Chasing the Dragon: The Central Bank Revolution

Posted by Hinde Capital

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chasingdragonnscreenshot“The market is not an accommodating machine. It won’t provide high returns just because you need them.”

Peter Bernstein

“All Nations with a capitalist mode of production are seized periodically by a feverish attempt to make money without the mediation of the process of production.”

Karl Marx

“Inflation is the disease of money.”

In this piece, the Central Bank Revolution II – Chasing the Dragon, we illustrate how the effects of central bank monetary policy, today, have already distorted the term structure so monstrously that assets have been driven to yields more akin to those of holding money. The yield grab has extended into riskier and riskier assets and structures, resulting in a diminished return profile that is not compensated for by the falling credit quality, and the heightened duration risk. The stage has been set for capital losses, as once again investors indulge in levered products, with suspect collateral value, and invest in plain vanilla assets with no margin of safety.

… the report HERE