Credit Bubble Bulletin

Greed and Fear ensure that markets have an inherent tendency to “overshoot.” Over-liquefied markets can significantly overshoot on the upside. Markets for a long time dominated by ultra-low rates and massive central bank buying can be expected to overshoot in historic fashion. And that’s precisely what has unfolded. Major market Reversals have a tendency to be violent and unstable affairs, catching almost everyone unprepared.

At the minimum, summertime complacency finished rather abruptly Friday. September 8 – Bloomberg (Kevin Buckland, Wes Goodman and Shigeki Nozawa): “One of the pillars of 2016’s record-setting global bond rally is starting to buckle. Japan’s sovereign personal debt is suffering its most severe rout in 13 years, handing investors bigger losses within the last two months than any authorities bonds amid speculation the lender of Japan programs to change its asset-purchase strategy.

September 6 – NPR (Anya Kamenetz): “The fall semester has just started on most university campuses, tuesday that but thousands of students in 38 claims were informed, instead, their college is closing its doors. Inside a press release, ITT Educational Services announced all campuses would be closed by it of its ITT Technical Institutes. The for-profit college system has turned into a household name over the past half-century.

The company blamed the shutdown on the U.S. September 9 – Reuters (Svea Herbst-Bayliss): “The Federal Reserve, long hesitant to raise U.S. Fed formal said… In another sign that a U.S. Boston Fed President Eric Rosengren said ‘dangers to the forecast are becoming increasingly two-sided.’ That means that while a slowdown remains a problem abroad, the U.S.

Fed policy remains unchanged for too much longer, he said. September 8 – Bloomberg (Alessandro Speciale): “Mario Draghi said the European Central Bank or investment company will study how to ensure its quantitative-easing program doesn’t go out of bonds to buy, while playing down the need to commit to fresh stimulus at this time. September 5 – Wall Street Journal (Takashi Nakamichi and Megumi Fujikawa): “Bank of Japan Gov. Haruhiko Kuroda… recognized the downsides of his negative-interest-rate plan, suggesting extreme caution about further reductions.

Coming amid a worldwide debate about the efficacy of extreme financial easing, Mr. Kuroda’s unusual emphasis on the potential harm from negative rates pointed to a growing sense even among backers that easing can go too far. The BOJ governor… said negative rates particularly hit the profit of financial institutions, while low long-term yields hurt some other businesses by forcing them to place aside more income for long-term pension responsibilities.

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September 6 – Financial Times (Claire Jones): “Using the eurozone facing lacklustre growth, low inflation and politics uncertainty, most economists expect the European Central Bank or investment company to keep buying billions of euros in bonds each month. European Central Bank bond-buying program itself? September 7 – Bloomberg (Devon Pendleton and Margaret Collins): “Family offices, which control the money of wealthy clans, are growing wary of hedge money.

Offices reduced their contact with hedge funds, that have underperformed stock markets because the financial crisis mostly, by 10% in the 12 months ending in-may, relating to… UBS Group AG and… Campden Wealth. September 7 – Reuters (Idrees Ali): “A U.S. Navy coastal patrol ship changed course after a fast-attack build from Iran’s Islamic Revolutionary Guard Corps arrived within 100 yards (91 meters) from it in the central Gulf on Sunday, U.S. Defense Department officials said… It was at least the fourth such event in under per month.

If you’re investing in individual stocks, you’ll want to keep carefully the percentage of any solitary position between 3 and 5 percent. In this manner you’re not heavily exposed to one investment breaking your portfolio. If the stock has more business risk, then you might choose an even lower percentage than this range. However, Amazon is a well-established business with a high management team, and while the stock price may fluctuate, the essential business is solid and growing.