The bond market has often been a canary in the coal mine for stocks, and it may well happen again. From Bill Blaine at morningporridge.com:
“Believe whatever you want about equities, but in bonds there is truth..”
This morning – The Stock Market Rollercoaster will continue a while longer, but a decisive divergence point is coming! Corporate debt is likely to crack on rising rates, price distortion, forgotten risk metrics, and rising defaults. It will signal the perilous financial health of some sectors – bursting the current bubble violently. Anyone for the last few choc-ices?
But first: a rumbustious Saturday evening in Dubai followed the Calcutta Cup Rugby Match between Scotland and England. I make that 2.5 in a row to Scotland – (I’m counting Scotland reversing a 40 point first-half deficit into second-half draw in 2019 as a win!). Interesting.. my nation of 5 million Scrappy Socialists with our paranoid fascination for blue face paint, blue flags, bagpipes and sharp pointy things, consistently thumps 60mm Englishmen who voted for Boris.
Is there a lesson in there somewhere…?
Meanwhile, back to the Unreal World, let me introduce you to a new Blain’s market mantra: If you are looking for truth in markets, in bonds there are fewer lies.
Aren’t we having fun in the equity market. Up, Down, Shake it all about. Amazon down 15% one day and up 13% the next. Facebook among the most volatile stocks on the block. Around the globe investors wake up wondering if it’s a risk on or off day, wholly uncertain what they believe about equity market uncertainty… The question is why…?