LTBB: Long-Term Bond Bottom

Whistling by the graveyard, yelling at the tide, or talking sense to someone with a closed mind: It’s all the same thing. Denial.

We start this morning two headlines that everyone should be thinking about, though few will outside of UrbanSurvival readers. There’s no new Pokémon to be birthed from the effort, after all.

Still, we draw your attention to the CNBC story over here: “This is NOT the beginning of the great bond market sell-off: Economist.”

This is a fine example of herd control.

When big financial outfits don’t want the public to wake up to what’s going on, the first thing they usually do is get into denial mode, and that gives them to unload their holdings before the stampede by the herd which really ought to have gored them as well.

Still, there is little denying it: Bonds ARE seeing yields rise which means the prices of bonds are swinging down.

It’s in the headlines, too. Yes, even beyond the well-founded speculation that the Fed will raise rates in December, although their November meeting is an outlier bet.

Since the Washington Post this morning has all but offered up the coronation of Queen Hillary, the Fed could hike at their November meeting and claim that “The Fed doesn’t play politics with rates” with relative impunity.

Of course, this is scandalously untrue: The Fed’s on data reveals the sloshing of printer’s ink jamming up M1 and M2 – the primary measures of how much money is abcout:


Now I will draw your attention to a slightly different timeframe offered in the Fed’s H.6 Money Stocks report. This is the “sliding window” view through the middle of October:


I won’t bother with the maths, but let me give it to you as a “thought problem:” If the 3-month M1 rate through September was 10.7%. and then the rate with an additional week scores as 9.5%, what are we to infer?

My suspicious is the Fed is already applying the brakes.

Or, perhaps more accurately, they have stood on the brakes, have invokes the ABS braking circuit, are smoking the tires, and have tossed in the Jake Brake for good measure.

This is to my (admittedly odd) way of seeing the future, what is beginning to show up around the edges of headlines already.

For one, you saw that last week it was looking like mortgage rates were now once again firming. “Buying or Refinancing May Get Tougher as Mortgage Rates Poised to Climb.”

Not like I’m the only one to notice: “Bond yields grind to highest since June, stocks wince.

There is a handy way to anticipate the Great Bottom in the bond market: Key an eye on Velocity of Money at M2. This is what you get when you divide GDP by M2 in circulation. That because money is very much like inventory turns in manufacturing. If you turn over your inventory at a given production level once per year, your company won’t be a rock star. But if you turn over inventory every month? Well, now you’re talking powerhouse.

Same thing for money.

In our “electric theory of money” it’s very much akin to Voltage (the electrical unit of pressure) and Amperes (the electrical unit of volumetric flow).

The amount of actual “work” done by an economy is similar to how Voltage times Current in Amperes equals work in Watts.

Essentially, then Velocity is a measure of the current (or volumetric flow) of money. The pressure may go up (as measured by dollars flying off the press), but if they go into dead pools of capital, they don’t do any Work and the economy slogs along in blahness.


The Great Magic is that as long as rates have been going down, there has been a massive incentive to let money (with apologies to our favorite Bond guru in Houston) rot in stale piles of fixed incomes.

As rates go up, however, money should begin to move again – and it’s already showing signs of Life.

The problem is that we will have a decent period of economic readjustment for a number of reasons as the Great Rollover back into real goods and productive plant and equipment are realized. Consumer spending will be hurting for a while, especially since big Obama/Hillarycare hikes will bite in 2017 as that system burns up on re-entry from it’s political orbit.

For now, we can expect there will be a last-minute run to real estate because it is a fixed non-monetary asset.

Stocks should do well, as they did when the Fed raised the discount rate in 1928 that put the finishing touched on the 1929 Bubble foundation.

But most of all, it will buy the Fed and Clinton administration some time and inflation which will tend to repair some of the mark-to-market issues we fear may be lurking in the $1.7 trillion in MBO paper the Fed is holding.

I want you to click on the long-term chart over here

Mechanically, draw a line from the 1982 high through present. You should be able to figure there are only two outcomes possible.

One is that rates go down and the global economy implodes for good right now. OR the rates turn up and money begins to move and we get the Roaring Late Teens analog to the Roaring Twenties.

In some way, it would be a shame, after all it would push the world war out to the 2024-2026 area. But never been much of a fan of famine or starvation anyway, so we could live with it.

We shall see, of course, but while the markets works down in the short term (balance of the month and to the election farce, for example) the good news is that the dream of a muddle-through is still out there.

I mean if devalued pension funds and massive cuts in Social Security and so on are set aside.

But it’s all why we get up on Monday. See how the first tee-shot off the back pins looks.

Europe Wants a US Bail-Out

When you see headlines like this:

European banks’ vulnerability could spill over to the US: it means only one thing to us.

Those bungling bureaucrats of the bankrupt Ure-a-peein’ Onion have their wet dreams about tapping the American taxpayers to save them.

Again, I would add.

I don’t recall all the paybacks from WW II…

Outing the Free Trade Scam

If you go over to and look at the latest trade scam disclosures, you can see how the globalists are planning to take over the world now:

Use Trade Deals to usurp sovereignty of countries like ‘Merica (formerly the land of the brave, home of the free, now the Land of the Brand and Home of the Fee).

Which explains why this story fits: One Day Biden Declares Cyber War, Next Day Assange Is Cut Off From Internet. Hmmm…

Useless News

Nothing like useless noise, is there?

Hillary Clinton to spend 5 days preparing for Las Vegas debate.  My money is on bed rest.

Trump: Election Is Being “Rigged” By Media And At Polling Stations.  Sets up after election lawsuits, doesn’t it?

A more cohesive overview? Newt Gingrich: Political Coup Is What Is Happening To America Right Now (VIDEO).

Dialing Back the Race Card

Meantime, the rise of Trump may have turned back one aspect of the political coup. Already the “FBI director: Stats don’t back up claims about police shooting epidemic.”

Which means what?

Methinks democrats are dialing-back the “race card” having overplayed it ahead of the election.

BLM may need to find a new clubhouse, too.

Don’t worry, it will be back. Bad politics never goes away…

Which also  means the FBI director’s job is safe: He’s dialing back racism and after letting Hillary skate and nothing under Oath for her key staff, too,  he should have a job for life. Nicely played, huh?  Gosh, back in Feb. I thought he’d be a short-timer….

War 5.3.1.i (Hotfix)

They never stop selling it, do they?

The Battle to Free Mosul From ISIS Has Begun. It Won’t Be Easy.

Expect daily patches through election day.  Then a long-term release candidate.

Empire State Manufacturing

Just out from the NY Fed:

“Business activity continued to decline in New York State, according to firms responding to the October 2016 Empire State Manufacturing Survey. The headline general business conditions index slipped five points to -6.8. The new orders index edged up but remained negative at -5.6, indicating an ongoing drop in orders, and the shipments index increased to -0.6, suggesting that shipments were essentially flat. Labor market conditions remained weak, with both employment levels and the average workweek reported as lower. Price indexes increased somewhat, and continued to signal moderate input price increases and a slight increase in selling prices. Indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead.”

Futures are flat to down a tad.

Be sure and drop by tomorrow as we dispense the latest Cost of Living Kool-Aid.


LTBB: Long-Term Bond Bottom — 7 Comments

  1. George I am thinking of selling my little piece of heaven. If I can time it fairly well I will be able to retire. Otherwise I work ’till I drop, assuming the economy will support my little business in a SHTF world. Naturally, it would be nice to sell at the peak, but I am not that naive. Nevertheless, do you have a time line for your expected real estate bubble.

  2. “LTBB: Long-Term Bond Bottom”

    I just had this conversation with someone the other day.. a random comment was they wish they could meet a millionaire to marry.. LOL LOL
    I said.. Millionaires don’t spend.. they are usually the cheapest people on the planet.. just ask any waitress who she would rather wait tables for.. the tips are always better if you wait on a middle class or poor persons table than a wealthy one and they won’t be as demanding.. take the good old days.. you didn’t have cable or internet.. cell phone.. you didn’t pay a hook up fee exploration fee basic fee was energy used.. the little guy with the coke bottle bottom glasses named Percy that borrowed your pencil because he was to cheap to buy one for himself is the millionaire.. the answer I got was please explain. ok.. take cable internet and cell phone.. since you aren’t going to go out and write a cd for two hundred dollars and most investment stock brokers will laugh in your face at the hint of buying stocks.. the only place is to buy savings bonds for the bottom feeders out here.. a safe trade.. any bank.. by putting that away at a young age alone and never putting another dime into it and the only action is to turn them over to new bonds.. you end up with a tidy sum just from compounding interest.. the trick for todays economy is to get you to spend send the money to another country for their economic survival and let us squander.. we in turn get cheap products by countries and industry leaders looking for that green paper…, the throw away society we are today..
    On average I don’t think there are very many american’s that have ten thousand in savings.. if so we wouldn’t need an increase in minimum wages or the eic or any other give away programs..
    I walked in and overheard my grand daughter asking her parents what kind of average costs were there in their budget.. not wanting to get into their financials.. they weren’t telling her anything.. I lectured them that the only way for children today is to know the realistic cost.. so I gave her the basic run down for our area..
    1000.00 rent , food 300.00 per person per month ( that has to go up form ten dollars a day to eleven this year..) electricity.. basic .. 100.00, cable and internet 200.00 , heating fuel.. 120.00 average, garbage 35.00, sewer and water 67.00, car payment 250.00, car insurance 55.00, fuel and maintenance 100.00 give or take …clothing 5.00 , misc entertainment, 20.00 per person, Health insurance 700.00.. meaning you need to have an income of more than ten dollars an hour which is why there are so many people on social programs..then if you have a school loan. well that is just icing on the cake..
    she was kind of shocked.. I told her do the math.. check it out you’ll see that this is true.. the days of just paying for what energy you use are long gone the three hundred dollar a month living expenses of the seventies and working one job are no longer here.. now the average home has to have two and a half incomes just to break even.. then if there are children.. well you know the routine there is another thousand a month in daycare plus..

  3. Bond bottom shipworm!..?! So what’s up with the urban survival Frontier .!?
    I can tell you that it’s abundant, everyone is thinking about it in some minut form Karma.? It is a crusade becoming a shipworm that is burrowing into the minds of everyone ,instead of the Timbers of ships

  4. I was shopping on the weekend at the local grocery and noticed the tabloids don’t have anything on Trump. No sex exploits or other juicy tidbits. Could it be the tabloids have more integrity than MSM? Maybe there are space aliens after all!

    • Because they could get sued, obviously the TV media has bigger bucks, larger lawyers and more gall.