Off The Cuff: Multiplying Market Oddities

In this week's Off The Cuff podcast, Chris and Axel Merk discuss:

• Impact Of A Trump Presidency On The Markets
  • What will the most likely trends be?
• Plummeting Bond Prices
  • Good or bad?
• The Unbearable Lightness Of Stocks
  • Rising prices in the face of rising interest rates
• Gold's Prospects
  • Inflation? Higher rates? What will it mean for gold?

Axel and Chris address the increasing sell-off in the bond market, which can also be described as the sudden rising of interest rates. In an over-indebted financial system as ours, rising rates will make it more expensive to service the outstanding debt, placing increasing headwinds on economic growth. Right now, the stock market is ignoring that — instead, it's pricing for perfection. Axel warns that this "oddity" will need to correct soon, one way or the other:

A central bank can be wonderfully independent when the fiscal house is in order. When the fiscal house isn’t in order, I don’t know any central bank that’s truly independent. The most recent example is, of course, the Euro zone. The moment everybody’s in trouble, Mr. ECB is promising to do whatever it takes.

So ultimately, when a government needs money and the cost of financing gets too expensive, well, you lean on the central bank and so the central bank has been very willing to provide cheap money to the Fed.