Day 658. It is a strange place indeed. If interest rates go negative, then won’t it create a run on the banks? If you save money, and it is worth less than when you started, aren’t you just paying to rent the vault? I was listening to the CNBC channel when they posed that possibility. There is no more time value for money they say, and hedge funds are flat. Energy is frozen around US $48 a barrel for oil while Arabia can produce it for $5 a barrel. Yet Canada has still got fire threatening the remaining McMurray oil supply. Just how will they play that going forward? That is a 7 month high for oil as it stands now.
George Soros has a bearish bet on the 2060 level S+P 500 with a 2 million put equivalent. He has also got a large gold position. Long gold, short equities. Investors are cashing out their hedge fund positions, but what they call a hedge fund isn’t really. It is more like an “edge” fund of blue chip stocks. Increased volatility should mean greater time premium on money, but it’s all mixed up. The VIX climbs to 15, but that is still tepid compared to the 20 long term average. What gives? Where did the volatility smile go on the yield curve? It’s the 224th anniversary of the NYSE of Wall Street fame, started May 17, 1792. 24 brokers signed the Buttonwood Agreement then.
Glad to see that other things are mixed up as much as health care. Never has so much money been blown on so little. None of it comes close to apple tree bark and leaves. The internet was made to withstand a nuke war, but when the money goes flat, who will be able to log onto it? A depression is where it will all lead if they can’t wrestle it into submission before then. That is what The Fed was formed to avoid, and this is the result of inflating 2008 away by printing truckloads of cash. The 1929 crash took 10 years to World War 2 to smash everything, and rebuild out of it. The USSR short sell finally paid dividends in 1990. They knew it eventually would when they bankrolled it in 1917. Socialism was a known sure fired failure economically, as it still is. Inside they are shorting this whole mess for all it is worth, or was when they started. Now inflation is expected to force rates to rise by 2017. That is the Fed mandate after all.
What about all these governments mired in debt? Will there be a massive tax default when people can’t afford it any more from the rate increase? Right on cue, Blackrock is raising the issue of China’s mounting debt that will get jacked up from rate increases. The elephant in the room is domestic debt though. Municipal bonds and the like will fall into the same squeeze. All those living on debt sharing the wealth now will wind up sharing the debt. Where is that going to go? The markets are said to hate uncertainty, but who knows how it has all been hedged off? The whole point of the hedge is to eliminate uncertainty.
All that and still melancholy. Not much I can do about it. Saw another news story that 30% of asthma was misdiagnosed. I was one of those. Either that or I have found a cure for incurable asthma and COPD. It was just misdiagnosed bug nematode slime that apple tree bark and leaves with pectin enzyme dissolved out. Worked for me. Why? They think there are no bugs in Canada. Any body can tell you that is depressing if they are supposed to be our best and brightest. More over, it has been known for 8 years. They have done nothing to correct it, or recognize Lyme Disease either. That would depress anybody.