EC Strange Days

Perhaps one of the oddest harbingers in our current global economy is the staggering amount of negative-yielding debt. As it stands, approximately $17 trillion worth of value is parked in bonds that pay the bearer negative money to hold.

The largest issuer by far is Japan, but the levels in Western Europe and the United States are also quite staggering.

(Click on image to enlarge)

Yesterday, this bizarre party has been joined by the most unlikely of friends… Greece.

That’s right, the country whose outstanding debt problem nearly sent the entire European Union into economic oblivion in 2012 is now being paid to borrow more.

Words cannot describe how insane this is. The spectrum of risk vs reward is completely broken. Watching economists on the television this morning try to pass this off as ‘normal’ and ‘sustainable’ is literally making me sick to my stomach.

Today’s Highlights

  • Fed is Fighting for Survival
  • Turkish Incursion
  • Bitwise Rejected

Please note: All data, figures & graphs are valid as of October 10th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As if the above Greek saga isn’t enough, further discord has recently been struck behind closed doors.

Last night, the US Federal Reserve banks (AKA: the largest player in the financial markets) released the meeting minutes of their interest rate decision on September 18th with the revelation that

As we know, on that day the Fed cut the interest rate from 2.25% to 2%. It seems that some officials were arguing in favor of a deeper cut to 1.75%, while another group didn’t want any cut at all.

Ladies and gentlemen, what we have here is a very rare 3-way split. At this point, we can probably just kiss forward guidance goodbye and start guessing what the path might be from here on out.

One thing that the Fed doesn’t seem to be disagreeing on is cash injections. Yes, that’s right, repo operations are set to continue and the Fed will lend money in the short term markets, no less than $75 billion per night, until November 4th.

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