by Pam Martens and Russ Martens at Wall Street on Parade
The corrupt political backdrop for today’s unprecedented market quagmire feels like a hyperbolic trailer for a low-budget sci-fi thriller: The former president of the only remaining superpower in the world has been charged with “staggering” frauds against banks – the ones he just deregulated as president. (This same former president was also caught red-handed with Top Secret documents after he left public office — but the super power’s 18 intelligence agencies have no idea what he did, or was planning to do, with these documents.)
On the other side of the globe, the sitting president of a bygone superpower is engaging in nuclear saber-rattling and conscripting 60-year-old men to fight an illegal war while young, able-bodied men flee the country en masse.
The world’s financial markets have gone off the rails in an equally disorienting fashion. The central bankers that had created bubbles in almost every asset class by keeping interest rates at zero for years, are now in competition for how fast they can raise interest rates in order to keep their currencies from collapsing and causing further crippling inflation. The dramatic spike in interest rates around the globe is causing prices to collapse in everything from stocks, bonds, commodities, and risk assets. There is nowhere for investors to hide.
Even the typical safe havens are quick sand. Gold has fallen from more than $2,000 in March to a closing price of $1,651.70 last Friday, a decline of 17.4 percent from March.
How about hiding out in short-term U.S. Treasury securities? Isn’t that always a safe haven? Not this time. Consider the share price of the Vanguard Short-Term Treasury Exchange Traded Fund (ETF). It sported a $61 share price last December. It closed at $57.79 on Friday. That’s because the Fed has promised to continue the pain (hiking short-term interest rates, which causes losses in existing debt instruments with lower fixed rates) until it gets inflation under control.
The yield on the two-year U.S. Treasury note is the highest in 15 years, closing Friday with a yield of 4.21 percent:…
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