Loading ...One thing Wall Street and Fed have in common is that they believe they are smarter than reality. Unfortunately, the yield curve is not only right as always, but this time it’s inflicting far more damage than it would normally. Especially to banks…
By ignoring the yield curve, the Fed is over-tightening which means they are decimating yield plays, commodities, Emerging Markets and ironically now even banks. Normally Financials benefit from higher interest rates, however, when long-term rates stop rising due to economic deflation, the bank rally ends.
Aside from three Tech stocks leading the market, there is no support, as late cycle Energy plays get crushed by Oil Wars 2.0.
As we know, the yield curve is merely the spread between long-term and short-term rates. Here we see why this cycle is “different” because long-term rates never rose as the Fed tightened. There was too much slack in the economy due to another decade of outsourcing:
http://ponziworld.blogspot.com
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The end is nigh, brother, the end is nigh!
World markets are like a pie crust stretched across the roof of a volcano!
Fu Manchu is about to pull the lever to the trap door!
Warbucks signals the trusty Punjab to cut the cords of the rope bridge!
Grease the skids! Happy tobogganing!