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Bond Bubble Bust

Global Bond Bubble Bust

Rarely do we investors get a market that we know is overvalued and that approaches such clearly defined limits as the bond market now. That is because there is a limit as to how negative bond yields can go. Their expected returns relative to their risks are especially bad. If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discount rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive. For example, it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest are embedded in the pricing of all investment assets, that would send them all much lower.

Those words are from the most successful hedge fund manager of all time — Ray Dalio. Read more

global debt crisis

The 4 Horsemen Of The Global Deleveraging Apocalypse Part II: A Neutrino Debt Bomb

This is part 2 of our 4-part series on the global deleveraging which is now beginning and is expected to last over the next 2 to 4 years. We anticipate a lot of pain for the global economy in the form of crashing security markets and depression-like economic conditions. This series will cover how we believe this crisis is likely to play out. We will not only help you understand what’s going on, but we will show you how to protect yourself from the coming economic turmoil. We’ll even show you how you can profit from it. If you missed part 1, you can find it here. Enjoy part 2 below: A Neutrino Debt Bomb.

global debt crisis

“And when he had opened the second seal, I heard the second beast say, ‘Come and see’.  And there went out another horse that was red: and power was given to him that sat thereon to take stability and growth from the earth, and that they should demand restructurings from one another: And there was given unto him a great ability to inflate and monetize.” ~ Bible (With a few changes by me)

Debt… Debt… Debt… Debt… Debt………Debt. It’s been discussed so much over the years that it feels like kicking a debt horse at this point (ehem, sorry).

Here’s the thing though… we have to talk about it. Debt is the most important (and misunderstood) dynamic of the economic machine. Debt is the cause of all our current economic ills.

Do you want to understand why there’s slow growth in the developed world? Well, it’s because of debt.

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China’s Deflationary Renminbi Devaluation

The 4 Horsemen Of The Global Deleveraging Apocalypse Part I : China’s Renminbi Devaluation

This is part 1 of our 4-part series on the global deleveraging which is now beginning and is expected to last over the next 2 to 4 years. We anticipate a lot of pain for the global economy in the form of crashing security markets and depression-like economic conditions. This series will cover how we believe this crisis is likely to play out. We will not only help you understand what’s going on, but we will show you how to protect yourself from the coming economic turmoil. We’ll even show you how you can profit from it. Enjoy part 1 below: China’s Renminbi Devaluation.

 

“Declaring war on China’s currency? Ha ha.” That’s the interesting title of a recent article published by the People’s Daily (official newspaper of China’s Communist Party). It serves as a warning to legendary fund manager, George Soros, against shorting the Chinese renminbi. (Side note: China’s currency has two names, the Yuan and Renminbi, they are interchangeable.) Read more