Notes From Underground: Welcome to 4Q, May We Not Be Drawn and Quartered

The political and economic landscape is fraught with danger even as the global equity markets remain mesmerized by the continued liquidity from the ECB, BOJ and the Swiss National Bank. It is not only the massive amount of asset purchases sustaining the elevated equity levels, the siren call of a HUGE U.S. tax cut (OR IS IT REFORM), which will be aided by being revenue neutral, keeps Wall Street pushing for lower risk premiums, or conversely increased stock market valuations. As I noted last week, the S&P/BOND RATIO has broken out to all-time highs as it has struggled for several years to climb above the record made in December 1999. The ratio moved to an all-time monthly high Friday, an indication that stocks are the highest price to Treasury debt, ever. Are stocks over extended on a fundamental basis?

It is too difficult to be certain while we remain in negative or zero global interest rate environment. The value of FREE MONEY may be more powerful than Einstein’s purported views on COMPOUND INTEREST. Regardless, the fourth quarter is going to be quite volatile as the world begins to focus on POLITICAL ECONOMY or for our concerns, GLOBAL MACRO FINANCE. We will experience an election in Japan, the Chinese Politburo Meeting, German domestic politics, a new Fed Chair (or not), a significant ECB meeting in late October, and, as of today, great domestic political stress in Spain. This is just a mere sampling of what is on the schedule. In today’s POST I am linking to a PODCAST from last Wednesday in which I discuss the coming world situation with former British MP John Browne .This is my first discourse with the well known British conservative politician and now analyst. Enjoy.

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4 Responses to “Notes From Underground: Welcome to 4Q, May We Not Be Drawn and Quartered”

  1. Arthur Says:

    Kudos. Wonderful podcast.

  2. Arthur Says:

    Must read/listen podcast. Kudos.

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