Greenspan Fears Imminent Stagflationary Slump, Warns The Bubble Is In Bonds Not Stocks

Will mainstream Keynesian economists (which is redundant since 99% of economists are Keynesian) and the indoctrinated masses label former Fed Chairman Greenspan a chicken little and delirious gold bug?  He's advocating a return to the gold standard, and forecasting stagflation.

This is coming from a man who was the ultimate Keynesian and dubbed the "Maestro" because he was so deft at printing virtually unlimited "stimulus" dollars.  Now that he's 91 years old, I'm sure his former allies will label him a decrepit, old, has-been scholar.

By the way, Austrian economists have been saying the bond market is the mother of all bubbles for quite a while.  They will be proven right, if early.

http://www.zerohedge.com/news/2017-08-01/greenspan-fears-stagflationary-slump-imminent-warns-bubble-bonds-not-stocks

Doug Casey: “Sell All Your Bonds”

http://www.caseyresearch.com/articles/doug-casey-sell-all-your-bonds

Peter Thiel's RNC Speech: "Wall Street Bankers Inflate Bubbles In Everything From Bonds To Hillary's Speaking Fees"

One doesn't have to be a Libertarian, a Republican, gay, or male to understand Peter Thiel's message.

http://www.zerohedge.com/news/2016-07-21/peter-thiels-rnc-speech-wall-street-bankers-inflate-bubbles-everything-bonds-hillary

Gold, Bonds, & "Maybe History Has Stopped"

Being right--but early, requires patience.

http://www.zerohedge.com/news/2014-11-05/gold-bonds-maybe-history-has-stopped

An Unprecedented $660 Billion In Excess Debt Demand, And What It Means For Bond Yields

This article declares the bond market will collapse with an accompanying soaring gold price.  But between now and then, bonds should continue their rally (yields and interest rates should continue to decline as QE artificially boosts demand for bonds, therefore outstripping supply)--and gold prices may further decline, despite the Fed's and Bank of Japan's balance sheets continuing to grow to grotesque levels.

In other words, expect choppy markets if you're long precious metals, but your day will come eventually, when inflation rears its ugly head.

http://www.zerohedge.com/news/2013-04-21/unprecedented-660-billion-excess-debt-demand-and-what-it-means-bond-yields

Bill Gross: The US Is A Debt Meth Addict - Unless The Fiscal Gap Is Closed Soon "The Damage Will Be Beyond Repair"

Once again the bond king is warning that the US Treasury bond market may be damaged "beyond repair", and is bullish on gold.  Go figure.

http://www.zerohedge.com/news/2012-10-02/bill-gross-us-debt-meth-addict-unless-fiscal-gap-closed-soon-damage-will-be-beyond-r

What's in a Name?

http://investments.pimco.com/insights/External%20Documents/Investment_Outlook_July_2012_Whats_in_a_Name.pdf

Gold Explodes On S&P Downgrade Warning

http://www.zerohedge.com/article/gold-explodes-sp-downgrade-warning

Who would have thunk that the one beneficiary of an insolvent US (with both bonds and stock futures plunging) would be gold. Oh wait...

Living Standards Doomed To Fall In U.S.

When the world's largest bond investor says get out of US Treasury bonds, one may want to take heed of his advice.

http://edegrootinsights.blogspot.com/2011/03/gold-market-saying-living-standards.html

Fed passes China in Treasury holdings

http://www.ft.com/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1CqdbTfkB

The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures.

Based on weekly data released on Thursday, the New York Fed’s holdings of Treasuries in its System Open Market Account, known as Soma, total $1,108bn, made up of bills, notes, bonds and Treasury Inflation Protected Securities, or Tips.

According to the most recent US Treasury data on foreign holders of US government paper, China holds $896bn and Japan owns $877bn.

“By June [the Fed] will have accumulated some $1,600bn of Treasury securities, likely to be in the vicinity of China and Japan’s combined holdings,” said Richard Gilhooly, a strategist at TD Securities. “The New York Fed surpassed China in the past month as the largest holder of US Treasury securities,” he noted.

Gross Says Fear ‘Mindless’ U.S. Deficit Spending

PIMCO's Bill Gross is parroting what I've been ranting about for years.  PIMCO funds have over $1 trillion under management.  When the world's biggest bond fund manager says to stay away from US Treasury bonds, one may want to heed his advice.

http://www.bloomberg.com/news/2011-01-05/pimco-s-gross-says-investors-should-fear-mindless-u-s-deficit-spending.html

“The problem is that politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion dollar annual deficit,” Gross wrote in a note on Pimco’s website today. “As long as the stock market pulsates upward and job growth continues, there is an abiding conviction that all is well and that ‘old normal’ norms have returned. Not likely. There will be pain aplenty.”

 “All investors should fear the consequences of mindless U.S. deficit spending.” wrote Gross, a founder and co-chief investment officer at Pimco. Like a female mantis who eats the head of her mate while reproducing, policy makers are “munching on the theoretical heads of future generations, while paying no mind to the wretches that will eventually be called upon to pay the bills,” he wrote.

Bond investors will suffer once general prices start to rise, Gross wrote. He declined to be interviewed today. 

“The American answer to a bulging waistline is always ‘mañana’” Gross wrote. “Eventually, as reflationary policies take hold, long-term bondholders lose their heads (and a portion of their principal as well), as yields rise to reflect higher future inflation.”

Marc Faber on QE2, equities, commodities, and bonds

http://www.youtube.com/watch?v=KWiwWWAPBm8&feature=player_embedded

Strong stocks or debilitated dollar?

Click on chart to enlarge.

http://online.barrons.com/article/SB50001424052970204485204575522280439957038.html?mod=BOL_hpp_dc

Stocks are up only in terms of a declining dollar. In real terms, relative to gold, stocks have gone nowhere.

Technically, equities indeed are resilient and seemingly every other day shake off morning weakness to rebound by the close. Stocks reaching new 52-week highs are plentiful while stocks at the other end are scarce.

So what's the problem? Basically, negative factors don't matter until they do. Only retrospectively do their importance reveal themselves.

The bond market continues to voice its displeasure with the economy.

The U.S. dollar also expressed its concern. One week ago, the U.S. Dollar Index (DXY), a measure of the dollar against a trade-weighted basket of other currencies, broke down below a very important support level at 80 (see Chart 1). In fact, the dollar has been in a declining trend since June.

Granted, a weak dollar helps U.S.-based exporting companies, and indeed big, multinational stocks on the U.S. exchanges are beating smaller, domestically oriented stocks. But a falling currency only helps until it hurts.

So is the weak dollar, and not a positive outlook for the economy, boosting stock prices? Chris Carolan, proprietor of the Carolan.org analysis firm thinks so. He points out that the stock market priced in gold has barely lifted off its March 2009 lows.

By changing the pricing mechanism of the stock market from nominal dollars to the purchasing power of gold, we can see an undeniable multiyear bear market still in force.

To be sure, a falling dollar does boost the price of gold as well since it is priced in dollars. But gold has rallied for nearly a decade as the dollar gyrated wildly. Indeed, gold has made highs in terms of all major paper currencies. Gold is in a bull market no matter how we look at it.

For the near-term, stocks continue to show strength — but only in terms of depreciating dollars. In real terms of a golden constant, the stock market has barely maintained its value.

John Paulson: double digit inflation coming

http://blogs.forbes.com/robertlenzner/2010/09/27/john-paulson-sell-bonds-buy-stocks-double-digit-inflation-coming/

Multibillionaire hedge fund operator John Paulson, the investment genius who made a killing going short subprime mortgages a few years ago, told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.

His crystal ball is for 2% GDP growth for 2011 and 2012 and he warns that the Fed’s promise of quantitative easing should contribute to double-digit inflation over the next few years.

As this is the best time in 50 years to buy homes, Paulson advised his listeners, crowded into 3 separate dining rooms, to issue 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

See disclaimers in the side bar. The opinions in this article are not necessarily representative of mine, and should not be construed as investment advice. Perform your own due diligence.

Fed reverses exit plans

http://www.bloomberg.com/news/2010-08-11/fed-reverses-exit-plans-sets-floor-of-2-trillion-for-securities-holdings.html

The Federal Reserve reversed plans to exit from aggressive monetary stimulus and decided to keep its bond holdings level to support an economic recovery it described as weaker than anticipated.

Central bankers meeting yesterday adopted a $2.05 trillion floor for their securities portfolio, pivoting toward a quantitative target for monetary policy.

Jim Rogers says sell bonds, buy precious metals

http://www.bloomberg.com/news/2010-07-07/sell-bonds-buy-precious-metals-rice-on-supply-shortages-jim-rogers-says.html

Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.

Louise Yamada on markets

Louise Yamada, a technical analyst extraordinaire, weighs in on equities, bonds, interest rates, and commodities, including gold and silver.



http://www.cnbc.com/id/15840232?play=1&video=1487900029

The BIS on sovereign debt

http://www.fgmr.com/gold-needed-now-more-than-ever.html

“Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future.”

“First, fiscal problems confronting industrial economies are bigger than suggested by official debt figures…As frightening as it is to consider public debt increasing to more than 100% of GDP, an even greater danger arises from a rapidly ageing population. The related unfunded liabilities are large and growing...In the aftermath of the financial crisis, the path of future output is likely to be permanently below where we thought it would be just several years ago. As a result, government revenues will be lower and expenditures higher, making consolidation even more difficult…

Second, large public debts have significant financial and real consequences. The recent sharp rise in risk premia on long-term bonds issued by several industrial countries suggests that markets no longer consider sovereign debt low-risk…

Third, we note the risk that persistently high levels of public debt will drive down capital accumulation, productivity growth and long-term potential growth…

Finally, looming long-term fiscal imbalances pose significant risk to the prospects for future monetary stability...unstable debt dynamics could lead to higher inflation: direct debt monetisation, and the temptation to reduce the real value of government debt through higher inflation.”

The Bank for International Settlements (BIS) is the highest authority on international finance. Which is why as a contrarian, I was shocked they are firing the same warning shots on sovereign debt that I've been ranting on for years. Perhaps the debt problems have become so severe and apparent that even the blind can see what faces us.

Dan Norcini's commentary

There is no such thing as a jobless recovery, despite what the government spins. Either it's an economic recovery--or it's not.

Bonds are strangely higher today when one considers a yearly high in the S&P 500 and a general reflation trade. I have given up attempting to figure that market out as it is undoubtedly so heavily intervened in by the monetary authorities that the signals it gives off are dubious. One would think that with gold moving higher today and the Dollar lower that the last thing that would be moving higher is the bond market. After all, if the economy is so damned good that the equities can put in a yearly high leading one to believe the chatter that the Fed is moving towards draining excess liquidity because things are so peachy-keen, then why would money be flowing INTO and not OUT OF bonds.

In the meantime, don’t worry about a single thing – bankrupted states, financially impoverished towns, townships, counties and cities, falling tax revenues, chronically high underemployment rates and federal government spending that can only be described as a treacherous betrayal of the next generation of citizens – none of this is important – the only thing that matter is that the stock market is higher so all is well. Let the good times roll baby!

Dubai defaults on its debt

Dubai, once the poster child of excess in the Middle East, is defaulting on its debt. Equities and bond markets worldwide were rocked on the news. Unfortunately, this won't be an isolated case going forward, as many emerging and developed countries are on the brink (including the US).

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRsjlClzl500

Happy Thanksgiving.