mercoledì 21 marzo 2018

Warning: The Stock Bubble is Getting Dangerously Close to Its Needle

Rates are rising once again.

Over 90% of investors focus almost exclusively on stocks. This is a mistake. The reality is that everything happening in stocks since 2008 has been the direct result of Central Banks creating a bubble in bonds.

Because our current financial system is debt-based in nature (meaning sovereign debt, not gold or some other asset is the bedrock of the financial system) when Central Banks did this, they effectively created a bubble in everything (including in stocks).

Put simply, it is BONDS, not stocks, that concern Central Banks the most. If stocks collapse, it's a big deal for investors. If bonds collapse, it's a big deal for entire countries/ the financial system.

With that in mind, consider that bonds have begun to collapse, with US Treasury bond yields rising sharply above their downtrends.

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THIS is what triggered the February meltdown.

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And by the look of things, we're not done yet. Instead of falling hard, rates have found support and are preparing to breakout to the upside again.

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