What do Jeff Gundlach, Bill Gross, and Ray Dalio all have in common? - big time fund managers who lead Wall Street's consensus view that bond yields can only head higher. If only the economic data would confirm that view:
How does this happen? Ponzi reflation, how else. Today's gambling class are looking at self-reflecting indicators bid up by their own hedge funds. They've bid up oil and now tell themselves that oil is higher because the economy is getting stronger. Oil then feeds back into inflation rates, commodity baskets, S&P 500 profits, and equipment orders. Gamblers then take the cue from these artificially contrived reflation rates to buy banks, energy stocks and transports, in the groupthink belief that the 'Conomy is expanding.
Ponzi reflation visualized:
But if they really wanted to know about forward reflation, they could ask the bond market itself, which has only now reached the level of last March. Why is that important: because that's when the reflation rally stalled last year.
Unfortunately for gamblers, stocks are now massively leveraged to Ponzi reflation:
Which just means that they are leveraged to economic collapse:
Now we know which one of these was right:
Any questions?
