Bill Blain Crawls Back Into His Pit: “There Is Apparently Nothing To Worry About”
What do we know different this morning?
There is apparently nothing to worry about. Everything is coming up roses. These are not the droids you are looking for – says my market guru Steve Previs. All the old market bears, like me, are looking for stuff to grumble about – terrified by the unintended consequences of QE, caught in the headlights of apparently overbought markets, of whatever else panics them… etc.
But what do we know?
We know nothing – the markets continue to make new highs supported by a blaze of good news and positive expectations. The disappointing China data and threat of poor US data is momentary… apparently.. But, but and but again… mood and sentiment can change on a dime…
I shall crawl back into my pit and ponder…
I could list a whole run of things likely to worry the markets in coming months. As usual, 99% of things the market unwisely labels “known unknowns” prove nothing more that whispy worries and momentary concerns – that with the benefit of hindsight we built up out of all proportion.
But, I am still convinced there is trouble ahead in bonds. The fact countries like Tajikistan and Ukraine are doing blowout deals is one thing – it shows price compression is out of sync and we are approaching a Ukrainian Chicken Farm Moment in the new issue bond market. It’s inevitable. The UCFM is an immutable law of bond physics.
I suspect there is trouble ahead in Investment Grade as well – which spells trouble for delicate sovereign sentiment. I got lots of positive feedback on my comments on the Austria “2% for 100” years deal yesterday, including a very astute observation from a US client as I tried to whet his interest:
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