How to make it, spend it, and invest it

10 Jul 2019


Post by MoneyRadio Staff

–We recently told you there was a darn good change big cap indices would go topside and break out of a long trading range. First off, the patterns were there but more importantly, we expected Powell to lower rates. We laughed at a few people saying Powell would not lower rates. We shall see how we finish today (reversals are a possibility) but as of this second, major big cap indices are edging out. Remember, small and mid caps continue to under-perform as well as other areas like the Transports and many Financials. We are never thrilled with these divergences but so far, big cap indices are paying no mind.–

–A few facts to ponder. Sorry about the sarcasm.–

—We are told GDP is in the 3s, unemployment in the 3s, major indices at highs, the big guy says “we have the greatest economy ever” yet the head of our central bank is lowering rates at the end of July. A nominee for a central bank position wants rates at 0%.—

—All these moves continue to enable massive, and we mean massive amounts of debt across the world to the tune of $250 trillion with no end in sight. May we repeat…$250 trillion of debt…but don’t worry. Just in the U.S., $3 billion is added to our debt every day and $1.5 billion of our tax dollars goes towards interest…again, every day. But don’t worry, the people that created all this debt tell us this debt is manageable.—

—50 year Italian bonds were just oversubscribed by a multiple of 6…floating at 2.8% even though Italy has serious debt/budget problems. —-

—14 different junk bonds in Europe have negative yields. Lending money to less credit-worthy companies and paying them…TO LEND TO THEM. Deposit the money and you give them the toaster! Lend money knowing you will lose money!—

—-100 year bonds (the most risky because of duration) are soaring as yields continue to implode. Guess what happens to these ridiculously long bonds if rates go the other way to make up for all this debt. (You do realize the more debt there is, the higher the rate is supposed to be.)—-

—-But again…do not worry. Debt does not matter. All is well. They have a handle on things. There are no bubbles. Negative yielding junk bond debt is just fine. Remember, as long as markets act well, nothing matters.—

—We know…sarcasm…but that’s all we have watching our Mets play ball and watching our Knicks in free agency!—-