Bonds and Chart Levels.....
I think it is important to note that when bonds get to a certain level the talking heads really start to crow about how they think that they know what is going to happen next. It is almost human nature to do this because you think that it is an event worth noting. I am not so sure.
You see last time bonds were here they bounced and headed back down as you can see from the chart below over the past twelve years. You can see that at times bonds were low and times they looked like they were going to head much higher. Neither happened in any of those times but rather the bonds tuned and made fools of everyone. That is what a sideways market can do to you. One that is controlled by central banks. You think that you know what is going on but you don't.
Back in the '60s and 70's we had a nice sideways market in stocks that lasted almost twenty years before beginning a bull run in the 1980s. As I mentioned before you can imagine the roars when it made new lows or it made new highs where people we certain that it was the start of a new bull or bear market. The reason why I use technicals so much is that they don't lie. They clearly show you where you are and where you should be looking. In this case, the technicals clearly show that we have been in nothing more than a sideways market for the past twenty years punctuated by six or seven turns. That is why I told you that we may be due for another turn fairly soon. Of course, at each stage of the highs or the low, the experts began chiming in with their opinions of either a catastrophe or normalization of interest rates. As usual, they were not right.
I simply show you this as a means to gauge the market movements when they make little to no sense on a fundamental level.
Could we be headed into negative interest rates?
I suppose that we could. Debt levels in most of the developed countries are at critical levels both commercially and personally. Leverage has never been higher. This by itself is not a problem until it becomes a problem. Servicing the debt may not be possible very soon at present interest rates. Then what do you do when most of the speculation came off near-zero interest rates back in 2009 and on. Is the next move negative?
Possibly. I mean what else can they do?
We talked about gold being a catalyst to warn of things getting out of hand. I think it may be a far more important gauge than bonds are at the moment. Bonds have always been the signalers of a new sort of time period in the markets but at this point in time, I am not so sure when the buyers and sellers of them are simply central banks. I mean is Warren Buffet prepared to pay to buy bonds and owe money at maturity?
I doubt it so the only entity willing to adopt such as reckless approach is a central bank where the value at maturity is not a concern.
Anyway, you can see the 10-year bond below. It is the largest and most liquid of the bond markets and you can see what I am talking about when referring to a sideways market. Cheers!
You see last time bonds were here they bounced and headed back down as you can see from the chart below over the past twelve years. You can see that at times bonds were low and times they looked like they were going to head much higher. Neither happened in any of those times but rather the bonds tuned and made fools of everyone. That is what a sideways market can do to you. One that is controlled by central banks. You think that you know what is going on but you don't.
Back in the '60s and 70's we had a nice sideways market in stocks that lasted almost twenty years before beginning a bull run in the 1980s. As I mentioned before you can imagine the roars when it made new lows or it made new highs where people we certain that it was the start of a new bull or bear market. The reason why I use technicals so much is that they don't lie. They clearly show you where you are and where you should be looking. In this case, the technicals clearly show that we have been in nothing more than a sideways market for the past twenty years punctuated by six or seven turns. That is why I told you that we may be due for another turn fairly soon. Of course, at each stage of the highs or the low, the experts began chiming in with their opinions of either a catastrophe or normalization of interest rates. As usual, they were not right.
I simply show you this as a means to gauge the market movements when they make little to no sense on a fundamental level.
Could we be headed into negative interest rates?
I suppose that we could. Debt levels in most of the developed countries are at critical levels both commercially and personally. Leverage has never been higher. This by itself is not a problem until it becomes a problem. Servicing the debt may not be possible very soon at present interest rates. Then what do you do when most of the speculation came off near-zero interest rates back in 2009 and on. Is the next move negative?
Possibly. I mean what else can they do?
We talked about gold being a catalyst to warn of things getting out of hand. I think it may be a far more important gauge than bonds are at the moment. Bonds have always been the signalers of a new sort of time period in the markets but at this point in time, I am not so sure when the buyers and sellers of them are simply central banks. I mean is Warren Buffet prepared to pay to buy bonds and owe money at maturity?
I doubt it so the only entity willing to adopt such as reckless approach is a central bank where the value at maturity is not a concern.
Anyway, you can see the 10-year bond below. It is the largest and most liquid of the bond markets and you can see what I am talking about when referring to a sideways market. Cheers!
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