Ignore Stocks, the REAL Crisis is Far Bigger and Far Worse
By Graham Summers
GoldSeek.com
Thursday, 28 January 2016
Investors today are focusing on the wrong asset class.
Stocks started off the year with one of the worst drops in recent memory. As of this morning the S&P 500 was down over 7% for the year thus far.
However, while stocks grab the headlines, it is the bond market that warrants the most attention.
The reason?
Firstly, size. The bond bubble is $100 trillion in size. To put this into perspective, the Tech Bubble, the single largest stock bubble in history relative to profits, was just $16 trillion in size.
Beyond this, there are $555 trillion derivatives trading based on interest rates (bond yields). So that $100 trillion in bonds is leveraged by an additional five to one.
In simple terms, as much as CNBC and others focus on stocks, the bond market, particularly the bond bubble is a much larger, more pressing problem.
Especially since it has begun to burst.
Junk bonds were the first “shoe to drop.” They’ve taken out their post-2009 bull market trendline (blue line) as well as critical support (green line).
The Rest…HERE
