"Nothing really matters, Anyone can see,
Nothing really matters,
Nothing really matters to me
Any way the wind blows…" – Queen
Powell emphasized we have maybe two half-point hikes ahead of us and the market loves it this morning!
Yield curves are flat, which reliably predict every recession – gotta love that! 3.5M people have left Ukraine, causing a refugee crisis in the rest of the World – more love. One-month anniversary of a war that's getting worse – love it. Banks in China have seized $2Bn worth of Evergrande properties as that company continues to spiral down – lovin' it! Miami Beach is under curfew in a State of Emergency – sping breakin' it! Biden is warning of impending Russian Cyber Attacks on US Companies – who doesn't love that?
Here are the two and 10-year notes as they race to oblivion. Bond investors like to think their money is safe but the cash value of the 2-year notes have lost 4% in 6 months and the 10-year notes have dropped 12% in two years. Yes, if you hold them to maturity you get all of your investment back plus all the promised interest – but that money buys 50% less gasoline, 20% less house, 40% less gold, 20% less food, etc. Powell is promising much more of the same to the bond holders yet, this month, the US Government willl attempt to sell $250Bn worth of debt at the same stupid-low rates. Something has to give at some point…
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