The Catalyst For The Next Economic Recession

The same people that believed that there was a real economic recovery now believe it is going to get even better. Why? In fact, this so called recovery is so old that we are overdue for a recession and why would not this big increase in interest rates be the catalyst to cause it?

Bond Market: Serious Technical Damage Has Been Done

Everybody is ignoring the monetary drag that is already evident from the bloodbath in the bond market and this is going to continue.

In fact if you look at the trend lines, we have broken some serious trend lines now which were down in yield and up in bond prices that have been in existence since 2007. So we have done some serious technical damage in the bond market. (10- year U.S. Treasuries, 30-year U.S. Government Bonds, iShares Barclays 20+ Year Treasury Bond ETF (TLT))

The Stock Market Is Getting It Wrong

Regardless of a December interest rate hike, the Federal Reserve is soon going to be reversing course and cutting interest rates and doing another round of quantitative easing (QE). In fact, long term interest rates are already spiking up on the potential that Yellen might raise interest rates and that is going to be enough to really prick the bubble in the housing market.

So far the stock market is remaining oblivious to the spike in bond yields because I think they believe the stimulus that might result from the tax cuts and spending increases will be enough to offset the drag of higher interest rates and I think they are very mistaken. There is no way to counteract the damage to this bubble that will result from a spike in long term interest rates.

This Can Be A Blowoff Top In The U.S. Dollar

This can really be a blowoff top in the Dollar Index, trading now at new 14-year highs. The Dollar Index is now above 100 as everybody is so sure that the Federal Reserve is going to be tightening. (SPDR Gold Trust ETF (GLD), EURUSD forex cross)

Newly Negotiated Trade Deals & Infrastructure Investment May Be Bullish For Silver

The renegotiated trade deals and the infrastructure investments planned under a Trump Administration may prove bullish for future silver prices. (iShares Silver ETF (SLV))

The Beginning Of An Explosive Move Up In Interest Rates

It is not just the fact that bond yields are rising but the rapidity of the move and the technical damage that`s being done. This could be the beginning of an explosive move up in interest rates and right now no one seems to care. (SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM), iShares Barclays 20+ Year Treasury Bond ETF (TLT), SPDR Barclays Capital High Yield Bnd ETF (JNK))

The Stock Market Bubble Needs To Deflate

There is no way we can have the economic growth that everyone is so excited about until we deflate the stock market bubble and Trump talked about a stock market bubble when he run for Office.

This Is A Gigantic Bond Bubble

This is a gigantic bond bubble that has been inflating for decades and we do not get a free pass because we have Trump. Our economy is so screwed up, the imbalances are so enormous of decades of bad policy that we just cannot elect Donald Trump and now everything magically goes away! (10- Year U.S. Treasuries, iShares Barclays 20+ Year Treasury Bond ETF (TLT) )

The 30-Year U.S. Government Bonds Will Collapse

Donald Trump has already said that we wants to take advantage of these low interest rates, finance deficits with 30 year bonds. So if he is going to be selling all these 30-year bonds, bond prices are already falling now in anticipation of this massive supply. The Federal Reserve is not buying them, there is no more QE in place. The emerging market currencies are being slaughtered, they are not going to be buying dollars, they are starting to sell U.S. Dollars, they are going to need to sell their Treasuries.

So, if you have emerging markets central banks trying to unload Treasuries from their reserves, the Federal Reserve is not buying any and at the same time the U.S. Government trying to sell massive quantities of long term Treasuries, how can the price of those bonds not collapse?

The Bond Bubble Is Deflating

The bond market had its worse week since 2013 and it looks like a lot more carnage can come if we really break down. Yields are still low. The yield on the 10-Year Treasuries is just above 2.10 percent and the yield on the 30-Year is now above 2.90 percent. These are still low yields but they are not nearly as low as they were a while back. But what is more important is the momentum in this move and how much higher interest rates would potentially go as this bond bubble deflates.