Markets Once Again Living on the Edge

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2 weeks ago we wrote the very lengthy article “These Markets are Bonkers and Living on the Edge” so we will not write the same article again–but it expresses what we are feeling once again tonight.

The treasury markets in the world are SCREAMING ‘trouble ahead’!!!!! How else can you explain that the Fed releases a statement that was probably more hawkish than we thought it would be and the 10 year treasury yield plunges 10 basis points. 

Now since we wrote our Bonkers article the EU has kicked off a giant QE program (what a waste) as a supposed deflation is happening almost globally. Yellen says that inflation will pick up as the ‘labor market improves further and transitory effects of lower energy prices and other factors dissipate’. Now we realize that we are in the minority calling for a wider negative affect from the imploding energy prices, but it seems to us that each day it is becoming more obvious that there is plenty of pain ahead. Kern County CA declared a fiscal emergency today as plunging oil revenue will reduce their tax collections by 1/3rd. Can you say ‘Hello Pink Slips’. Forget that us conservative types think there is too much government anyway–this is about jobs-not philosophies and we never wish for anyone to lose a job. In North Dakota the daily rig count is now at 148–falling almost daily. Each of these reductions represents numerous jobs lost–and high paying jobs. In North Dakota they are busy building everything from highways to new schools–we hope they have a plenty big rainy day fund to pay for all of these items. Housing construction has gone absolutely nuts in North Dakota and if drilling and production fall too much there will be massive problems. There is no reason to hang around when you are unemployed in North Dakota. Of course all of these things take months to play through the system and there is always a chance energy prices will rise–it would only take a couple pipeline attacks in Iraq to get supplies in balance.

While we could ramble on and on we won’t as it would only be a rehash of the article linked above. We shall see what happens in the next couple days, but it would not surprise me if we got some really big swings in the various markets–we just hope they don’t let it get out of control. 

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