On the authority of Bill Gross
The 32-year-old bull market in bonds is kaput, the founder of Pimco tweeted the other day. The implications of this seismic shift in interest rates (if such a shift has, in fact, occurred) is the subject at hand.
Many a financial institution has been rooting for a normalized yield curve. The ZIRP-y structure of rates in place punishes them on both sides of the balance sheet. Low rates mean that assets yield less and liabilities cost more. Rising rates deliver a double measure of relief. Who stands to benefit?
Herewith an update on China (sinking), Australia (sympathetically sinking), and a handful of Grant's short-sale names (also sinking, except for the one that soared). Our longstanding China backstory has lately moved front and center. China's banking and credit structures are evidently cracking.
As we go to press, India is going out of business, or so it might appear. The rupee is quoted at 58.4 to the dollar, cheapest on record. India's current account deficit is swelling, inflation is raging, and car sales are dwindling. What to do?
