{"id":38840,"date":"2018-10-07T12:43:58","date_gmt":"2018-10-07T17:43:58","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38840"},"modified":"2018-10-07T12:43:58","modified_gmt":"2018-10-07T17:43:58","slug":"waiting-for-the-world-to-end-bond-rout-bodes-badly-for-exuberant-equity-investors","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38840","title":{"rendered":"“Waiting For The World To End” – Bond Rout Bodes Badly For Exuberant Equity Investors"},"content":{"rendered":"
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“Waiting For The World To End” – Bond Rout Bodes Badly For Exuberant Equity Investors<\/span><\/a><\/h3>\n<\/div>\n
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It was a tough week for stock market investors but the primary driver of the chaotic crumble in small caps and tech stocks was not one of the usual suspects and even for those who consider themselves ‘hedged’ or balanced it was the worst week in 7 months.<\/strong><\/p>\n

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The blame for this blight on Americans’ wealth was placed squarely on the shoulders of the bond market and its violent and high velocity lurch higher in yields.<\/p>\n

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Yields rose across the curve on the back of strong US economic data and hawkish comments from Federal Reserve Chairman Powell, forcing equity investors to reevaluate the higher rate environment.<\/p>\n

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To be sure, the absence of uncertainty has been bewildering given the fact that the US government\u2019s budget deficit has swelled, contributing to the country\u2019s\u00a0debt load, now at $21.5 trillion. Meanwhile, corporate America has gone on a borrowing spree to take advantage of near-record low rates. In fact, according to Bloomberg<\/a>, excluding financials, S&P 500 companies have more than doubled their borrowings to $5 trillion over the past decade.<\/p>\n

\u201cThere are a lot of people waiting for the world to end because of this bond market,\u201d<\/strong><\/em> said Brad McMillan, chief investment officer for Commonwealth Financial Network, which oversees $156 billion.<\/p>\n

\u201cLow rates will keep going forever — a lot of justification for high valuations is based on the assumption. That assumption is largely broken.\u201d<\/strong><\/em><\/p><\/blockquote>\n

And, as Bloomberg\u00a0 <\/a>notes, prophesies of doom are\u00a0everywhere.<\/p>\n

There\u2019s billionaire investor Stan Druckenmiller, who says our \u201cmassive debt problem\u201d will ignite a crisis. <\/strong><\/p>\n

Oaktree Capital\u2019s Howard Marks warns that public and private debt will be \u201cground zero when things next go wrong.\u201d <\/strong><\/p>\n

And Citadel\u2019s Ken Griffin sees a credit binge ending badly<\/strong>.<\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

“Waiting For The World To End” – Bond Rout Bodes Badly For Exuberant Equity Investors It was a tough week for stock market investors but the primary driver of the chaotic crumble in small caps and tech stocks was not one of the usual suspects and even for those who consider themselves ‘hedged’ or balanced […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[88,431,534,2443,827,843,4318],"class_list":["post-38840","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bonds","tag-interest-rates","tag-monetary-policy","tag-stock-markets","tag-united-states","tag-us-government","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38840"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38840\/revisions"}],"predecessor-version":[{"id":38841,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38840\/revisions\/38841"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}