Monday, July 18, 2016

Money Printing & Financial Repression
Mask A "Lengthening List" Of Bad Omens 
"World markets are in the midst of something on a frighteningly grander scale than the financial crisis .. Tens of Trillions of sovereign debt have become trapped in speculative melt-up dynamics, as central bankers, derivative traders, speculators and safe haven buyers all battle to procure precious bonds. And I don’t believe it’s coincidence that the world’s largest derivative players are seeing their stock prices suffer under intense selling pressure. Meanwhile, sinking bank shares heighten market fears, which only feeds the dislocation and reinforces the dynamic imperiling the big derivative operators .. Brexit could easily have spurred a problematic 'risk off.' Instead, a globally super-charged sovereign debt dislocation/melt-up has completely overwhelmed the markets. The disappearing supply of sovereigns and resulting evaporation of yields - coupled with the prospect of endless QE - have led to a generalized risk market short-squeeze and unwind of hedges. This worked to solidify the notion that corporates and EM would now provide the primary source of yield for a freakishly yield-desperate world. And with visions of over-abundant liquidity and ultra-low corporate borrowing costs as far as the eye can see – replete with M&A boom and buybacks forever - it has become possible to overlook a lengthening list of fundamental factors overhanging equities markets."
- Doug Noland
LINK HERE to the essay

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