With an understandable short-term mentality dominating, we should expect markets to continue to bundle what central bankers and others feel should be more differentiated. The likely upshot is continued volatility underpinned by alternating periods of risk-on and risk-off.
I believe that stocks are depressed because there is a pervasive feeling that something awful is going to happen. What is this enormous tail-risk? It's the intersection of reckless fiscal policy with overindulgent "Jelly Donut" monetary policy.
Fed up with how all the economic, financial and policy news out of Europe have been contributing to market volatility? Well, not only will this continue but, now, we must also get ready for something new over the next few weeks.
Interest rate movements affect almost every type of investment in some way, but bond investments will react with direct negative correlation. The rule for bond investing is that the lower the coupon and the longer the maturity, the more volatile prices will be.
They always tell you no one rings a bell when a market top or bottom is reached. But a bell is now ringing for the end of the 30-year bull market in U.S. debt. And ironically, the bell ringer is our very own U.S. Treasury Department.
In 1729, Jonathan Swift's idea was simple: the starving Irish should sell their own children to the rich as food. I want to suggest that we put in motion a similar undertaking. The basic idea is that we offer ourselves up as a sacrifice to the bond markets.
In the U.S., the action in the bond market is difficult to explain. Yields have fallen dramatically this year despite several developments that normally would cause bond investors to flee and yields to soar.