Singularity
 

Take it as you will.

https://www.zerohedge.com/markets/capital-markets-have-reached-singularity

Most investors have lived (and died) by the adage that "there is no alternative" to equities for the last decade or more - as global central bank repression has forced every Tom, Dick, & Harriet into ever more risky assets in search of yield... or some return.

However, a funny thing happened when "don't fight The Fed" began to mean doing something that the commission-rakers and asset-gatherers wanted it to mean - stock prices fell, bond yields rose, and inflation chewed up any real income gains the average-joe felt.

"This is the way" that markets have been for a year or so now to the point where something shocking has just happened.

While we all know you should never "cross the streams", it appears we have reached the capital market equivalent of the 'singularity': rates, equities, and credit yields have all converged.



For the first time since 2001, 6-month US money closed above the earnings yield (1/PE) of the S&P 500.

Additionally, investment-grade (IG) credit yields are still above 6 month money as they have also been selling off, but the gap has narrowed substantially in recent months. This hasn't inverted since 1980 but has got close in recent weeks.

Deutsche Bank's Jim Reid explains why this matters:

Earnings yields were below 6m money for long periods in the 1980s and 1990s without it impacting equity returns too much until the peak inversion around the dotcom boom/bust.



One might argue that for most of the 1980s and 1990s, collapsing yields and real yields meant that both bonds and equities could rally in unison.

For credit though, this type of curve spread has been a good lead indicator of credit spreads. As this curve gets flatter, the higher the probability is of spreads widening over the next 18 months and visa-versa.

Intuitively, when yields on short-end money are competitive with longer duration risk assets, there should be more circumspect investment behaviour with animal spirits slowly draining away. The front-end should become more attractive to the detriment of riskier ventures out the curve. This is why we think an inverted curve is such a good predictor of the economy over subsequent quarters.

(edit) Click link to see graphs

People flocking to treasuries tells me people are losing faith in equities even if they have competitive yields.

What really scares me is the response people have when told treasuries are the safest thing there is with a sarcastic, ‘Yeah sure, for now.’

So put it into perspective, paint me a picture and tell me what it all means...

None of these guys can do all three...they can not complete the puzzle because they are missing key pieces...to fill in the blanks they make up stuff...which is all off center and misses the mark...

In the end their models do not work..

"Translation: Brace - the singularity is upon us."

How 'bout that the economy isn't as Rosy as Biden's handlers want you to believe?

So Tabs, where's your money?

As if this is something new... laid this Equity stuff all out chapter and verse when QE3 was instituted... in 12.

I guess it just had to be in your face obvious for these guyz to figure it out.. Now that it is so obvious I don't need to say anything more..and if you still don't get it you are too stupid to be helped.

and yet taking our money out of the market would be a blood letting to the benefit of the Feds. So we hang on because when the bottom drops out it won't matter where your money is.

I will confess there was a time I thought Cindy was nuts for buying all those I bonds...
The older ones are paying pretty damned well...

The FED in 2022 had to start raising interest rates or face a Weimar USD moment...they are going to have to continue to support the USD by raising rates..until the USD is in equilibrium with it's intrinsic value...no matter the cost to the economy..the end result for the American people is the end of an era of abundance... and a collapsing standard of living..

The US govt is going to have to deficit curb spending.. if the govt is shut down in the attempt Standard and Poors might very well downgrade the rating on US debt as they did in 2011. This will have consequences..

The difference between drunken sailors and Congress.

When drunken sailors run out of money, they quit spending.

IOW, the debt based economic system has run its course, and now the chicken are coming to roost…

Equities do not presently have the same competitive yields when accounting for risk.

There was a time where a portfolio actually (gasp) had treasuries. Interest rates are finally coming back online so it makes sense to adjust and tilt ones portfolio according to ones needs and horizon. That's one's business and not anyone-else's.

Mr. Marky is simply having a tantrum because now it actually needs to put out effort to make monies for its shareholders. Above and beyond what one can get from treasuries. Pricing is adjusting for the risk in doing so. It's not like interest rates are at a crushing level. Further Mr. Marky is all about excuses. Right now it is inflation. Pfft. Get to work you lackies! Earns me sum ka-ching from that whore-ton MBA dammit!

Treasuries are the safest thing out there when considering the options. Short term treasuries that is. Ride the change bus baby! This girl is to get you through the summer only, not a 4-evah girl. Once it plateaus, re-evaluate based upon your needz.

I have just one work for you guys: Plastics.

Superman, you're not far off. You can make bank if you happen to have a few extra tons of PVDF or PFA resin just lying around right now...

True. PVDF is very hard to source these days, shortage caused by all the gigafactories demand.

Thank you.

http://forums.pelicanparts.com/uploa...1678542170.jpg

The debt based system was instituted in 68 and amplified in the 80's...it had hit the wall for consumers in 08...where the Public sector picked up the slack creating the MOTHER OF ALL BUBBLES THE SOVEREIGN DEBT BUBBLE...

They have destroyed the intrinsic value of the Globally indispensable currency..the USD..all of a sudden all the air in the room has been sucked out and everyone is gasping for breath..and there is none to be had...there is no where to turn..Desperation is setting in..Systems are failing and collapsing..