Yield, What Yield?


Yield, What Yield?

There is virtually nothing with yield in the public markets that exists any longer. This has all been engineered by the world’s central banks as the nations they represent cannot afford their budgets or social programs. So, they turned to their central banks to make “Pixie Dust” money and then to buy sovereign and corporate debt driving yields first to Zero and now, in most cases, to less than Zero. To be quite blunt, this is a catastrophe waiting in the wings.

It is a “Borrower’s Paradise” and an “Investors Hell.” Moreover, I am afraid we are stuck in this dichotomy for a very long time, as these same nations cannot afford to get out of the rabbit hole, that they have created. They should have listened to Alice.

“The hurrier I go, the behinder I get.”

– Alice


Switzerland -0.772%

Germany -0.631%

Netherlands -0.586%

France -0.443%

Slovenia -0.358%

Portugal -0.220%

Spain -0.215%

Italy +0.302%

Greece +0.363%

Japan -0.152%

United States +1.684%

*Data according to Bloomberg

Rationally, economically, none of the above data makes any sense. If someone had ever proposed that the yields of all of these countries should be less than yields in the United States we would have thought that they had flown over the cuckoo’s nest. Yet, now, here we are, and the facts are the facts. Well, I am telling you that this has all been engineered by the central banks at the direction of the nations that they represent and this all can go on for a very long time as they can keep making the “Pixie Dust” money ad infinitum.

If you want to ponder more about some type of end game I can give you the answer. It would come in the currency markets, if it ever got to that, where the flip side of printing all of this “Money from Nothing” would finally result in a collapse of someone’s currency as global investors came to the realization that someone’s currency no longer had any value. However, having said that, I do not expect this occurrence anytime soon, and maybe not in our lifetimes.

In my opinion, we are in “Wonderland” and it is virtually impossible to line up against the only people in the world that are authorized to create money from nothing except imagination. What we once thought was impossible has become possible. What we once thought could never happen has happened.

From Bloomberg:


Global Sovereign Debt 0.813%

U.S. Treasuries 1.672%

Global Corp Debt 2.084%

U.S. Corp Debt 2.8423%

“But I don’t want to go among mad people,” Alice remarked.

“Oh, you can’t help that,” said the Cat: “we’re all mad here. I’m mad. You’re mad.”

“How do you know I’m mad?” said Alice.

“You must be,” said the Cat, “or you wouldn’t have come here.”

– Wonderland

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.