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Out of the Box: The Deck is Stacked

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“Listen, am I gonna learn the big con or not?”
-The Sting

COUNTRY 2 YR. YIELD 10 YR. YIELD
SWITZERLAND -1.157% -1.100%
DENMARK -0.911% -0.562%
GERMANY -0.889% -0.594%
NETHERLAND -0.871% -0.475%
SLOVAKIA -0.868% -0.302%
FINLAND -0.858% -0.330%
AUSTRIA -0.816% -0.346%
FRANCE -0.791% -0.289%
BELGIUM -0.778% -0.240%
SWEDEN -0.658% -0.277%
SLOVENIA -0.643% -0.155%
LATVIA -0.627% -0.113%
PORTUGAL -0.610% +0.232%
SPAIN -0.513% +0.222%
BULGARIA -0.461% +0.255%
LITHUANIA -0.161% +0.249%
CROATIA -0.OO2% +0.883%
JAPAN -0.280% -0.227%
U.S. +1.59% +1.652%

*All data from Bloomberg

There, you see all of the data, the hard facts, the blatant reality of where we are now. I wanted to put it out there, so it could stare you in the face. We’re being taken!

“You gotta keep his con even after you take his money. He can’t know you took him.”
-The Sting

The central banks learned this little trick, this graft, if you will, after the financial debacle of 2008/2009. They learned that they could rig the game and get away with it. The countries that they represent, Japan, and in Europe, cannot afford their budgets, or their social programs, and so they make money from nothing, but blinks, to pay for them. This is as directed by their countries. There is no other independent central bank except the Fed, and the foreign central banks do exactly what they are told. It is Berlin, Brussels, Paris and Tokyo that are running the show. Get it?

So, America, with the biggest economy, and the best economy, for the moment, and the biggest and deepest bond market on the planet, is being throttled, by most of the rest of the world, and put in its place. We are being skimmed and somehow, or another, it doesn’t seem to be apparent to our central bank that this is taking place.

We need to raise the flag!

Comments by President Trump, or no comments by President Trump, our yields cannot continue at current levels if we wish to compete. The nations in Europe are just going to arb our yields until ours come within a hairsbreadth of theirs. The Dollar against the Euro is at a ridiculous level and that is hurting many of our multi-national corporations. The Fed has been backed into a corner and we need to lower our interest rates. I say to the Fed, “Get a move on” because you are not being given any choice. The Fed’s lack of comprehension, of systemic actions, is not helping the country they represent, in my humble opinion.

The United States is now in a global “Game of Thrones. We are battling with China about tariffs. We are battling with Europe and Japan about interest rates. Both struggles are eventually going to play out on another front as well. They will broaden into currency wars.

For thousands of years there were no significant amount of negatively yielding debt. It didn’t exist. Well, my friends, thousands of years are over. Get this through your heads. The evidence is at the top of my commentary today. The facts are displayed.

It’s not some inverted yield curve. There is not a recession imminent on the horizon, unless, the Fed doesn’t respond in kind. The lack of Dollar liquidity can be turned from foe to friend. All the Fed has to do is act. We are being gamed by Europe, and Japan, and we refuse to recognize it. This is our fault and we better wake-up!

“Sit down and shut up, will ya? Try not to live up to all my expectations.”
-The Sting

Mark J. Grant
Chief Global Strategist, Fixed Income
Managing Director
B. Riley FBR Inc.
Mgrant69@Bloomberg.net
U.S. 954-468-2366

Information herein is for general use; is not unbiased/impartial; is current at publication date, subject to change; may be from third parties; and may not be accurate or complete. Opinions are the Author’s, not B. Riley FBR, Inc., or their respective affiliates or subsidiaries. This is not a research report or solicitation or recommendation to buy/sell the subject securities. Investment factors are not fully addressed herein. B. Riley FBR Inc. and their affiliates may have a proprietary position in the subject securities. Redistribution/reproduction of this material is prohibited. See additional disclosures at: http://brileyfbr.com/legal/legal_disclosures

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