• 254 days Will The ECB Continue To Hike Rates?
  • 255 days Forbes: Aramco Remains Largest Company In The Middle East
  • 256 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 656 days Could Crypto Overtake Traditional Investment?
  • 661 days Americans Still Quitting Jobs At Record Pace
  • 663 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 666 days Is The Dollar Too Strong?
  • 666 days Big Tech Disappoints Investors on Earnings Calls
  • 667 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 669 days China Is Quietly Trying To Distance Itself From Russia
  • 669 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 673 days Crypto Investors Won Big In 2021
  • 673 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 674 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 676 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 677 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 680 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 681 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 681 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 683 days Are NFTs About To Take Over Gaming?
  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