A Look Back at 2016: What Went Wrong and What Went Right

28.12.2016 • Investing

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Chris LoweInner Circle (USA)

What a year!

It started with a 27% stock market plunge in China… the worst January rout for world stocks in history… and a mad dash into bonds.

And it’s ending with the biggest rout in global bonds going back to 1990 – a roughly $2 trillion wipeout – and a mad dash back into stocks.

In between, we’ve seen the Brits vote to exit the European Union… Donald Trump win the White House… Brazilian stocks rip 73% higher… gold mining stocks surge 150%… then fall 40%… and the Indian feds ban 86% of the country’s banknotes in the escalating global War on Cash.

And as Bill Bonner has been warning, there are plenty more fireworks to come in 2017…

One big worry: bonds.

Since Election Day, global bonds have lost more than $2 trillion in value. And the yield on the 10-year Treasury note is up 130 basis points from its July low to 2.58% at writing – its highest level since October 2014.

It’s no wonder, given what could be coming down the pike under the incoming Trump administration. Bill:

Will the new president allow real change… a real correction? Will bad debts be liquidated? Will stock market prices be cut in half? Will the fake money be thrown out, forcing the Deep State to downsize?
Nah… Instead, Mr. Trump has already signaled a switch to fiscal stimulus. Big spending. Deficits. Walls. Roads. Boondoggles. The fake cash will flow. The debt – mostly government debt – will rise. And this time, the cash will go into the consumer economy… with rising prices not far behind.
A few years ago, we predicted the nation’s itinerary: Tokyo… then Buenos Aires; deflation… then inflation. That is, we will go broke slowly… then suddenly.
We will soon see rising inflation and the end of the 35-year bull market in bonds.
As Bill advises, “Keep your seat belts fastened and your eyes open. And brush up on your Spanish.”

 

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