Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Sooner Or Later, Bond Bear Will Return, Hartnett Says
Market participants witnessed enough remarkable developments over the past fours years to burn retinas. November brought another such development: One of the best months for US bonds in four decades.
The list of superlatives employed by the mainstream financial media to describe bonds' abrupt about-face is long indeed. Any synonym of "excellent" will work.
Suffice to say that regardless of how you care to define "US bonds" (i.e., whether you're just talking about the long bond, or you want to
I doubt Ackman’s short thesis, especially in the long term, because his tenets indicate the seeds of a more palatable resolution, given enough time for geopolitical evolution. The nexus of economic issues for the next few decades is workers; we don’t have enough of them. His first bullets – onshoring, union power, strikes – indicate that problem. You can add western world demographics to the list, and the green transition (utterly necessary) will exacerbate the need for workers as well. Given time, we will either: solve immigration (unlikely), re-engage with China (we haven’t actually disengaged…), or look to India/ROW. Higher rates and the resultant stagflation won’t solve workers or save companies from constrained earnings, operations, innovation, etc., so I expect some less painful solution to emerge first. Eventually some Republican president (I’m using “Only Nixon…” logic here) will line up China’s current economic pain (lack of demand) and our economic pain (lack of workers) and we’ll revamp outsourcing to China and sell it to red states as “smart onshoring” or some other ludicrous political machination. I’d rather see India hit the gas, personally, as an outsourcing and market development solution.
Harnett’s last chart showing the 35 year fall in rates is/was so beautiful. No guesses or risks involved. It was a slip ‘n slide greased with free money. A big source for my handle. Actually, I got started in “81 and I also got a free house in the bargain.
Mr. Hartnett is the first I saw to remind us that the fed does’t like to piss off the incumbent in an election year…Waiting for this for a while….Here’s a contrarian thouht- China , despite the huge discount on oil from Russia and Iran and the crash of a lot of commodities, needs to export, badly in my opinion. They may actually resume exporting deflation to some degree…