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Albert Edwards: Why The Next Recession “Might Only Be Six Months Away”

September 20, 2018

Albert Edwards: Why The Next Recession “Might Only Be Six Months Away”

SocGen’s Albert Edwards is out with a new note today – one which he says he wasn’t going to write – but felt compelled to do so anyway due to the ongoing rout in the US bond market, which has prompted the following question that Edwards tries to answer: Is the Ice Age over?… of as he elaborates:

“As the bond rout continues, the biggest call investors have to make is whether the break of the multi-decade downtrend marks the end of the secular bull market. This is the big one. Get on the wrong side of a new multi-year bear market in government bonds and all investment portfolios will be shredded to ribbons, as bonds are the cornerstone of most equity valuation models.”

To Edwards this is a familiar question because as he explains, it is “exactly the same bold heading box I wrote in my Global Strategy Weekly of 13 June 2007.” As he recalls, “the rout in the bond market back then was even more savage than it has been in recent weeks, with the 10y yield rising from 4¾% in mid-May 2007 to the 5¼% peak on 12 June, just one day before I wrote the words above, pondering the possible end of the secular bull market for Government bonds.”

Furthermore, just like now, yields were also set to break out above the secular downtrend and respected bond investors such as Bill Gross were, just like now, calling for the end of the secular bull market. Referring to a chart from SocGen’s head of technical analysis, Edwards points out that the break in the 10y above 2.8% was not the key level that could mark the end of the secular bull market, but rather it was the 3.05% zone as shown in the chart below. Indicatively, earlier today the 10Y hit 3.09% after reaching as high as 3.11% yesterday.

…click on the above link to read the rest of the article…

This Is Going To Happen In 2016: “One Of The Greatest Commodity Plays Of All Time”

January 3, 2016

This Is Going To Happen In 2016: “One Of The Greatest Commodity Plays Of All Time”

While stock markets held strong near their all-time highs, the last year saw massive financial destruction in global commodities markets. Oil, gold, silver, steel, coal and other raw materials experienced price drops not seen since just before the the Crash of 2008. As an example of how bad it has gotten in the raw materials space one need only look at the Baltic Dry Index, which is used to assess the cost of shipping raw materials by sea. Signaling serious economic problems, the BDI recently hit its all-time low, surpassing even the lows hit during the last financial crisis.

That a significant financial, economic or monetary event will soon be upon us cannot be denied.

Yet within crisis there is opportunity, and knowing what can happen and how to position yourself accordingly ahead of the fallout will not only ensure that your wealth is preserved, but will help you thrive financially. While we have always urged those concerned with the state of affairs in the world to have a healthy storage of food and supplies in anticipation of supply disruptions or hyperinflationary monetary policy, a major financial event will, as it did following the last crisis, likely lead to significant gains in precious metals as investors the world over shift capital into the historical monetary asset of last resort.

As Future Money Trends explains in the following micro-documentary, there are three perfect catalysts for why silver and gold are headed to new highs in the very near future: low prices and global supply shortages, war, and the collapse of U.S. bond markets.

What we are about to show you is undeniable evidence… This is going to happen within the next year… Silver is likely the most undervalued asset available to investors today. 

Watch (Courtesy Future Money Trends):

…click on the above link to read the rest of the article…

The US Bond Market is far Larger than the Stock Market: If Even Part of it Blows, it’ll Dig a Magnificent Crater

September 23, 2015

The US Bond Market is far Larger than the Stock Market: If Even Part of it Blows, it’ll Dig a Magnificent Crater

“So, if rates rise, we get nervous. If rates fall, we get nervous. If rates stay the same, we get nervous. When don’t we get nervous? Raise the rates already! We are talking an idling .25% not 3.5% where we should be to make saving pay, and borrowing a cautionary endeavor as it should be!”

That’s the lament posted by a WOLF STREET commenter on Monday afternoon.

“Perhaps investors are getting nervous because the price action is so bad,” explained DoubleLine Capital CEO Jeffrey Gundlach on Monday about the selling pressures junk bonds have come under after Fed Chair Janet Yellen’s press conference, which had been, in his words, “a little bit of a debacle.”

He complained that Yellen had thrown uncertainty and confusion over financial markets, as Fed heads “kind of no longer have a framework” to go by.

He’s always talking up his $80-billion book, which is full of bonds. He has a lot to lose when rates rise and bonds decline in value. So he said that raising rates this year would be a “policy mistake.”

It certainly would be for him, having ridden the greatest bond bull market all the way to its peak while extracting a ton of fees along the way.

Bond-fund managers like Gundlach already had a few scares to deal with, including the “Taper Tantrum” in the summer of 2013 in reaction to the Fed’s discussions on tapering QE Infinity out of existence, then the “flash crash” in the Treasury market last October 15, and for the past year, the not-so-flash crash in energy junk bonds.

Folks have reason to be nervous about bonds.

Bonds are supposed to be a conservative investment, safer and more predictable than stocks and a host of other asset classes. But bonds are on edge, and investors can see it. And they can see the sheer magnitude of it.

 

…click on the above link to read the rest of the article…

It’s Not Just China You Should Be Worried About

August 21, 2015

It’s Not Just China You Should Be Worried About

Junk Rolling Over

TIVOLI, New York – Chinese stocks fell hard on Tuesday. The Shanghai Composite plunged more than 6% – the biggest fall in three weeks. Our research team in Beijing is downcast.

“Nobody here wants to hear about stocks,” they tell us.

roulettewheelImage credit: AP

And the junkiest – and riskiest – part of the U.S. bond market has taken a dive too. Here’s that chart of the big U.S. junk bond ETF that Chris highlighted in yesterday’s Market Insight. It has completely rolled over this year…

1-HYGiShares iBoxx High Yield Corporate Bond ETF (HYG), daily. HYG is down 6% from its high for the year (this chart shows solely the price of HYG, it is not a total return chart including coupon payments) – click to enlarge.

Meanwhile, U.S. corporate earnings have plateaued. And according to Deutsche Bank’s David Bianco, earnings are actually falling when you exclude companies’ slick accounting adjustments to “smooth” their numbers.

The only thing left propping up Wall Street stocks, as we explained yesterday, is insider trading.

Retail Rot

Recent sales figures from America’s retailers show how deep the rot has become.

Sales have been rising at an alarmingly slow rate – just 0.5% since 2007. Between 2000 and 2007, they went up four times as fast. In the 1990s recovery, they went up six times as fast.

Especially rotten are sales at America’s four largest mall retailers – Macy’s, Kohl’s, Sears, and JC Penney. Together, their sales are falling at a 10% rate per year… or four times faster than the fall in department store sales generally. What is interesting about these four companies is that they have been among the most aggressive of the stock market manipulators.

…click on the above link to read the rest of the article…

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