I am always on the lookout for cheap cash.

I usually earn 50%-100% a year in my personal trading account, when I have time to devote to it.

Taking on new developers, writers, and customer support staff requires cash. It also sometimes requires a few bucks to pry valuable information out of my global contacts for your trading benefit.

So I had a principal repayment of $325,000 due the other day on one of my lines of credit.

Then I got the call I thought I’d never get.

My lender didn’t want their money back.

It turns out that their loan to me was the top-performing asset in their portfolio last year, earning 4%. Better yet, she was able to sleep at night, and ignore the market volatility.

If I paid her back now her only choice was to put it into cash paying a mere 25 basis points. Ten year Treasury bonds (TLT) only yielded 1.60%. Anything else out there, stocks, junk bonds, foreign currencies, or precious metals were just too scary right now.

I thought for a moment.

My predatory inner hedge fund trader told me to demand a 2% interest rate only, and she had to say ‘please.” But she had provided money when I needed it and had been a good counterparty.

Like everyone and his brother, his fraternity mate, and his long lost cousin, I thought bonds would fall this year and interest rates would rise. So far, they have moved in the other direction in the extreme.

The handful of colleagues I know with a half century of trading and investing experience never thought they’d see a 1.60% print on the ten year.

Yet, here we are.

There is now a global negative interest rate panic going on. Investors fear that banks will never make money again, and are throwing their shares out the window with both hands.

However, just like the stock market is discounting a recession that isn’t going to happen, banks are now discounting a financial crisis that isn’t going to happen either.

Higher rates are normally what you get in the seventh year of an economic recovery. This is usually when corporate America starts to expand capacity and borrow money with both hands, driving rates up.

Of course, looking back with laser sharp 20/20 hindsight, it is so clear why fixed income securities of every description have been on a tear all year.

I will give you ten reasons why I have been wrong on bonds:

1) The Federal Reserve is pushing on a string, attempting to force companies to increase hiring, keeping interest rates at artificially low levels. My theory on why this isn’t working is that companies have become so efficient, thanks to hyper accelerating technology, that they don’t need humans anymore.

2) The US Treasury wants low rates to finance America’s massive $18 trillion national debt. Move rates from 0% to 6% and you have an instant financial crisis.

3) With Japan and Europe in a currency price war and a race to the bottom, the world is sending its money to the US to chase higher interest rates in an appreciating greenback, now at a six-year peak, funneling more money into bonds. The choices for ten-year government bonds are Japan at 0.0%, Germany at 0.20%, Switzerland at a negative -0.38% and the US at 1.60%. It all makes our bonds look like a screaming bargain.

4) Since the 2009 peak, the US budget deficit has fallen the fastest in history, down 75% from $1.6 trillion to a mere $400 billion, and lower numbers beckon. Obama’s tax hikes did a lot to shore up the nation’s balance sheet and cash flow. A growing economy also throws off a ton more in tax revenues. As a result, the Treasury is issuing far fewer bonds, creating a shortage.

5) This recovery has been led by small ticket auto purchases, not big-ticket home purchases. The last real estate crash is still too recent a memory for many traumatized buyers, at least for those few who can get a mortgage. This keeps loan demand weak, and interest rates at subterranean levels.

6) The Fed’s policy of using asset price inflation to spur the economy has been wildly successful. Bonds are included in these assets, and they have benefited the most.

7) New rules imposed by Dodd-Frank force banks and institutional investors to hold much larger amounts of bonds than in the past. This is why US banks are so healthy right now, despite their rock bottom share prices.

8) The concentration of wealth with the top 1% also generates more bond purchases. It seems that once you become a billionaire, you become ultra conservative and only invest in safe fixed income products. This is happening globally. For more on this, click here for “The 1% and the Bond Market”.

9) Inflation? Come again? What’s that? Commodity, energy, and food prices are disappearing up their own exhaust pipes. Industrial revolutions produce deflationary centuries, and we have just entered the third one in history (after no. 1, steam, and no. 2, electricity).

10) The psychological effects of the 2008-2009 crash were so frightening that many investors will never recover. That means more bond buying and less buying of all other assets. I can’t tell you how many investment advisors I know who have converted their practices to bond only ones.

The bottom line for all of this is that bank shares are approaching extremely attractive levels. From here I think they may become the top-performing sector in the market in 2016.

Two big developments today may have signaled that the end of the melt down is near. Deutsche Bank announced that it is buying back $5.5 billion of its own bonds at a huge discount, a brilliant move. And JP Morgan CEO Jamie Diamond said he would buy back $25 billion of his company’s stock.

Jamie’s market timing on this sort of thing is pretty good. The last time he did this was at the market bottom in 2009.

Look at the charts for Bank of America (BAC), Citibank (C), JP Morgan (JPM), Morgan Stanley (MS), and Goldman Sachs (GS) and your eyes will pop out of your head.

I told my lender that I’d be happy to keep her money for another year, and renew her subscription for free as well.

Anyone want a job?

No Negative Interest Rates Here