China Enters Stagflation, EU To Follow Very Soon

 According to the latest statistics China is now at or very near stagflation. Industrial production has contracted for the third month in a row while inflation keeps ramping up. The US is (essentially) also in stagflation (see previous posts), while the EU is rapidly heading that way too. Add them up and you get almost 75% of the global GDP…

Unless inflation is stopped in its tracks right now we are in for a very rough time ahead.  With interest rates still extremely low, the real danger will be sovereign bankruptcies when long term bond rates spike up and investors refuse to buy/roll over more debt, even from the US.

The Fed and ECB are in denial, and so are most politicians.  Unlike them, all experienced, long term investors are constantly warning of serious trouble. One of my favorites is Jim Rogers who says the next bear market is just around the corner and will be the worst in his lifetime.

But hey, what does he know compared to the likes of Reddit users who are frothing in the mouth to trade yet another dog meme crypto? Yup, the world has gone mad.. woof woof…

PS There is always a “canary in the coal mine”. In today’s bond market I think the dubious honor goes to the Greek Government 10 year bond (GGB).

Last Friday its yield soared by 30 bp (0.30%) from 1.00% to 1.30%. In ONE DAY… In terms of price in the secondary market, that’s a drop of  3 full points, ie a mark to market loss of 3%.  Think about it: a GGB investor lost in ONE DAY what he will make in interest in THREE YEARS.  

The Canary In The Coal Mine Looks Very Troubled