Few things have been more confusing to traders in the last few weeks than the action in the bond market. With the USA on the verge of a near default and QE2 now over, there are few investors who would have thought that bonds would be an outperforming asset class. Even bond market “gurus” said: “Who will buy Treasuries when the Fed doesn’t?

I’ve pointed out most of these misconceptions about US government debt in real-time and why QE2 was never a “funding” source for government spending, debt monetization, etc. The debt ceiling debate is no exception. It’s been another charade with all the usual players spreading fallacies about the American monetary system.  (If you’ve noticed a bit of frustration in my writing lately it is due to the disgust resulting from the way this entire thing has been handled by our politicians AND the media.  Don’t worry, I’ll get over it!).  

The bond market was never worried about US default or the end of QE2 because that’s not what the bond market takes its cues from. The bond market takes its cues from the Fed. And the Fed takes its cues from the economy. The simple message coming from the debt ceiling debacle has not been one of insolvency. Only the media and the fearmongerers were focused on an actual insolvency. The real story here was always the impact of the debt ceiling outcome on the real economy. And the bond market’s message has been loud and clear. Bond traders think this deal stinks for the economy and what they see is an anemic economy.  It’s that simple.


Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Cullen, I’m a regular reader and an MMT fan. I’ve been holding about 60% of my assets in a mix of Treasury bonds/notes and corporate bonds. I’ve done very well (+7.5% YTD) , especially over the last few weeks and months as the bond yields have come down. What signs would you look for to indicate when a bond holder should consider selling and taking profits? Should I look for any signs of strength in the global economy? In your view, is this just a minor mid-cycle slowdown, or do you think it could turn into something more serious, like a double dip back into recession or zero growth? Thanks for your excellent website.

  2. Agreed. The bond market is clearly focusing on fiscal retrenchment. However, we are quickly approaching the financial crisis lows (in yield), when the world appeared to be falling apart. Today feels different. Sure, the economic outlook is anemic, but the system has stabilized. Why is the bond market partying like it is 2008?

  3. Wait until QE3? I think September we will start to hear noise about this, but treasuries still will be strong (specially as things get ugly in Europe) for months.

    In any case now is to early to get out as we are in for a rally on bonds.

  4. Financial system stabilized? Not so sure about that. Recession means more negative equity on households, more foreclosures, and worsening balance sheets. European financial system could fall of a cliff right now, and I’m not so certain about what the ECB would do (I guess we are in for an huge TARP at the end of it, but politically there iss little space for it).Financial system still is mainly insolvent and worsening economic conditions for households and corporations and falling real estate means things get worse, not better.

  5. The $UST and $USB seem to be going parabolic. This is – IMO – the final blow off of the epic 30 year T-bond bull market. The graphs look like the Nasdaq in 1999 and 2000 and the price of silver earlier this year. Is going to be interesting !

    And it – IMO – has nothing to do with MMT.

  6. My guess is that the answer to when/if the red arrow reverses is the same this time as the other two = QE(?=3).

  7. The Bond market is partying like it is 2008 for in many, many respects it is.

    None of the underlying problems have been solved. The problems are better known and understood today – but not solved.
    The household balance sheet problem is still severe and showing only glacial progress. And most importantly not only is stimulus running out, it will be followed by budget cuts at the Federal, State, County and City level.

    Add that to the slow down in the emerging markets and Europe’s woes. Boys and Girls, Europe’s problems if left to get out of hand will impact our markets in a most profound manner.

    This is not rocket science anymore. It is written broadly across the economy.

  8. Roche wrote “(If you’ve noticed a bit of frustration in my writing lately it is due to the disgust resulting from the way this entire thing has been handled by our politicians AND the media….)

    That comment suggests you are naive to the degree that there might have actually been something productive that came out of all the rigmarole. I think you should do something to increase your cynicism–I suppose the “something” is just to stay alive and keep observing.

  9. Larry- good work on your investments. While the equity bulls are telling you to load up you owned the most detested assets on Wall St. And it’s served you very well.

    We’ve been running 40% cash up until Friday we invested in the large cap space about 15%. We did this for a short term trade. We feel tough sledding until Oct. This S.T trade is not working out for us right now. We are down intra day 2% since Friday.

    I thought I’d share my thoughts as a fellow reader. Our current allocation is as follows as of this writing:
    Asia Currencies-5%
    And we just bought 15% SPY-short term trade….
    Not alot of risk for us as you can see but today my trade is weighing us down for what has been a decent year so far.

  10. Mark & Leverage- I agree with both of you. My job is to profit regardless of this picture. But the negative back drop in 09-10 which propelled risk assets higher is different now. Very cautious about getting burned playing with this market. But I’ll continue to invest where I think it’s appropriate..which I think opportunities are arising again Short term and if you both are correct longer term here soon.

  11. Naive, no. If anyone is aware of how ignorant people are about the ways of the monetary system, it is me. After all, I have spent countless hours debunking these myths and making predictions in real-time. My frustration comes from the fact that I reach 10MM+ people on a monthly basis via my various article syndicates and the message is as poorly understood today as it was 3 years ago when I started the website…..

  12. “the message is as poorly understood today as it was 3 years ago when I started the website…..”

    only by certain people (uh, like the ones making policy). But don’t forget us “little guys”. WE ARE learning! and the ripples ARE spreading. I’m one that didn’t get it until a few months ago, and i’m not alone. I’m spreading the word to my friends as well, as I’m sure most of the other responders are on this board.

    Your work may not have shifted policy YET, but you and Kelton and Mosler and Black and………ARE reaching people.



  13. Cullen, you’ve completely and utterly changed my view of the economy in the last year – so that’s one, and I’ve been spreading the message as much as I can with some success…keep up the good work.

  14. In 2009 we enacted an $800 billion stimulus. What are the prospects for doing that now?

  15. Right. Everyone is talking about U.S. Treasuries at cocktail parties. It’s a classic bubble – like the dot com boom or housing in 2006…

  16. Mark and Leverage, points well taken. Especially about Europe, which is a big concern of mine. However, if what you are saying is true, the equity market should also be approaching its financial crisis low. Far from it (though today is a good effort!)

  17. Larry, in response to your question above . . . . Cullen said on his radio interview that the time to get rid of bonds was on the first rate hike.

    Perhaps Cullen will elaborate.

  18. Right Dan. Sorry I missed your comment Larry. I would not want to own bonds once the economy gets to the point where it looks like the Fed will raise rates….

  19. Cullen, If/when the FED decides a QE3 is necessary. In your opinion, will the market react the same way as they did with QE2? Or will they see the failure of QE2 as a stimulus to the overall economy and see the FED’s attempt as an act of desperation? Thus a signal to sell the market. Any other thought on the subject from other readers of this blog?

  20. Cab drivers are giving Treasury bond tips. This is exactly what happened in Zimbabwe before the hyperinflation…

  21. Actually, what preceded hyperinflation in Zimbabwe was 85% unemployment, a collapse in their one export, a regime change, and massive corruption. Comparing that to the USA is crazy. On the other hand, there are probably some Zimbabwean cab drivers in the USA who have seen a remarkable jump in the standard of living by virtue of moving here….

  22. When (not if) this market implodes then the whole US “”kit kaboodle”” comes crashing down. It will certainly destroy the entire -or at least a very large part of of- the US credit market and then one of the next “”trainstations”” will/could be called “”Hyper-inflation””.

  23. Thanks. And it is clear that our economy is far too weak now for the Fed to even think about raising rates. It will likely be months before we get strong enough to do so. So bonds are a hold here.

  24. Cullen, if we implement QE3 now, the FED will lose its independence. Can you imagine Ron Paul’s reaction?????

  25. The bond market sees deflationary forces that will not be denied. The lesson of the global financial crisis is that debt eventually comes due, and that once the economy reaches the Ponzi stage of borrowing the cessation of asset appreciation plus high leverage equals disaster for any currency user, whether a person or a nation. The USA is a currency issuer and the dollar is the reserve currency, but even that privilege does little good in a US real economy dominated by consumers who are currency users overindebted with Ponzi stage real estate debt and thus are either insolvent or have no demand for loans, no matter how low the interest rate is.

    We can either delever Ponzi stage debt the old fashioned way (massive write offs in a Mellonesque-Swedish hybrid banking liquidation) or do a massive helicopter drop of money (big checks for everyone courtesy of the Fed and Treasury, as the world stares in disgust), but anything less than those two extremes will simply drag us along the painful road that we have been traveling since 2008. The time for the Swedish-Mellonesque hybrid liquidation of the banks was 2008, and TARP and stimulus to the tune of $1.5 trillion dollars have already gone up the TBTF-consumption-bureaucracy chimney (no TVA or Hoover Dam or bridges or parks or rural modernization this time around), and so we may be destined to the slow burn of the USA in place since 2007 for a long time to come. As Obama said: “elections have consequences”. He wanted a transformational presidency, and he got one, except that the transformation won’t be what he (and we) had in mind.

  26. Since i see were putting returns on here..put my clients entire portfolio into HDY stock…made 23% in a week exited the trade…with the the rest of the years gains, i have made my clients 31% YTD…lucky year.

  27. Cullen, reading the material on this site has been an epiphany for me, and the recent media focus on the debt ceiling issue has given me many opportunities to explain MMT to friends and family. At some point awareness and understanding will reach the echo chamber stage and go viral. Until that moment, it’ll often feel like a long, unrewarding slog, but I’m confident that progress is being made.

  28. “Few things have been more confusing to traders in the last few weeks than the action in the bond market. With the USA on the verge of a near default and QE2 now over, there are few investors who would have thought that bonds would be an outperforming asset class.”

    Speaking as one of those baffled by the behavior of the bond market (which is not necessarily statistically representative), Cullen I don’t believe you are characterizing the perspective accurately (at least not for all of us). It’s not surprising people are piling into treasures if they believe the debt deal was as good as done. The economy is deteriorating and has been for some time. People look to treasuries as a safe haven (markets 101). I think what is surprising is that the bond market believed the debt deal was as good as done, at least strong enough to put their money on the line, willing to accept the risk they might be wrong. Personally it wouldn’t have surprised me to see negotiations in Washington go sideways. In my estimation, piling into bonds was excessively risky in light of the potential self imposed default. We were down to the wire. The bond market in my opinion gambled irrationally and won.

    As an aside, there is irony here in the bond market behavior. The move to treasuries suggests people have more faith in the system and the ability of the politicians to get the job done than they would otherwise admit verbally. Pocket books however speak louder than words. If you want to know what people really believe, the lesson is to watch what they invest in. While the bond market was correct about still receiving their coupon payments come Tuesday, it was too close to the wire and too much of a coin flip for my tastes. Market Watch Headline as of 10:50 PST Tuesday August 2nd: “U.S. debt bill becomes law, with just hours to spare.” That’s cutting it awfully close. Does it seem rational to put money on the line in this scenario?

    But let’s get to the meat here; you wrote:

    “The real story here was always the impact of the debt ceiling outcome on the real economy. And the bond market’s message has been loud and clear. Bond traders think this deal stinks for the economy and what they see is an anemic economy. It’s that simple.”

    Your article is a question of bond market motivation and beliefs. What was the bond market motivated by in investing in treasuries? What I believe we need to do here is to sort causation from correlation. It seems to me we have one of three scenarios:

    1. Treasury purchasers are motivated by a belief in a deteriorating economy.
    2. Treasure purchasers are motivated by a belief that this debt bill will have a negative affect on the already deteriorating economy for reasons MMT would suggest.
    3. 1 & 2.

    Cullen correct me if I’m mistaken, but it seems you are suggesting in your article 3 is correct. I don’t think there is any debate about 1 being true. The economy has been deteriorating for some time. Equity markets deteriorate when the economy deteriorates. We’ve all been watching this. ECRI has been talking about growth slowing for awhile. Friday’s GDP was a real eye opener to markets as further confirmed by the data released this week. The question is 2 and to what degree (if any) the bond market is motivated by a belief this bill is bad for the economy. More to the point, the question is to what degree (if any) the bond market is motivated by beliefs the bill is bad for the economy stemming from MMT. You’re arguing causation here–bond markets believe this bill will have a negative affect on the economy, therefore they are purchasing treasuries. But it seems this is not all you are suggesting. In addition you seem to be suggesting they believe this bill is bad for the economy because of MMT. Now it may be nothing more than my own lack of creative thinking, but I don’t see how you can support this claim. To be clearer, let me ask: do you believe the bond market believes in MMT? If not, how can you believe they believe this bill is bad for the economy for the reasons MMT would suggest it is if in fact MMT is not a generally accepted view? It seems–and I may be mistaken–you are viewing the bond market motivation through the MMT looking glass. This would suggest you have a belief in two propositions which are inconsistent:

    a. The bond market does not believe in MMT in any statistically significant quantity.
    b. Yet the bond market believes the bill is bad for the economy because of the MMT economic worldview.

    Have I misunderstood you? If not, it seems to me 1 above is a sufficient condition/motivating factor for the bond market behavior. 2 can’t be the case if few believe MMT. It is possible the bond market believes the bill is bad for the economy for reasons unrelated to MMT, but that isn’t how I understood your article.

  29. I am sorry but I think the conclusions here are only partially true. I do agree that QE2 was never a funding source, the debt ceiling debacle has been a charade with lots of fallacies spread. Where I would differ is when you say the bond market wholly takes its cues from the Fed and by implication the real economy. For me this is a too simplistic view, although this is one of the factors.
    If I look at the Italian or German bond market then there is very little difference between now and 3 months ago, yet the bond markets for both countries have shifted significantly. I will accept that European bond markets are likely to have very different drivers to US bond markets,but it shows a breakdown in the correlation between bond markets and the economy can occur. The same applies to Canadian and Australian bond markets, although you could argue that size and liquidity matters.
    As the Greek economy increasingly gets into difficulty bond yields rise which might indicate you would expect yields to rise if the economy begins to falter. I will accept that there is a difference between Greece and the US, most likely linked to the potential solvency of Greece.
    I am not arguing that there is no correlation between the economy and the bond market, but that there are other factors which can mask the correlation especially at this point in time. For me these other factors are
    1) Whether the currency is rising or failing relative to others.
    2) Availability of supply at particular durations.
    3) CME margins on the bonds.
    4) Availability of similar rated bonds.
    5) Short term funding requirements of financial institutions.
    6) Potential future ratings.
    7) Whether the bond issuer has control over the currency.
    8) Whether the currency the bonds are issued in are in a reserve currency.
    It just might be that the bond market is saying we are in a risk off mode at the moment or that financial institutions are even more addicted to short term financing. That risk off mode might indicate that markets expect the economy to falter, but it might also indicate that markets expect a ratings downgrade or that longer term the deficit might not be sustainable without a drop in the value of the currency. For me there is a danger in reading too much into the state of the economy by looking at the government bond market, even though as a broad theme I agree with what is being said here.
    There is also a risk that the bond market will over react at the first rate hike after being so low for so long, with yields over shooting and damaging the real economy.That would be another sign that the correlation is not working as it should.

  30. “I explained this in the piece. The bond market doesn’t adhere to MMT. It adheres to Fed policy.”

    You made two claims:

    1. Bond traders think this deal stinks for the economy…


    2. …what they see is an anemic economy.

    And it is both of these which affect Fed policy, keeping it accommodative. I understand what you’re saying. The issue I was raising was related to why you believe 1 is true? I know *you* think the debt deal stinks for the economy, and you believe this because of your adherence to MMT. But you didn’t reveal why you believe the bond market believes the debt deal is bad juju if in fact it is for different reasons than your own. It isn’t crazy for me to think you may have been imputing your beliefs about the-debt-deal’s-to-be-seen-negative-affects-on-the-economy to the bond market. This is why I asked if I’ve misunderstood you, because upon further thought, that wouldn’t make a lot of sense since it seems apparent you recognize MMT isn’t exactly mainstream. Ultimately I’d like clarification as to why you believe 1 to be true. Why is 1 a motivating factor for purchases in treasuries when 2 would itself explain the move? Why is 1 causally related to the move? Why isn’t the debt deal merely correlated to the move which is actually caused by the deteriorating macro picture?

  31. Robert, you don’t need to adhere to MMT to know that
    G (govt spending) is the second largest contributor to GDP (after C – consumption). What happens – at least in the short term – to GDP when you slash G? You got it. If by some miracle C/I/NX don’t go up more than the slashed G, your GDP will shrink. Market understand basic macro, I think.

  32. regime change? mugabe was firmly in power long before hyperinflation took place. not that i think hyperinflation will happen here but claiming regime change is factually inaccurate.

  33. I’ll give you that, but I think it’s misleading to imply that the Mugabe regime change didn’t ultimately cause or contribute to the hyperinflation. Besides, when I refer to regime change, I am more referring to the fact that regime changes result in very unstable political and social environments. These environments are ripe for the public to reject the currency that is issued…..

  34. I’m not going to assume what Cullen’s argument is Peter. He’s a grown man, he can speak for himself without me having to do it for him. He wrote the article, he should have taken the time to establish the causation. The debt deal could merely be correlated. Correct me if I’m mistaken, but you seem to be suggesting the argument he didn’t state he shouldn’t have needed to state since it should be plainly obvious/intuitive to the reader (just look at the GDP equation; G is going down, what do you expect to happen? Causation is obvious). Does that sound right? On the other hand you suggest the conclusion one draws is relative to the details. Unless the details are plainly obvious to the reader, I don’t see how the conclusion could be. In other words, should a reduction in G obviously not be compensated for by an increase in C/I/NX? Are those details intuitive/readily known/plainly obvious? If not, then why would the conclusion be obvious?

    Look at the details; the average yearly reduction in G of the debt deal is 200 billion. Assuming every penny is going to affect domestic GDP (which isn’t necessarily a fair assumption since a reduction in spending could affect foreign GDP on items such as foreign aid), this equates to about a 1.3% reduction in GDP (assuming a total GDP of 15 trillion). The CBO’s projected GDP increase for 2011 was 3.1%. See page 13, right side under “The Economic Outlook”:


    The decrease, if the CBO is correct, is entirely offset by the increase. We’d still have tepid growth this year and not necessarily a reason to run off to treasuries. The problem is the bond market is coming to realize the CBO overestimated the growth significantly to begin with. First quarter GDP growth was revised to .4% (which is virtually no growth) and second quarter was at a mere 1.3%. Unless 3rd and 4th quarter pick up dramatically to make up for lost ground, the CBO was clearly overly optimistic. And how likely is the rate of growth to pick up now in light of this debt deal? With GDP overly optimistic and macro data coming uglier than expected, people are worried. Fear motivates treasury purchases. This is how you establish causation, something the article left the reader desiring.

  35. I’ve got two words for you… Supply and Demand.

    Who is going to fund the added $2 trillion in new Treasuries?

    1) Private Funds (sucking money from the corporate bond market, less investment to grow the economy.
    2) Sovereign Funds (China, Russia, and Japan are tapped out and have already made it clear they won’t triple their holdings).
    3) The Fed (i.e. QE3, lower dollar, inflation, etc)

    The economy is going to stink, yes… but that doesn’t mean bond yeilds are going to remain low. Ever hear of Stagflation? (was that Jimmy Carter’s administration??? :)

  36. Robert, I am not sure what your beef is. You asked Cullen why he thought that the market thinks that the debt ceiling deal is bad for the economy. regardless of the previous GDP growth estimates, those were already built into the market price. Slashing a major component of GDP growth is a no-brainer signal to the market that its current assessment of that growth is going to prove wrong.

    ” I don’t see how the conclusion could be. In other words, should a reduction in G obviously not be compensated for by an increase in C/I/NX? Are those details intuitive/readily known/plainly obvious?”

    I think they are, at least in the short term.

  37. An easier way to show the negative correlation between Long Term Treasuries and the economy is to show a chart of TLT (Long Term Treasuries) versus VTI (Total Stock Market).


    As you can see, Long Term Treasuries mirror Total Stock Market.

  38. Cullen,

    I haven’t read it yet, but I’ll read the article when I have more time. Thank you for the attempted clarification. As to reading into your comments a bit too much, I was perfectly transparent about my need for clarification based on my concerns. You didn’t offer any supporting argument for the claim in question which left the interpretation of what that argument might be up to the reader. There’s more to why I had the concern that I did, but often times more effort is required than it is worth to try and spell everything out. Ultimately the bottom line was, is Cullen seeing this through MMT colored glasses or does he have some alternative reason for believing the claim? The former both made and didn’t make sense relative to the considerations in question. In addition I had the question of why you believe the debt deal is causally related versus simple correlation. Generally it seems you do this, so it’s not a big deal, but I was just looking for you to be clear on the reasons for your belief. Regardless, I appreciate your work and was only looking to have an intelligent conversation about details. As they say iron sharpens iron.

  39. Robert,

    Thanks for the comment. To be honest, I’d be lying if I said that my preconceived notions weren’t influencing my opinions. I am human after all! :-) I suffer from all the same biases that the rest of us try to fight on a daily basis. Your comment is a good reminder that I should be more aware of it. I hope you enjoy the new post and I hope it clarifies some of your thinking.



  40. Peter,

    “Robert, I am not sure what your beef is.”

    No real beef, I was only looking for a justification of a claim (a supporting argument). If there is any hint of annoyance, it was only at my interpretation that the two of you were suggesting I was being obtuse.

    “You asked Cullen why he thought that the market thinks that the debt ceiling deal is bad for the economy. Regardless of the previous GDP growth estimates, those were already built into the market price. Slashing a major component of GDP growth is a no-brainer signal to the market that its current assessment of that growth is going to prove wrong.”

    While I agree all things remaining the same the reduction in G is a no-brainer signal that projected growth needs to be revised downward (at least in the short term), this isn’t–and this is key–necessarily a sufficient condition for the motivation to purchase treasuries. That apparently was the claim being made. The counter-example is straight forward; what if GDP growth was at 5%? Dropping to 4% or 3.5% isn’t necessarily a reason to flee to safety. You might see a bump in treasury purchases, but not a four month trend as we’ve seen since April. Therefore a reduction in growth estimates based on this debt deal doesn’t necessarily explain why treasuries are being purchased. The growth rate has to be low enough to begin with for a reduction in that growth rate to encourage fear.

    It seems to me the move to treasuries is largely about macro-economic trends which has largely *not* (until at best recently) been about the debt deal. Equity prices have caught up with earnings, thus downside risk is greater than upside potential. Thus the investor feels inclined to pull his money, set it in treasuries which is historically secure (although this last week was I believe an exception; a lot more risk in treasuries than normal for no other reason than a self-imposed legal constraint), let the money bring some kind of return, and wait for equities to be better valued. The debt deal may be a motivating factor now, but it doesn’t explain the last four months. How could it; the debt deal is too recent. This is part of why I was concerned Cullen may have been drawing causation where correlation is more the issue. The debt deal at best merely exacerbates an existing problem. If that’s what Cullen was arguing, then we have achieved the desired clarity.

    Gentleman, I appreciate the chat. You guys both have good thoughts to offer. I hope to do the same. It’s good for there to be an environment of questioning each other as well as encouraging each other to think and write clearly.

  41. Btw, Cullen, you’ve got to add an edit feature to these posts. Inevitably I always catch something needing to be changed after I’ve made the post no matter how many times I’ve edited it prior.

    On that note, I meant gentlemen…

  42. Robert,

    “The counter-example is straight forward; what if GDP growth was at 5%? Dropping to 4% or 3.5% isn’t necessarily a reason to flee to safety”

    I wouldn’t characterize it as a “flee to safety”. I’d say it is more like chasing risk-adjusted returns. In your example, if the GDP forecast were lowered from %4 to %3.5, cet. par., I’d still expect people to move from equities to bonds, reflecting the fact that the priced-in risk-adjusted return of the equities just got revised down. Maybe I am wrong.

  43. I think that’s a fair re-characterization. We speak of fear and greed in markets. Occasionally we have real fear, but generally it is just portfolio adjustment based on risk evaluation.

  44. To VRBII, I would sell the Hussman HSGFX, as Hussman is an OK economist, but he is no good at all at market timing or selection. Look at the track record over 5 yrs is poor.

    My portfolio now is:

    DLTNX – 10% DoubleLine Tot Rtn
    VWESX and VCLT – 10%
    PASDX – 10%
    6% each in the following: PRPFX, RNDLX, FNMIX, FINPX,

    Good luck to you. I try to trade only about 10% of my portfolio now as I’m only learning how to trade, pretty much holding the bond funds until the economy strengthens enough for the Fed to think about raising int rates.

  45. Me too Peter. My 401k Bond funds have done fairly well. I’m all Bonds and cash (since 2nd week of July) Now looking for a possible reentry point into equities. I think the Markets have synchronized with the poor macro picture for a while.
    I do have one question for you or Cullen though:
    If QE is having no effect then why do the markets plunge at the end of QE. Is it mostly psychology? False belief? (Superstition)