My former post contained a link to my recent summary of Armstrong's thesis, which says that printing is ending in all the western countries other than Europe and Japan. This was a secret central bank agreement to prop up those dying economies by driving bond investors to Europe and Japan (declining interest rates cause the value of pre-existing bonds to appreciate, whereas rising interest rates in the other western countries drive speculative bond investors out and the long-term bond investors such as pensions are dying).
Armstrong's ECM model had turning point this Sept 3 or 4 2014 which means the stampede into the dollar could accelerate and volatility could be very high in all markets this week! The Euro recently turned down. And now Draghi says Germany is wrong and the ECB must print trillions of Euros.
There is shockingly little market discipline in sovereigns. Sovereign bond rates are policy rates subject to market noise. Increasingly, even equity prices are becoming a kind of policy rate. No developed nation has a hope of paying down debt significantly at market rates, so market rates must be destroyed and central banks buy the nations' debt.
Pension funds don't fold, much. They restructure perforce instead. The dominant trends are to shift to equities or to increase leverage in order to achieve target returns. The former is rather incompetent, if you ask me. The latter aligns the funds with policy, which works until it doesn't. I would not enjoy being responsible for a large amount of other people's retirement money, at this juncture.
The present regime of falling oil (probable u.s./saudi collusion punitive to russia) falling gold (probable central bank futures sales), rising rates, rising dollar is well suited to positioning for war, while retaining economic policy objectives. But rates should fall again soon enough, with a risk-off trade when more geopolitical risk becomes inescapably obvious. btc is correlating to falling risk, falling hard money, but there is no flight to safety happening yet, more like obedient alignment to policy.
With Yellen at the helm they will print again soon enough. Taking away the punchbowl is not going to sit well in equities. They want a correction, but can barely tolerate it when it happens. So far they have anticipated/managed the markets remarkably well. When the whipsaw begins, then you know the whole thing is about to unravel massively. War would tend to make things easier to predict, and defer whipsaw. I suspect they have been running scenario analyses at the fed for several months already. Sadly, I am not privy, and am unlikely to be able to anticipate the results of 20 diverse Ph.D.s role-playing for 12 weeks, at least not without running agent model simulations, which I can't. Conceivably Armstrong might. Although, I am very skeptical of his technical claims, having seen powerpoints attributed to 1997(?) but authored with Office 2003.
I notice that 1000 NATO troops are going to Ukraine for exercises now. That's a temperate but firm little escalation. Did someone with a very small brain discover they had a backbone?