Let the Carn-age Begin

A Bloomberg report of earlier today observes that Central Banks are under fire. In an article entitled, “Carney Is Growing Tired of the Global Central Bank Blame Game,” it says that Bank of England Governor Mark Carney isn’t willing to take the blame for the state of the global economy any longer, rebuking the growing criticism levelled at him and his global central banking colleagues for low interest rates and the sluggish pace of growth via their “asset purchase policies” and other barmy schemes such as negative-interest rates.

Meanwhile, the very new “Trump Team,” have been quick off the mark to criticise the Federal Reserve and it’s boss, Yellen, advising it to shrink its bloated balance sheet, arguing that the Fed’s debt portfolio has damaged the economy by channelling credit to corporations and the federal government instead of to new, more dynamic small businesses, whilst harming savers and retirees along the way.

This column has long advocated the folly of Central Bank policies, in fact central banks in general, stating that it is the market that sets interest rates, not the CBs, they only re-act.

And after years on central bank attempts to “rig the markets,” a crime to lesser mortals, the markets are striking back, as observed via last week’s “Investment Markets Overview:”

As US and UK Central Bankers delude themselves this week, and those who care to listen to them, that interest rates will only be increased once over the next two to three years, the 10-year bond yields of both countries have soared by a respective 21% and 20% this week and by 63% and 170% over the past 3-months.

16-november-2016-blog-1

The chart above shows the US Treasury 10-Year Yield, inverted to better show its close correlation to stocks, in this case the S&P 500 Index. Well over a $Trillion in world bond values were vaporised last week, with the JP Morgan Global Aggregate Bond Index value falling from $38.4TR to $36.8TR month to date, the largest slide in decades.

Once the S&P finishes its “kiss” of the underside of the dashed-red support line, a few bob may be about to disappear from stock portfolios also.

Last week’s “Investment Markets Overview,” also showed the link between stock-markets and credit, or should we say debt-levels to anyone other than the banking community, which also observed that both are “rolling over:”

16-november-2016-blog-2

So as Carney “cries into his corn-flakes,” and the blame-game intensifies between the CBs and the politicians, you may be well advised to follow true independent market analysis before the events unfold.

The levels of global debt and asset values stoked-up by it suggests that the carnage is about to begin.

 

 

 

 

 

 

 

 

 

 

 

 

 

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2 responses to this post.

  1. […] called “independent” organs of state, such as Central Banks, with the last exposure being, “Let the Carn-age Begin,” in respect of the Bank of England’s dire record on interest rates and CPI inflation […]

    Reply

  2. […] We last wrote about the Bank of England in the November 2016 knowledge-share, “Let the Car-nage Begin,” which reminded that central banks’ “re-act” to market interest rates not make any […]

    Reply

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