What Will the S&P Do this Week?

[Justin Bilyj]

No one is talking about the Elephant in the room. You can't have low rates, low inflation when gold is high. Why will gold go higher? Besides being more expensive to mine, China and India is 2.5 billion people in a 7 billion person world.
When you have not only the governments but the people hoarding gold..expect it to rip off the facade of inflation and rates like a stuck bandaid...it will always come back to fundamentals when fiat gets out of hand like it is with Zirp and Qe...

 

[DWilly]

I predict that the 10yT will be steadily above 3% by the end of the year. Maybe even up to 3.5%.
If QE really does end this year then who knows.... 4% could happen.

I definitely agree w/ your analysis. The FED has definitely painted themselves into a corner. If rates rise this high we will witness a collapse of some sort of the US economy due to effects of servicing our astronomical debt. We have already crossed the 100% debt to GDP ratio. But at least we're in good company; Japan 242%, Greece 174%, Italy 133%, Portugal 125%, and Ireland 117%.
At this level even a slight rise in rates will have a devastating effect.

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No one is talking about the Elephant in the room. You can't have low rates, low inflation when gold is high.

Sure you can, if you have the ability to slam gold futures in the wee morning hours w/ unlimited naked short contracts. I have traded futures for quite a while now and have seen it for over a year now. 1000+ gold contracts traded in one or two minutes between 12am-4am as the price of gold nosedives. This hasn't been seen historically until now. At this point the FED basically has the power to set the price of any commodity they wish.

But you are correct, down can only be up for so long. Eventually the laws of math will regain control and when that mean reversion occurs it's gonna be violent!

 

[Justin Bilyj]

I think the biggest motivator for the FED to keep rates artificially low is due to the Derivatives to the tune of 300-600T hiding on the balance sheets of foreign and domestic banks and central banks world wide.
If the rates go up, it starts setting off the derivatives bomb which will effectively blow up all finances as we know it. All funds and institutions are invested in some way with them so noone could go untouched from them.
THAT's what NO ONE is talking about right now..

 

[scagnt83]

I definitely agree w/ your analysis. The FED has definitely painted themselves into a corner. If rates rise this high we will witness a collapse of some sort of the US economy due to effects of servicing our astronomical debt. We have already crossed the 100% debt to GDP ratio. But at least we're in good company; Japan 242%, Greece 174%, Italy 133%, Portugal 125%, and Ireland 117%.
At this level even a slight rise in rates will have a devastating effect.

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At this point the most I am hoping for is a relatively decent market and a 10yT above 3%.

If the 10yT can stay above 3% or even 3.5%, then things will be much brighter for the insurance industry.