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The Bond Bubble – Confirmed

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UBCBT-Y 2015

The BUBBLE for 2015,75 should be the bond market – not stocks. The capital flows should move into the typical flight to quality mode and drive rates even lower. This will set the stage for BIG BANG. To accomplish that, we should see the stock markets tread water, but not necessarily drive off the cliff.


We can see the 30 year bonds from a yearly perspective we recreated back to the late 1700s not only elected THREE YEARLY BULLISH REVERSALS for the close of 2014, but the oscillator also turned up. This is reflecting the sectorial capital flow shift. Of course, the dollar haters are out in force claiming our capital flow models are wrong because the stock markets are dropping. This is typical myopic perspective that will prevent them from ever really profiting from what lies ahead. They refuse to comprehend (1) you have capital flows among nations that drives the currencies for example, and (2) you then have sector driven capital flows.



It is the sector flows that we see as bubbles. To create a bubble in anything, we need capital CONCENTRATION. This is where confidence comes into play. People display their herd-instinct by running into a sector because that is what everyone else is doing. People are convinced by price movement.



Each 8.6 year peak and bottom in the ECM produces a bubble in something. The 1989.95 was the end of Communism and the peak in the Japanese Bubble. The 1985 was the peak in deflation (dollar high) and  1987 was the peak in dollar assets shifting the capital flows out of USA to Japan. Capital moved from Japan into South East Asia. Then 1994.25 was the peak in SE Asia with the low in US stock market as capital flows shift back to USA and Europe.

IBEUUS-Y.jpg 12-30-2014

The 1998 target was the peak in the Russian boom and the collapse of Long-term Capital Management and the initial peak in inflows to Europe for the birth of the Euro. Then the capital flows shift into the USA for the internet bubble in 2000. That is when the Euro hit is low in 2000 as capital concentrated in USA. The 2000 Tech Bubble was followed by the low in 2002 in US shares and then came the securitzation bubble in real estate for 2007.15. The euro produced the highest closing for 2007 and intraday high in 2008. The Euroland crisis was beginning as smart money began to shift again out of Europe. The 2011 bottom was the peak in oil and gold and the start of the breakout in stocks and the beginning of the Euro Crisis in full bloom.



These are the next three main waves until we reach the end of this 51.6 year wave with the culmination in 2032. Thereafter, China will surpass the USA and Asia will rise to the financial capital of the world. That is set in motion by the corruption in New York in place now that will deter capital in the long-run from the USA because we have no rule of law.

This 2015.75 turn should be the start of BIG BANG and this should be market with the low in interest rates that ferments the peak in the bond bubble. Each 8.6 year wave produces a bubble, yet in a different sector. It is never the same thing twice.


So for those desperate to try to prove me wrong, enjoy yourself. Count you money while you still have something to play with for unless you grasp how the world functions, chances are you will ge sucked into one bubble or another, This is not about being personally right or wrong. This is trying to figure out what make the world tick,