Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

4 Reasons Not to Buy Bonds Now

Interest-Rates / International Bond Market Aug 18, 2016 - 03:35 PM GMT

By: John_Mauldin

Interest-Rates

BY JARED DILLIAN : I try to be a long-term thinker and filter out all the short-term noise. That’s hard nowadays, because there is so much short-term noise!

Any one of these four things would be big news, especially in the dog days of summer. But all four?  It’s crazy out there.


I can’t stay focused. I can’t resist the temptation to dive into the short-term stuff. So here we go. Put your boots on.

Canada’s housing bubble

Vancouver housing prices are up 32 freaking percent from last July, but sales are down 19%.

I've written about Canada's housing bubble (a lot). I continue to think it is one of the best macro opportunities globally over the next 10 years.

This is the classic sign of a top—prices keep going up on lower and lower volume. It’s a textbook, parabolic, blow-off move. I don’t think US housing prices ever moved that violently 10 years ago.

There are also early indications that the 15% tax for foreign homebuyers that’s being applied in British Columbia is starting to work. Sales agreements are being cancelled, and deals are falling apart.

They will probably reprice at lower levels. You never know, but this could be the one thing at the margin that causes all of Canadian housing to collapse.

Fed has lost its street cred

William Dudley, New York Fed president, said that the Fed could hike in September. Said it was a possibility. But it really isn’t, because it is right before the election.

So why would he say something that is, like, totally false?

The Fed likes to jawbone markets—if Dudley sounds hawkish, then financial conditions might tighten on their own, without the Fed really having to do anything. But the problem is that the Fed has jerked markets around so much over the years that nobody really pays attention anymore.

Think about it: when the head of the New York Fed starts talking in concrete, specific terms about rate hikes, and the market completely ignores him—that is a problem.

The Fed now has serious credibility issues. This means that monetary policy is no longer as effective as it once was.

Unless… the Fed actually takes action and hikes rates.

Now, I have said all along that they will hike rates (for sure) after the election, and they definitely will if the winner is Trump. And I still believe that.

Regardless of what Brainard says, Yellen is in charge, and she has expressed a desire to “normalize” rates. Get the political uncertainty out of the way, and that might happen.

Walmart is buying Jet.com

Jet.com basically takes $20 bills and sells them for $10. That is their business model. I am not kidding. Whoever runs Jet.com has created one of the world’s best and most outrageous loss-making entities. And it just got bought by Walmart for $3 billion!

This is all wrong. First of all, it shows desperation by Walmart. Of course they can’t let Bezos run away with it, they need a real online presence. But have they just demonstrated that they were unable to hire even a handful of smart people to build a website? That they had to buy the ridiculous Jet.com?

Second of all, can you think of the perverse incentives behind rewarding the executives of an utterly intractable business such as Jet.com with $3 billion?

I don’t mean to be glib, but it doesn’t take a lot of talent to build a money-losing business. Maybe I should be more charitable—it is downright impossible to compete with Amazon, after all, but Jet didn’t even come close.

And I thought Yo was nuts.

Trump is blowing himself up

Don’t want to dive too deep into politics here—I already poked the tiger. But if the goal for Team Trump is to win, they’re not doing a very good job, falling far behind Hillary Clinton in national polls.

I saw the other day that two Whitmans—Meg and Christie Todd, prominent women Republicans—are outright endorsing Hillary. In fact, the whole phenomenon of “Clinton Republicans” is becoming a thing (like the Reagan Democrats 30 years ago).

Unlike Nate Silver and Scott Adams, I am not going to make any predictions. (I am much better at predicting markets than politics; Scott Walker was my early pick for the Republican nominee.)

But I will reiterate my earlier position that either nominee will be fully engaged in a huge fiscal stimulus in 2017. Trump just said he would spend $500 billion on bridges to nowhere. Clinton will one-up him, for sure. Look out, bond market.

I would rather do a swan dive into the Sarlacc Pit than buy a bond in this environment.

Subscribe to Jared’s Insights Into Behavioral Economics

Click here to subscribe to Jared’s free weekly newsletter, The 10th Man, so you won’t fall prey to the herd mentality that so often causes mainstream investors to make the wrong decision.

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

6 Critical Money Making Rules