Must Read – The Wall Street Examiner http://wallstreetexaminer.com Get the facts. Tue, 09 Feb 2016 21:59:20 +0000 en-US hourly 1 David Stockman Tells Bloomberg: Oil To Stay in The Twenties, China Bubble Unprecedented, Negative Interest Rates To Cause Monetary Collapse http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-oil-stay-twenties-china-bubble-unprecedented/ http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-oil-stay-twenties-china-bubble-unprecedented/#respond Tue, 09 Feb 2016 20:37:22 +0000 http://wallstreetexaminer.com/?p=284029 The post David Stockman Tells Bloomberg: Oil To Stay in The Twenties, China Bubble Unprecedented, Negative Interest Rates To Cause Monetary Collapse was originally published at The Wall Street Examiner. Follow the money!

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David Stockman Tells Bloomberg: There Will Be a Run on ETFs and Mutual Funds http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-there-will-be-a-run-on-etfs-and-mutual-funds/ http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-there-will-be-a-run-on-etfs-and-mutual-funds/#respond Tue, 09 Feb 2016 20:08:50 +0000 http://wallstreetexaminer.com/?p=284027 The post David Stockman Tells Bloomberg: There Will Be a Run on ETFs and Mutual Funds was originally published at The Wall Street Examiner. Follow the money!

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David Stockman Tells Bloomberg: Bear to Maul Markets- End of An Era http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-bear-to-maul-markets-end-of-an-era/ http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-bear-to-maul-markets-end-of-an-era/#respond Tue, 09 Feb 2016 19:53:38 +0000 http://wallstreetexaminer.com/?p=284023 The post David Stockman Tells Bloomberg: Bear to Maul Markets- End of An Era was originally published at The Wall Street Examiner. Follow the money!

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Ya Got Trouble! WTI Crude Falls Below $29, 10Y-2Y Yield Curve Keeps Falling http://wallstreetexaminer.com/2016/02/ya-got-trouble-wti-crude-falls-29-10y-2y-yield-curve-keeps-falling/ http://wallstreetexaminer.com/2016/02/ya-got-trouble-wti-crude-falls-29-10y-2y-yield-curve-keeps-falling/#respond Tue, 09 Feb 2016 18:23:48 +0000 http://confoundedinterest.wordpress.com/?p=45618 Oh ya got trouble, right here in Potomac City. With a capital “T” That rhymes with “P” And that stands for Policy (Monetary). Yes friends, policy errors. Crude oil prices keep falling as do commodity prices and the Treasury yield curve slope.

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Oh ya got trouble, right here in Potomac City. With a capital “T” That rhymes with “P” And that stands for Policy (Monetary).

Yes friends, policy errors. Crude oil prices keep falling as do commodity prices and the Treasury yield curve slope.

crashh

And with $7 trillion in negative rate sovereign debt around the globe,

20160209_Neg

ya got trouble!

rpreston

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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David Stockman Tells Bloomberg: “When The Crunch Comes, Bank CEOs Lie” http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-crunch-comes-bank-ceos-lie/ http://wallstreetexaminer.com/2016/02/david-stockman-tells-bloomberg-crunch-comes-bank-ceos-lie/#respond Tue, 09 Feb 2016 16:38:48 +0000 http://davidstockmanscontracorner.com/?p=90742 Deutsche Bank AG co-Chief Executive Officer John Cryan told employees that Germany’s largest bank is “rock solid” as investor concern about capital and funds drove down the value of stocks and bonds. Former OMB Director David Stockman weighs in.

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Deutsche Bank AG co-Chief Executive Officer John Cryan told employees that Germany’s largest bank is “rock solid” as investor concern about capital and funds drove down the value of stocks and bonds. Former OMB Director David Stockman weighs in on the banking industry. He speaks on “Bloomberg.”

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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Yellen’s Congressional Testimony Should Be “Lively” (Small Firm Optimism? France? Italy?) http://wallstreetexaminer.com/2016/02/yellens-congressional-testimony-lively-small-firm-optimism-france-italy/ http://wallstreetexaminer.com/2016/02/yellens-congressional-testimony-lively-small-firm-optimism-france-italy/#respond Tue, 09 Feb 2016 16:04:37 +0000 http://confoundedinterest.wordpress.com/?p=45604 Federal Reserve Chair Janet Yellen will give testimony in the US Congress on Wednesday and Thursday. Dunstan Prial from Fox Business says it will be “lively.” I assume that the questioning will be lively, not Yellen. Yellen will be her pleasant, monotone self. Suppression of savers has been asked before of both Bernanke and Yellen.

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Federal Reserve Chair Janet Yellen will give testimony in the US Congress on Wednesday and Thursday. Dunstan Prial from Fox Business says it will be “lively.”

I assume that the questioning will be lively, not Yellen. Yellen will be her pleasant, monotone self.

Suppression of savers has been asked before of both Bernanke and Yellen. The response has been the response of “you have to break a few eggs to make an omelet.” Or victims of friendly fire.

Since 2007, real median household income has fallen despite all the intervention by The Fed. On the other hand, the S&P 500 has soared post intervention.

fedspx

Yellen is likely to say the following: the employment market is strong (9.9% U-6 is strong?), but there are headwinds in China and Europe. So only 2 rate hikes this year.

I would like one Congressman to ask Yellen about the French experience with ECB rate policy. She will likely respond that France has structural economic problems that the ECB can’t fix. Just like the USA.

franceecb

I would also ask her why small firm optimism is still below any prior to 2008 (self-employed workers still below pre-recession levels). She will answer “That is a structural problem.”

bizoptuuu

How about the meltdown of Italian banks? Why hasn’t Draghi’s low interest rate policies helped the Italian banks? Say it with me: its structural.

itabankcds

Then we have the US Treasury yield curve, at the lowest level (flattest) since January 2008 while credit risk indicators are rising.

creditugh

And the global economy has $7 trillion in bonds with negative yields.

20160209_Neg

So what does all this mean, Chairman Yellen? Likely response: “We are going to have to raise interest rates.”

14718_1436704376627217_1859692961203865379_n

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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Echoes of 2011 at Deutsche? http://wallstreetexaminer.com/2016/02/echoes-2011-deutsche/ http://wallstreetexaminer.com/2016/02/echoes-2011-deutsche/#respond Tue, 09 Feb 2016 13:20:00 +0000 http://wallstreetexaminer.com/?guid=aad01067aa16f8c16c9c19a3c092f81b Almost 4 and a half years ago, I wrote about the systemic weaknesses in the Deutsche Bank balancesheet: http://trueeconomics.blogspot.com/2011/09/13092011-german-and-french-banks.html, And now we are seeing these weaknesses coming to the front

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Almost 4 and a half years ago, I wrote about the systemic weaknesses in the Deutsche Bank balance sheet.  And now we are seeing these weaknesses coming to the front.

It is not quite Europe’s Lehman Moment, yet, but if Deutsche goes to the wall at the rates implied by its CDS, we are into more than Lehman-deep pool of the proverbial…

Source: @Schuldensuehner 

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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This Is Your Best Investment When the Fed Turns to Negative Interest Rates http://wallstreetexaminer.com/2016/02/best-investment-fed-turns-negative-interest-rates/ http://wallstreetexaminer.com/2016/02/best-investment-fed-turns-negative-interest-rates/#respond Tue, 09 Feb 2016 10:00:42 +0000 http://moneymorning.com/?p=204299 The U.S. stock market is tanking, but Japan's Nikkei 225 is soaring a little more than a week after the country's central bank announced a move to negative interest rates.

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The Dow Jones Industrial Average plunged through the psychologically important 16,000 mark in yesterday’s sell-off before rebounding slightly, while the S&P 500 and Nasdaq slid 1.4% and 1.8%, respectively.

But in Japan, a Lunar New Year’s treat for investors: The ever-volatile Nikkei 225 snapped a four-day losing streak to end up 1%. That’s performance that most American investors would kill for right now.

For that, we can look to Bank of Japan chief Haruhiko Kuroda, a faithful practitioner of the “Abenomics” that have kept Japan’s stock markets curiously (some may say insanely) buoyant in these sell-happy times… only at the cost of wrecking the country’s long-term economic health.

Kuroda created shockwaves late last month when he announced he was taking a key Japanese deposit rate negative, bringing the worldwide total of sovereign debt “paying” negative interest to $5 trillion.

I don’t doubt that Yellen & Co. are watching events in Japan’s central banking sector and stock market with equal parts anxiety and interest: They have a foundering economy and a plunging stock market on their hands – even if they’re not “officially” supposed to care about the stock market.

Those markets have reached a state of “bad news is good news” again, with markets rallying a bit as they price in a more dovish stance behind disappointing economic data.

That’s cutting off the Fed’s options, and soon the only logical place for the Fed to turn will be more easing… and negative deposit rates.

So today I’m going to show you the investment to own for the liquidity crisis that’s bound to follow – and ruin the unprepared…

The Bank of Japan Is Desperate

That’s why, in a surprise move, it just introduced a deposit rate of -0.1% for commercial banks. What that means is banks will now have to pay rather than be paid for hoarding cash.

The goal is to get banks to loosen their grip on cash and start lending it, in an effort to stimulate economic activity.

It’s an uphill battle, as spending has remained sparse despite near-zero rates for some time already.

But it’s also a sign of desperation, as the Bank of Japan recently announced it was delaying its outlook for achieving its targeted 2% inflation by at least six months. That’s already the second time since October 2015.

And this after forcing trillions of yen into the Japanese financial system. OK, so stocks doubled in the process, but the economy has endured no fewer than three recessions since 2010.

Incredibly, Japan had a cautionary example for its negative-interest-rate project (NIRP): Europe. The policy has been a disaster there, too.

It’s going to take these countries a long time to dig out from under these experiments…

Europe: The First of the Worst

Negative Interest Rates

The European Central Bank (ECB) was the first major central bank to institute sub-zero deposit rates – a year and a half ago.

But that wasn’t enough. On Dec. 3, 2015, the ECB lowered rates further to -0.3% on overnight deposits.

And the ECB’s got company, with other European economies outside the Union. Sweden’s key rate is running at -0.35%, Denmark’s is down at -0.75%, and Switzerland takes the top spot at -1.1%.

Considering that the goal is to get people to borrow and spend more, this unusual policy has clearly failed. Have a look at how this half-baked tactic has worked out for these three nations.

In words, these charts are telling us that, as bank interest rates have approached zero, people have instead increased their savings.

That’s clearly a failed mission for those central banks.

But clear and utter failure is no reason the Fed’s own geniuses won’t pull the very same futile stunt.

Bernanke Returns to Suggest NIRP for United States

You don’t have to listen all that hard to hear the ever louder and increasingly frequent warnings that NIRP is headed for the United States. The evidence is becoming more compelling by the day.

Fourth-quarter GDP data recent revealed economic growth of 0.7% between October and December; a pale shadow of the 2% rate that was reported for Q3.

Even the Fed couldn’t sweep reality under the rug, acknowledging that “economic growth slowed late last year.” The U.S. Department of Commerce noted that Q4 real gross domestic demand was cut in half to 1.1% versus Q3’s 2.2%.

Like in Europe, the American people are just not spending.

James Grant, editor of Grant’s Interest Rate Observer, recently told Bloomberg TV Canada, “The Fed is going to recant and reverse… There’s an important chance it will return to zero or some policy equivalent to zero, some new outbreak of stimulus.”

Grant believes the United States is already in a recession.

Former Fed Chair Ben Bernanke told MarketWatch that he believes the Fed should consider using negative rates to fight the next serious economic slowdown. Emphasis mine.

I guess “Helicopter” Ben doesn’t have access to the same data we do, like the three simple charts I just showed you.

But perhaps most intriguing are the trial balloons being floated by the Fed.

The most recent one, following on previous hints by New York Fed President Dudley and former Minneapolis Fed President Kocherlakota, comes from no less than current Fed Vice Chair Stanley Fischer.

Fischer just said in a Bloomberg interview that NIRP was working “more than I expected.”

I’m not sure just what indicator Fischer has used to reach his conclusion, but then again the Fed’s never let real data get in the way of a bad decision.

Now the Fed will stress test big banks under a scenario where three-month treasury yields go negative in Q2 2016 then drop to -0.5% and stay there until early 2019.

Folks, it’s time to prepare for the United States to be NIRP’ed.

The Best Investment to Beat NIRP

The world is headed down a path of exploding debt, fiat money, and negative interest rates for which there’s simply no historical precedent.

In this scenario, your best line of defense is to own some gold and silver as both insurance and for the serious upside potential.

I know this may sound simplistic. But it appears that advice has yet to be heeded by the vast majority of Americans.

While reliable data on gold ownership in the United States is admittedly hard to come by, the best estimates point to numbers in the low single digits. Some experts place it below 3%.

My top recommendation is to acquire real, hold-in-your-hand gold and silver coins and/or bars.

But I know many simply want to own gold and silver in the easiest way possible. Enter exchange-traded funds (ETFs).

If you’re going to go that route, then consider these.

A top choice among gold ETFs is the Sprott Physical Gold Trust (NYSE Arca:PHYS). It holds gold bullion that is fully allocated and stored at a secure third-party location in Canada, subject to periodic inspections and audits.

There is no levered financial institution between investors and the gold, plus U.S. investors holding for at least 12 months can benefit from a 15% (approximately) capital gains tax versus the 28% rate with most precious metals ETFs.

For silver, have a look at the Sprott Physical Silver Trust ETF (NYSE Arca: PSLV). PSLV also holds its silver bullion fully allocated and stored, as is the gold held in PHYS, and it’s subject to the same periodic inspections and audits.

Here too there’s no levered financial institution involved, and the tax advantages for U.S. investors are similar to PHYS.

Just remember, if you wait to buy this form of insurance when everyone else realizes its true value, odds are it’s going to cost you a whole lot more.

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The post This Is Your Best Investment When the Fed Turns to Negative Interest Rates appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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The Spook In the Casino—–Recession Just Ahead, Part 1 http://wallstreetexaminer.com/2016/02/spook-casino-recession-just-ahead-part-1/ http://wallstreetexaminer.com/2016/02/spook-casino-recession-just-ahead-part-1/#respond Mon, 08 Feb 2016 21:17:33 +0000 http://davidstockmanscontracorner.com/?p=90607 The wise guys keep buying the dips owing to the simple proposition that there is never a lasting bear market without a recession. So after today’s blow-out we are likely to get another call to scoop up the “bargains” because the correction has run its course and the US economy is still chugging along notwithstanding the…

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The wise guys keep buying the dips owing to the simple proposition that there is never a lasting bear market without a recession. So after today’s blow-out we are likely to get another call to scoop up the “bargains” because the correction has run its course and the US economy is still chugging along notwithstanding the contretemps in China and other places of purportedly limited moment.

Indeed, on the basis of Wall Street’s muscle memory alone there is surely another dead cat bounce on its way any day. But here’s the memo. BTFDs is not working any more and, more crucially, there is a recession coming and soon. And then the bear will maul, not simply paw as today.

The fact is, BTFD hasn’t worked on a net basis hasn’t for about 730 days now. The S&P 500 closed today where it first crossed in February 2014.
^SPX Chart

^SPX data by YCharts

In light of this extended dwell time in no man’s land, it is not surprising that the market is getting spooked. After all, the real driver of the post-March 2009 rebound of the stock indices was the Fed’s massive intrusion in money and capital markets, not a sustainable recovery of main street business activity or real household incomes. Real net CapEx is still below 2007 levels, for example, as is the real median household income.

And most certainly the market’s 220% gain between the post-recession bottom of 670 and the May 2015 peak of 2130 was not owing to an explosion of corporate earnings. If you set aside Wall Street’s annually renewable ex-items hockey stick, what you actually have on the profits front is a paltry 8% cummulative gain since the pre-crisis earnings peak way back in June 2007.

That’s right. S&P earnings on an honest GAAP reported basis peaked at $85 per share in the LTM period for June 2007, and posted at just $90.66 during Q3 2015; and based on Q4 filings to date, are certain to be down another dollar or two per share in the current quarter.

Thus, based on the most recent reporting, S&P 500 earnings are off by 14.4% from the current cycle’s peak, thereby replicating the exact pattern which occurred during the 2007-2009 collapse. While the Wall Street hockey sticks were projecting earnings of $120 per share or more for 2008, actual GAAP earnings starting falling after the June 2007 LTM period, and kept plunging until they hit bottom at $7 per share in June 2009.

S&P 500 Earnings

The blue bars mark the death throes of a dying bull last time. Self-evidently, this bull market—marked in red—– is not far behind.

The reason, of course, is that a recession is coming. As I suggested in debunking another phony jobs report from the BLS last Friday, the world would be far better off if they simply shutdown the BLS. Adding up minimum wage gigs a few hours per week with full time employment slots in a factory, as per the establishment survey, is a completely stupid, useless and profoundly misleading waste of time.

If we need aggregated data on employment trends, the US government itself already publishes a far more timely and representative measure of Americans at work. It’s called the treasury’s daily tax withholding report, and it has this central virtue: No employer sends Uncle Sam cash for model imputed employees, as does the BLS in its trend cycle projections and birth/death model; nor do real businesses forward withholding taxes in behalf of the guesstimated number of seasonally adjusted payroll records for phantom employees who did not actually report for work.

Stated differently, the daily tax withholding report is the real thing and the whole thing; it captures the labor input of the entire US economy in real time, and does not get revised and manipulated endlessly over the course of months and years from its original release.

Now it is strongly pointing to recession dead ahead.

As I indicated in the last post, my colleague Lee Adler has been tracking the daily withholding reports for more than a decade and knows their details and rhythms inside-out. He now reports that tax collections are swooningjust as they always do when the US economy enters a recession.

In fact, his latest report as of February 6th indicates that,

“The annual rate of change in withholding taxes has shifted from positive to negative. It has grown increasingly negative in inflation adjusted terms for more than a month. Following on the heels of a weak December, it is a clear sign that the US has entered recession……..the implied real growth rate is now roughlynegative 4.5% per year……it is the most negative growth rate since the recession. It follows the longest stretch of zero growth in several years, This can no longer be considered temporary or an anomaly. It has all the earmarks of a trend reversal and is getting worse.”

Withholding Tax Collections Annual Growth- Click to enlarge

Needless to say, the starting point for overcoming the casino’s blind spot with respect to the oncoming recession is to recognize that payroll jobs as reported by the BLS are a severely lagging indicator. Here is what happened to the headline jobs count in just the 12 months after May 2008. The resulting 4.6% plunge would amount to a nearly a 7 million job loss from current levels.

In the next installment we will review the reasons why Keynesians and Wall Street bulls cannot see the recession coming, starting with the phony notion of the oil tax cut. But here is a hint.

Last year the US economy consumed 19.37 million barrels per day (mb/d) of petroleum products, but produced 13.74 mb/d of petroleum liquids. The latter included 3.26 mb/d of natural gas liquids and nearly 1 mb/d of ethanol on top of 9.43 mb/d of crude oil. So net imports were only 5.63 million mb/d or just 29% of consumption.

And that’s the starting point for the so-called oil tax cut. To wit, the nation’s annual net import volume was about 2 billion barrels. Accordingly, every $10 of lower oil prices amount’s to just 0.1% of GDP or the equivalent of $3.25 per week for each US household. 

On the pure math of it, that doesn’t make for an economic bonanza, but the story is actually far worse. Next we will consider the F-150 indicator to explicate the reasons why.

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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Uneasy Feeling: Treasury Yield Curve Flattens To Lowest Since Jan 2008 http://wallstreetexaminer.com/2016/02/uneasy-feeling-treasury-yield-curve-flattens-lowest-since-jan-2008/ http://wallstreetexaminer.com/2016/02/uneasy-feeling-treasury-yield-curve-flattens-lowest-since-jan-2008/#respond Mon, 08 Feb 2016 20:34:57 +0000 http://confoundedinterest.wordpress.com/?p=45596 Between China and Europe, financial markets have an uneasy feeling. The 10Y-2Y US Treasury Yield Curve has just fallen to its lowest level since January 2008. Despite all the massive stimulus from The Federal Reserve. And with the decline came the US bank stock prices. Yes, financial markets have an unpeaceful, uneasy feeling about things. […]

The post Uneasy Feeling: Treasury Yield Curve Flattens To Lowest Since Jan 2008 was originally published at The Wall Street Examiner. Follow the money!

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Between China and Europe, financial markets have an uneasy feeling.

The 10Y-2Y US Treasury Yield Curve has just fallen to its lowest level since January 2008.

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Despite all the massive stimulus from The Federal Reserve.

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And with the decline came the US bank stock prices.

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Yes, financial markets have an unpeaceful, uneasy feeling about things. And like Jeffrey Lebowsky, I hate the f***ing Eagles.

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The post Uneasy Feeling: Treasury Yield Curve Flattens To Lowest Since Jan 2008 was originally published at The Wall Street Examiner. Follow the money!

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