• 212 days Could Crypto Overtake Traditional Investment?
  • 216 days Americans Still Quitting Jobs At Record Pace
  • 218 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 221 days Is The Dollar Too Strong?
  • 222 days Big Tech Disappoints Investors on Earnings Calls
  • 223 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 224 days China Is Quietly Trying To Distance Itself From Russia
  • 225 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 229 days Crypto Investors Won Big In 2021
  • 229 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 230 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 232 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 232 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 236 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 236 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 237 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 239 days Are NFTs About To Take Over Gaming?
  • 239 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 242 days What’s Causing Inflation In The United States?
  • 243 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Next Phase In The Crisis

The recent stock market rise is lulling investors back to sleep.


Ulysses and the Sirens. Herbert James Draper. WikiCommons.

***More For Clients and Subscribers***

Bailouts Usher In Next Crisis

History (and our recent Report titled "The Invisible Hourglass") suggests how this financial episode will end. The bailout borrowings are ushering in the next wave of the crisis. Just like the bankers who could not see their own downfall, it is the politicians and their Keynesian advisors that are now pushing us over the second cliff. As expected, the Treasury bond yield has risen sharply from 2.53% to over 4.5% in 5 months. The Fed is confused. According to Russell Napier (author of Anatomy of the Bear), yields over 6% could cause the next leg down. He expects this within the next two years. We disagree, there's no definite trigger point. As we mentioned in The Haughty Bond, yields rose as investors dumped Bonds (well, everything) for cash. Stocks and bonds were sold simultaneously. Regardless, the yield is on track to reach 6% by this fall. According to Weiss Research's recent white paper on banking bailouts:

"In the 1930s, interest rates moved down, up, and then down again, in three distinct phases: In Phase 1, all interest rates declined due to deflation. In Phase 2, however, despite sharp GDP declines, interest rates surged unexpectedly: The 3-month Treasury-bill rate jumped six fold - from about a half percent to 3 percent; the yields on 20-Year Treasury bonds surged beyond their pre-crash peak; and the average yield on low-grade corporate bonds exploded higher to 11 percent. At this juncture, like today, the federal government came under increasingly intense pressure from creditors to reduce its federal deficit; limit its efforts to save failing banks; and, shift to a more disciplined, austere, tough-love approach. Finally, in Phase 3, interest rates fell and mostly remained low for the balance of the decade."


Source: Weiss Research Inc.

Instead of borrowing money to prop up Wall Street Firms, the U.S. Treasury should save its ammo. More important events could come along that would require government action.


WikiCommons.

As we wait for creditors to force the issue, Treasury bond yields continue to fly.

At Lamont Trading Advisors, we provide wealth preservation strategies for our clients. For more information, contact us. Our monthly Investment Analysis Report requires a subscription fee of $40 a month. Current subscribers are allowed to freely distribute this report with proper attribution.

***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions. This newsletter should not be construed as personal investment advice. It is for informational purposes only.

 

Back to homepage

Leave a comment

Leave a comment