With stocks trading lower and gold and silver also getting hit, today a legend in the business sent King World News a powerful piece discussing just how disastrous the situation in the West really is. A powerful guest commentary is included.
From Art Cashin's notes: Negative Interest Rates Are Becoming Pervasive – A friend passed along a recent piece by Jeremy Warner in The Telegraph. Here's how it began:
Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.
With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.
On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.
On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.
Not only has this never happened before on such a scale, but it marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default. Yet far from being a welcome sign of returning economic confidence, this almost surreal state of affairs actually signals the very reverse. How did we get here, and what does it mean for the future? Whichever way you come at it, the answer to this second question is not good, not good at all.
The implications of all this merits a good deal of study and attention. Let's get on the case.
Consensus – Bunds look to be under some pressure again this morning. That will bear watching. Initial Claims unlikely to be a factor unless they are above 300,000. Bulls need to get back the momentum and need to hold above Tuesday's low of 2095. Stay wary, alert and very, very, nimble. ***ALSO JUST RELEASED: China And Russia's Plans For World Domination And Skyrocketing Gold CLICK HERE.
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