Is it “Late 2007” For the Everything Bubble?

By: Graham_Summers

Timing the end of a major bubble is extraordinarily difficult as it entails figuring out when a critical mass of investors shift from greed to fear.

Having said that, we’ve recently seen a number of developments that would suggest we’re near the end of the current Bond Bubble.

Back in June the world saw the unveiling of perhaps the single most insane investment of all time: the 100-year bond.

To make matters more insane, the countries that were issuing these bonds (Argentina and Austria) both have experienced numerous sovereign dent crises in the last 100 years.

More recently, Austria almost went bust in 2015. And Argentina only just resolved issues with debt-holders from its 2001 default last year (2016).

Of course, 100-year bonds are not entirely new: Belgium and Ireland issued 100-year bonds last year (2016).

However, both of these issues were via private placements (meaning the bonds were sold at set prices to a select group of investors).

By way of contrast, both Argentina and Austria issued their 100-year bonds on the open market to anyone and everyone. Even more insane, both debt issues experienced tremendous investor demand!

Argentina sold $2.75 billion of a hotly demanded 100-year bond in U.S. dollars on Monday, just over a year after emerging from its latest default, according to the government.

The South American country received $9.75 billion in orders for the bond, as investors eyed a yield of 7.9 percent in an otherwise low yielding fixed income market where pension funds need to lock in long-term returns.

Source: Reuters

Austria has sold €3.5bn of 100-year debt in the largest century bond to hit the markets to date, the latest indication of hot investor demand for very long-dated debt. Bids from potential investors reached €11.4bn, dealmakers said.

Source: Financial Times

Let’s put this in very simple terms… two countries, both of which struggled with sovereign debt issues in the last four years, saw investors place between $3 and $4 in bids for every $1 in new debt issuance… on 100-year bonds.

This is beyond insanity. It is the textbook definition of a bubble. And it indicates we are nearing the end of the line for this current bubble.

The time to prepare for this is NOW before the carnage hits.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s to come when The Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

https://phoenixcapitalmarketing.com/TEB.html

Graham Summers

Phoenix Capital Research

http://www.phoenixcapitalmarketing.com

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2017 Copyright Graham Summers - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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