Bubble

News

‘Peak Greed’ Fuels Record Junk Bond Sales in Europe

High-yield borrowers are following in the footsteps of Europe’s investment-grade market, which has also seen a record-breaking flurry of bond issuance this year. For now though, syndicate bankers are still testing the waters in Europe’s high-yield market. Most of the deals so far have been from issuers with well-known capital structures, said Andrey Kuznetsov, senior credit portfolio Manager at Hermes Investment Management.

Germany Limiting the Ability to Anonymously Purchase Gold in an Attempt to Force People to Hold Euros

Two years ago people in Germany could anonymously purchase EUR 15,000 of gold, then the limit dropped to EUR 10,000, and now the limit will drop to only EUR 2,000 as of January 10. Anyone who purchases more than the EUR 2,000 limit will have to go through an intensive know your customer (KYC) process and a criminal background check.

Germany, which is the most powerful member of the European Union, is claiming that they are limiting anonymous gold purchases in order to prevent money laundering. However, the drastic reduction of anonymous gold purchase limits coincides with increasingly negative interest rates in the European Union.

Essentially, people who save money in banks are charged to hold their money, which is basically the opposite of savings. In order to avoid this people can buy gold, but now the European Union is clamping down on gold in order to force people to keep their money invested in Euros.

Basically, the European Union is taking away the freedom to divert money into safe haven assets, and increasingly forcing people to hold the Euro against their will. This may be an omen of what is to come as fiat currencies continue to lose value worldwide due to crashing Central Bank interest rates and mass money printing.

Head of U.S.’ largest bank says central banks are fueling a sovereign debt bubble, negative-rates won’t ‘end well’

Maturing junk debt hits record, posing elevated default risks, Moody’s says

Moody’s Investors Service warned Thursday that default risk is on the rise for the nearly $1.2 trillion of speculative-grade loans, bonds and various related instruments maturing from 2020-24. That total is a record for maturities coming due over a five-year period, up 14% from 2019.

While low interest rates have allowed spec-rated companies to continue to roll over all that paper, a slowdown in the economy or a reversal in Federal Reserve monetary policy could pose problems.

Bernie Sanders Hasn’t Quite Captured What Wall Street Does: 

It’s Actually a Fraud-Monetization System with aMoney-Printing Unit Called the New York Fed

Senator Bernie Sanders has come closer than anyone on the Presidential campaign trail in defining what Wall Street actually does. Sanders has repeatedly stated at his rallies that “the business model of Wall Street is fraud.”

That analysis is correct but abbreviated. Sanders needs to go further. It’s not just Wall Street’s business model that has left the United States with the greatest wealth inequality since the Roaring Twenties (a time when Wall Street investment banks were also allowed to own deposit-taking banks). It’s how Wall Street is monetizing that fraud that poses an existential threat to the solvency of the United States and the impoverishment of millions of Americans.

As a sign of just how brazen and disastrously broken the U.S. financial system has become, with no hearings in Congress, with no blaring headlines on the front pages of newspapers, the New York Fed turned on its money spigot to Wall Street again on September 17, 2019. It was the first time this has happened since the financial crisis.

 For the past four months the New York Fed has been spewing hundreds of billions of dollars each week to Wall Street’s trading houses, pushing the Dow Jones Industrial Average up by 3,000 points, with no accountability to anyone or explanation as to why Wall Street needs or deserves this money.

DYI:

This is the most insane period of time for stocks and bonds on a world wide basis.  Central banks have lost their minds with all of this money printing jacking up securities prices to the heavens changing the landscape from investing to a gambling parlor.  This will not end well.  Of course the question is when??  I don’t know and no one does either.  At these levels sooner rather than later but to define sooner or later I’ll admit I’m stumped!  The U.S. market overvalued since 2012 and now has climbed to levels of absurdity.  The only two areas of reasonable value is cash [short term bills and notes] plus precious metals – gold and silver – and their respective mining companies. 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 1/1/20

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DYI