John Mauldin: Sea Change

Ted

FYI: Did you feel the economic weather change this week? The shift was subtle, like fall tippy-toeing in after a pleasant summer to surprise us, but I think we’ll look back and say this was the moment when that last grain of sand fell onto the sandpile, triggering many profound fingers of instability [1] in a pile that has long been close to collapse. This is the grain of sand that sets off those long chains of volatility that have been gathering for the last five years, waiting to surprise us with the suddenness and violence of the avalanche they unleash.
Regards,
Ted
http://www.ritholtz.com/blog/2014/10/sea-change/print/

JohnChisum

This past Tuesday we noticed the trade winds had shifted from the southwest to out of the northeast. This happens every year and just like a switch was thrown.

Are the markets the same way? Not likely although some might point to a chart or a specific event and say that was the beginning. It will be interesting to see if Mauldin is right on a new bull market in bonds. Didn't the old bull market just end?

Good read in any case.

VintageFreak

Wait a second. Has anyone read Code Red? I believe it was published earlier this year. At the public library while waiting for my kids to finish their "stuff", I read a few pages. The book seemed to argue excessive money printing would lead to hyperinflation. Doh! I thought and put the book down.

Now I read above post. He seems to be arguing for disinflation. Huh?

JohnChisum

From chapter 7,

"We’re going to see a return of the bond bull market with a vengeance. Almost the entire world has hedged its bets for a rising interest-rate environment and assumes a benign dollar market. Almost no one expects a falling interest-rate environment, yet that is precisely what we will get if the dollar continues to rise and we have a crisis or two."

He put in a bunch of if's and buts in there. It seems unlikely to me but he has his audience.

Dex

Inflation requires more then printing money - i.e. demand for a product or service more then supply. The people with money can buy what they want when they want it - no shortage.

VintageFreak

I just felt what he says in his book is opposite to what he blogged, YET he refers to the book. I think I'm going to get that book from library and read it. Just like I sometimes watch Fox News sometimes just to know what those Jokers are thinking.

Junkster

I rarely read the talking heads because (and you learn this after almost 50 years in the game) they know absolutely nothing more than me, you, or the man in the moon. They just understand the art of articulation combined with a little bit of knowledge. Too bad knowledge isn't a marker for being a successful trader/investor. I could only skim through the verbiage but as John Wayne alluded to before " new bull market in bonds" ????? Has this talking head been on vacation all year??? And a sea change???? Haven't Treasuries this year already been saying a sea change????

Now let's see if those intraday lows in the 10 year hold or now that the talking heads are believers that yields gradually begin to tick up.