Over the last couple of months, we’ve focused a lot of attention on the stock market bubble. But some analysts say we should be watching the bond market bubble. Last summer, former Fed chair Alan Greenspan issued an emphatic warning: Beware, the bond bubble is about to burst. And when it does, it will take stock prices down with it.
Last week, Mint Capital strategist Bill Blain issued a similar warning.
The truth is in bond markets. And that’s where I’m looking for the dam to break. The great crash of 2018 is going to start in the deeper, darker depths of the credit market.’
Blain noted that the People’s Bank of China recently dropped $47 billion into its financial system where bond yields have risen dramatically amid growing signs of wobble.
The game’s afoot once more. The result is global stocks bound upwards. Again. It suggests central banks have little to worry about in 2018 – if markets get fractious, just bung a load of money at them. Personally, I’m not convinced how the tau of monetary market distortion is a good thing. Markets have become like Pavlov’s dog: ring the easy money bell, and markets salivate to the upside.’
This post was published at Schiffgold on NOVEMBER 22, 2017.