Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up)

Stock-Markets / Financial Crash Nov 16, 2017 - 10:34 AM GMT

By: John_Mauldin

Stock-Markets

BY JARED DILLIAN : I have been a bond bear for a while.

Back in the summer of 2016, I spoke at a small conference out in San Diego. My topic: How interest rates were going to go up.

It didn’t go over very well with people. I haven’t been invited back to speak, which is too bad—because I was right. (You may also want to learn what I predicted about today’s bubble in my exclusive free report, Investing in the Age of the Everything Bubble.)


When I gave that talk, yields on 10-year notes were about 1.6%. Today, they are about 2.4%. That may not seem like a lot, but it is.

The evidence is starting to pile up that yields may be going even higher.

Quantitative Tightening Is Picking Up Speed

The Fed is letting assets roll off the balance sheet. A little at first, but more later. This is not a small thing! New Fed Chairman Jay Powell wants this to be smooth as a gravy sandwich, but we will see.

Meanwhile, the ECB is tapering, and will taper more…

The BOJ has pegged the yield curve and buys bonds when the market forces them into it…

The Bank of England seems to be finally lifting off…

What had once been a flood of global liquidity is now starting to run in reverse.

So, if you remember all the complaints about central banks, that:

1) They had inflated asset prices

2) And worsened inequality

Then you can expect:

1) Asset prices to deflate

2) And rich people to get poorer

Bonds and Stocks Will Go Down Together

This is what you have been waiting for, right? Rich people to lose money?

Rich people will lose money because asset prices will deflate. What kind of assets? Financial assets—stocks and bonds.

Yes, in the next bear market, stocks and bonds will likely go down together.

People have become accustomed to an inverse relationship between stock and bond prices. Funny thing about stock-bond correlation: The long-term average is zero, but sometimes it is 1, and sometimes it is -1.

There are a lot of people holding 70/30 or 60/40 portfolios of stocks and bonds who think they are diversified. They are probably not diversified. To be diversified today, you need to be a bit more imaginative about what asset classes you include in your portfolio—and have a healthy dose of cash.

Anyway, a pretty good leading indicator of asset prices deflating and rich people getting poor is Sotheby’s, the auction house.

The chart is making lower highs.  It seems quantitative easing didn’t just fluff up stocks and bonds, it fluffed up art and crap as well.

We might be onto something.

FANG and Bitcoin Signal the End Is Near

The Chicago Mercantile Exchange is listing futures on FANG and Bitcoin. You probably heard.

Most people would objectively say that FANG and Bitcoin are bubbles. There might be some disagreement, but not much.

These products are purely for speculation. We’re not even sure that Bitcoin serves any economic purpose.

Let’s look at the history of listing derivatives on bubbles.

The listing of ABX led to the destruction of the subprime mortgage market. The listing of CMBX led to the destruction of commercial mortgage-backed securities. Heck, even the Nikkei futures were listed right near the top of Japan in 1989.

And lots of people think that tulip futures are what did the tulips in.

I was talking with a good friend the other day, a bond salesman who has been around for a while. He is fifty and has quite a bit of grey in his beard. We were talking about how cool it was that 1-year Treasury bills yielded almost 1.5%, and how you can get 1.5% in an online savings account.

I said to him, are you listening to us? We’re talking about T-bills. Nobody talks about T-bills. But in 1981, everyone was talking about T-bills.

We will get back there eventually.

Grab Jared Dillian’s Exclusive Special Report, Investing in the Age of the Everything Bubble

As a Wall Street veteran and former Lehman Brothers head of ETF trading, Jared Dillian has traded through two bear markets.

Now, he’s staking his reputation on a call that a downturn is coming. And soon.

In this special report, you will learn how to properly position your portfolio for the coming bloodbath. Claim your FREE copy now.

John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in