Original Channel: Wealthion

Video Title: Bill Fleckenstein: A “Generation-Long” Bear Market In Bonds Lies Ahead

Published Date: 2023-10-18T15:15:11Z

The guest expert, Bill Fleckenstein, discusses the current state of the bond market and its relationship with the Federal Reserve (Fed). He believes that the bond market is losing confidence in the Fed’s ability to control inflation, leading to higher long bond yields. Fleckenstein also predicts that inflation will be higher in the future, citing changing psychology and aggressive wage demands as evidence. He notes that if the Fed pauses its tightening measures, longer rates may rise while the Fed cuts rates, leading to an upside-down situation. Additionally, he points out that supply is a factor in the bond market, with the current enormous supply causing uncertainty about the investment case for bonds. Overall, Fleckenstein suggests that the bond market is in the early stages of losing faith in the Fed and its ability to control inflation. The market for bonds is changing and bond buyers are becoming more cautious. The deficit and inflation are major factors contributing to this change. Previously, buyers were not as concerned about the deficit, but now they are more wary. The yield curve is flat or inverted, which makes it less attractive to own long-term bonds. Positive carry (the profit made from holding a bond) is no longer present, causing buyers to reconsider their investments. Additionally, the Fed and foreign investors are selling bonds, further decreasing demand. All of this leads to the need for a stronger case or higher rate of return for people to be willing to buy bonds. If the Fed pauses its interest rate hikes and economic data weakens, there may be a temporary rally in bonds. However, overall, the bond market is changing and buyers are being more selective and cautious. The speaker discusses various topics during a conversation, including: – The bailout of depositors at Silicon Valley Bank. – Expectations of the Federal Reserve pausing rates and higher yields. – The end of the era of the market working as it has in the past 25 years. – The historical trend of bond markets and the expectation of a generational bear market. – The difficulty of shorting bonds due to unpredictable variables. – Potential concerns about the maturity of debt for corporations and its impact on profit margins. – The Federal Reserve’s role in creating and bailing out problems in the economy. – The effect of fiat currency and the importance of a responsible approach. – Other risks, such as the border crisis and overall dysfunction in society. The speaker discusses the similarities between the current financial system and the gold standard, noting that central bank irresponsibility rather than fiat currency is the main problem. They also express concerns about the open Southern border and social dysfunction. The speaker mentions the potential problems with the passive bid in the market, particularly if there are layoffs and the bid unravels. They mention the need to be aware of potential risks and adjust investment strategies accordingly. The speaker recommends being cautious in the current environment and suggests considering short-term Treasury bonds, gold or precious metals, and companies with pricing power and strong fundamentals. They believe that gold and mining stocks could perform well if there is increased interest from Western investors.