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Bonds, US treasuries, The Dollar


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Per clif, we are due to have bond freak out in in Oct, Nov after or close to language of Hillary dropping out. Whether the market were reacting to Hillary or something else was unclear just that they would temporally linked.


We did have lots of chatter about Hillary dropping out due to health prior to the 9/26/16 debate.


So we are looking for:

Something that will cause bond yield rates to rise (making debt too expensive to pay?)

The FED to freak out and try 3 fixes.

Italian banks problems effecting Germany, the EU and the US

Dollar devaluation as part of the crisis

Equities crash Mar 2017


All of the above was discussed in this Clif youtube

Body doubles? CGIHillary? Is Hillary dead?

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So today Congress may have triggered financial blowback form Saudi Arabia. Saudi said that they would dump US treasuries if Obama allowed 9/11 victims to sue Saudi Arbabia for damages. Obama vetoed the bill and Congress just overode the veto.


Obama Humiliated: Congress Overwhelmingly Votes To Override President's Veto Of "Sept 11" Bill



Summary: The US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House voted 348-77 to reject a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto.


As reported before, the implications for capital markets should the House follow the Senate in overriding Obama's veto, they could be dramatic: as noted earlier, the threat of the 9/11 bill passing has put on hold Saudi plans to issue its megabond, effectively putting even more pressure on the kingdom's finances; alternatively as Saudi Arabia has threatened before, should the bill pass, it would (and may have no other choice considering its liquidity crisis) have to sell US reserves, among which billions in Treasurys and an unknown amount of US equities.


Rogue Money w Bix Wier and Guerilla V discussing the Saudi situation.

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Here's the first bit of blow-back. OPEC is cutting output for the first time in almost a decade. Fuel prices rising means profits are pinched on the front end due to the necessary increase in prices. Upshot: consumers will further scale back on purchases.


With the end result being less sales and fewer profits.



Edited by User Name
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They call this demand destruction and frankly, it can be great for the environment. Slowly whittling away the demand for oil and gas, which means new innovation in alternative technologies, and a diminishment of Big Oil's footprint. Maybe not so bad after the initial messy and challenging disruptions.


However in the context of dollar devaluation and a derivatives melt-down (accompanied by a credit freeze and cash controls) it sounds like the recipe for localism. As in, everybody gets stuck right where they are currently sitting. Not a lot of moving around, of either people or goods.

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Bond yields rising and Italian banks


Italian Bond Yields Jump After Rome Confirms It Will Issue 50 Year Bonds



Once priced, Italy will become the latest nation to issue super-long bonds this year, following sovereigns including Belgium, France, Ireland and Spain in taking advantage of the historically low interest rates spurred by central bank stimulus.
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  • 4 years later...

The dollar sure is robust eh? I wouldn’t have thought it would have lasted this long. I was worried about it crashing from the early 2000s.


glad not all worries come to fruition.

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Try 1960s and 70s, as the US slowly did away with all ties to precious metals; no silver certificates, debased coinage, elimination of gold standard.  Typical end-of-empire stuff.  The USD has been crashing ever since, but as a slow moving train wreck, not the overnight Hollywood drama scenario.  Looking back from 1,000 years from now, it will all seem so obvious.  We never could afford to be the policemen of the world, nobody can.  

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