonging what is mathematically and historically inevitable.
Fiat will crumble and this will be the greatest financial reckoning in the history of mankind. period.
God will bring down this world down, and it will be stomped on by the feet of the poor, the steps of the needy.
In reply to They already have… by BraceforImpact
Everyone said the same when Bernanke took the reins, when Yellen took the reins.
Just keep printing moar confetti ... its all good
Exactly.
The fed has total control.
To print, or not to print. That is the only question.
In reply to Everyone said the same when… by pc_babe
We are seeing the fruits of the FED pumping over $3 trillion of ultra-cheap money for stock buybacks and MA deals. The proverbial chickens are coming home to roost. This will not end well.
To infinity and beyond.
In reply to We are seeing the fruits of… by Phillyguy
The only way for the current Western Economic Model to work, the risk free rate of return (10 yr UST bond equivalent) should yield 5%. Otherwise all the pensions fail and entitlement programs run out of money.
Unfortunately, try to get to 5% from here, and the entire system collapses.
Pagination