Bond vigilantes be like . . .

 Yippee-ki-yay, motherfucker.

 

Through Oct 14 the traditional 60/40 401k portfolio is down a net 21% in 2022, not counting inflation

 Bonds are supposed to perform well as the safe haven asset when stocks fall, reducing the net impact to the portfolio when equities decline.

But not this year!

Bonds have actually crashed on the long end, down even more than stocks, as stocks entered a bear market.

The bond crash is a market statement rebuking the spending those bonds have represented: Not enough return for the risk.

So far the spendthrift Congress remains tone-deaf, leaving it to the Fed to raise interest rates . . . ever so feebly.

No one in his right mind believes raising interest rates 300 basis points is going to have much impact on inflation raging at 800 basis points.

That's because spending money you don't have to save the economy destroys the economy

 

Dems Spent $2T to Save Economy, But Won't Talk About It

Jim Tankersley, NYT

You can't get this kind of information just anywhere, and you know why

Wawa shuttering two Philadelphia stores amid city's retail crime surge:

Retail theft is up more than 50% in Philadelphia

Jim Cramer's stupid people who made a lot of money on Oct 13 weren't stupid until today, when they gave it all back, lol

Jim thought the market would tank on the inflation news. Instead it rallied.

But the market took it all back today.

Jim is nothing if not entertaining, as are other market cheerleaders.

Gayed meanwhile fully expected the rally to continue today.

Tonight there is much weeping and gnashing of teeth behind the brave faces.

Traditional 60/40 portfolio fails to protect investors when both stocks and bonds dive: Worst in 100 years

 

CNBC S&P 500 chart doesn't show the 2022 low-to-date on 10/12/22 like Yahoo Finance and Google Finance even though they mentioned it

 

COVID-19 is over: Drudge no longer features stats

Food and energy are bad enough, which core inflation would you rather have?

 

Democrats underestimate the power of Crimea as a political liability

 

GOP Overestimates Power of Crime as a Political Issue

Walter Shapiro, New Republic

 

AOC Receives Backlash At Town Hall: "You're Voting To Start A Nuclear War With Russia And China"; "You're Establishment"

France is upwind

 France Says It Won't Deploy Nukes If Vlad Uses Them Against Ukraine...

Debt draws forward prosperity -- Ambrose Evans Pritchard

 

Payback is a bitch, or why everything sucks

Debt stopped buying economic growth, if it ever did in the first place, way back in 1982, but no one has seemed to notice.

Prosperity based on debt is not prosperity.

Debt draws forward prosperity, and then when you get forward, there's no prosperity there because you already made off with it.

It's like the polar explorer who starved and froze to death because he ate the food caches on the way to the pole instead of saving them for on the way back.

 

The US military can't meet its recruitment quotas, so it's going to insult some more the confederates who are now shunning enlistment

 Department of Defense OKs renaming 9 military bases...

 They've got nothing better to do.

The Bank of England is pulling out the QE stops to keep the yields from rising which pulling out the QE stops two weeks ago didn't stop

Fail harder!

Makes sense to me!

 

Ben Bernanke wins Nobel Prize in Economics for 495 bank failures under his leadership as Federal Reserve Chair Feb 2006-Feb 2014

 

 

The 495 failures were a huge improvement over the 9,000 bank failures during The Great Depression of the 1930s, his specialty of study in the 1980s, experts said under their breath.

Americans can't afford new cars, but they're all out of skeletons

 

New cars are finally back in stock — but Americans might not be able to afford them

US GDP is so dead

 

US homes were at least 84% overvalued in 2021

 Rounding out the Unholy Trinity of Big Ticket Asset Inflation, Housing joins Stocks and Bonds in similar overvaluation territory in 2021 at about 84%.

In Feb 2012 when housing bottomed after The Great Financial Crisis, a previous inflation-adjusted Case-Shiller home price index chart no longer updated for present years showed that prices had fallen into the top range of US house prices which had prevailed throughout the post-war from the 1950s to the late 1990s. Mind you, the top range of those inflation-adjusted prices.

Thanks to Democrats and Republicans, including Bill Clinton and Newt Gingrich, the American Dream, the nest of the American future, was turned into a mere commodity in the late 1990s, to be churned in the markets for profit.

Long-suppressed long term interest rates have conspired with commoditization to produce valuations which have exploded, making houses unaffordable as nests, which is why your kid is still living in your basement.

The chart below shows the nominal price figures, on an average annual basis through 2021. The blow-off tops in 2022 are even worse (the index topped 308 in June), and are not shown because the year ain't over, and prices are falling.

At an average index level of 260 in 2021, prices were inflated from 141 in 2012 by about 84%, not far below the overvaluation of stocks and bonds at 90% and higher.

 

 

 

 

The percentage holding full-time jobs through September 2022 held above 50%, disappointing the ubiquitous advocates of a Fed interest rate pivot

 Full time as a percentage of civilian population in September was 50.3%, and for 2022 through September averaged 50.15%.

Not bad, considering.

The Fed will see little evidence in this figure that its interest rate increase policy is harming employment.

Stocks on Friday collapsed after a head fake to start the week to within 1.5% of the 52-week lows set a week ago.

Long term investment grade bonds and US Treasury securities also revisited lows from 9/27/22, coming within pennies of those benchmarks.

30-year yield for UST is back up to 3.86%. It was 3.87% on 9/27. At the beginning of 2022, yield was a paltry 2.01% by comparison.

UK gilts are experiencing the same action despite the Bank of England intervening to buy bonds. 

The bond crisis is not over.

With yields soaring across the board no one wants to own the lower paying outstanding issues, which are legion, destroying their value.

But everything in the global economy is based on those, piled up in earnest after The Great Financial Crisis of 2008, and in orgiastic frenzy afterwards during the late pandemic.

Bond yields in 2022 are telling you that they are overvalued by 92%.

Stock market valuation is telling you a similar thing.

From 1938 through 2019 the median ratio of the S&P 500 to GDP is 81. In 2020 we averaged 154, or 90% overvalued.

This is the major deflationary headwind facing the world, the other side of the COVID-19 inflationary shock coin.

Push here, it comes out over there.

Modern central banking cannot escape this conundrum any more than the gold standard could.

The only thing the individual can do in this situation is to owe nothing and save everything, preferably in your hands.

Good luck.