THE #BOND #BUBBLE THAT ALREADY BURST
1. Once and for all, dispense with the notion that rising #InterestRates are a result of a growing #economy. Housing & industrial production is rolling over & retail sales are declining.
Rates are rising bc of INSOLVENCY & #CREDIT RISK. pic.twitter.com/VXVV4OCdLh
— OW (@OccupyWisdom) February 23, 2018
2. In 2007, prior to the crisis, the following was true:
???? the average yield was 4.6%
???? the #deficit was 1% of #GDP
???? publicly traded #debt was ~ 5 trillion #dollars
Due to #ZIRP, if the 10 year goes to a meager 4.4%, bond investors will lose OVER 25% of their investment— ???? (@OccupyWisdom) February 23, 2018
3. In 2018-19, prior to the coming crisis, the following is true:
???? publicly traded debt is ~ 15 trillion dollars
???? the deficit will be 8.5% of GDP
???? so interest rates are going to the ???? ???? ????
Unless of course the #CentralBanks reverse and buy everything up…— ???? (@OccupyWisdom) February 23, 2018
4. As these rates continue to rise, high yield debt will implode, or will continue to implode. pic.twitter.com/kOhtkHRlW3
— ???? (@OccupyWisdom) February 23, 2018
5. There is an unmitigated #panic coming where a sell off will occur in:
???? Bonds of all kinds
???? Treasuries
???? Bond funds
Followed by
???? Stocks
???? High yield debt
As the risk premium for these investments goes to 0??— ???? (@OccupyWisdom) February 23, 2018
6. Before the deformed economy following the 2008 crisis, the average 10 year treasury yield was ABOVE 7% and was only lower when the Fed began unrestrained purchases. pic.twitter.com/Q6lxsCrst3
— ???? (@OccupyWisdom) February 23, 2018
7. As the Central Banks become net sellers of treasuries, and we have 3T$ deficit, who will be buying them? Who will buy corporate debt?
American’s personal savings rate is at an all time low in history (exception of 1 month) so I don’t see many private purchases from citizens. pic.twitter.com/AUpA7FfmfC— ???? (@OccupyWisdom) February 23, 2018
8. So as rates rise banks become insolvent again, zombie corporations become unable to pay the interest on their debt, we see layoffs, #recession.
We enter a recession with:
??equity values at 140% to GDP
?? 3 trillion $ deficits in a 21 trillion $ economy pic.twitter.com/ZnPMWTZDQQ— ???? (@OccupyWisdom) February 23, 2018
A Shocking view of UST10Y. Hug someone when you see this chart. pic.twitter.com/sORtthSzHj
— Alastair Williamson (@StockBoardAsset) February 23, 2018
Japan seems to be dumping USTs. I would not be a buyer of US debt if i was a foreigner… ex. US is what we've maintained… pic.twitter.com/mf97hvIPa7
— Alastair Williamson (@StockBoardAsset) February 23, 2018
If stocks suffer sustained fall, it will quickly put severe fiscal strain on pensions, then onto local taxpayers, then onto politicians. i.e. The entire US economy & gov't is MASSIVELY short vol. It is literally a matter of US national security that stocks rise on low vol. https://t.co/QPYoOrwMD6
— Luke Gromen (@LukeGromen) February 22, 2018