During my hiatus, I spoke with Rick Santelli (click on the image below) to discuss some of the new issues presenting investment opportunities, in addition to concerns surrounding potential negative fallout from ill-conceived models, such as the effect of the border adjustment tax on the global financial system.
All week the news continues to be about the all-time low yields made on the 2-year German schatz. As I warned last month, Gundlach was correct being short European debt instruments, but the BUND and German instruments were the wrong instrument. German debt is high quality collateral. The capital key of the ECB and the growing budget surplus in Germany is causing a shortage of these high quality assets, which forces investors and financiers to push German yields even lower. There will be more coming on this when I return next week.