Salient to Investors:

L.A. Little at Technical Analysis Today writes:

  • We have created mountains of debt to solve our existing debt problems.
  • Debt creation causes currencies to devalue and prices of most financial assets to rise for at least a while until the next country does the same.
  • Bonds are slumping just at the prospect of the Fed raising rates for the first time in a decade in December, and most likely only by 0.25%. A quarter point rise matters because almost all the trades are highly leveraged, and it is unknown how much the market will price in further rate increases.
  • While dollar strength deepens deflation, its more serious effect is on those countries, fund managers, et al that have used the cheaper dollar to go on a debt-buying binge. IIF estimates this debt doubled from 2008 to 2014 to $6.8 trillion, while non-financial corporate bonds in emerging markets tripled since 2008 to $2.6 trillion, to over 80% of GDP.

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