SUCKING THE AIR OUT

Of everything.  Politics, that is, the latest being the firing of Comey.  Now I for one think the guy and his butt boy Fitzgerald should have been put in the slammer 10 years ago for the railroading of Scooter  Libby who, while apparently not the neatest guy in the world didn't deserve 2 years for a trumped up charge (no pun intended) of lying to the FBI.  Got that off my chest and the world goes on...unnoticed though it may be.

Big note auction today that stank causing yields to sneak up a bit (long bond was lower) in anticipation that the Fed will get in gear again next month and take the discount rate up again.  Right now, fixed income is not the place to be. And while half of Washington is proclaiming the end of the Republic and very possibly democracy bolstered by the New York Times making up stuff to support the position, very quietly things in the view of a lot of people are looking up; witness the Fed.  Remarkably, and with this I do not agree, Europe seems to have become the darling based on Macron,    better corporate news, the Greeks and the rest of the Euros making nice-nice (we're not too sure about the Germans) and the rise from the dead of DeutscheBank with the infusion of a whole lot of borrowed Chinese Money from a company about whom nobody knows anything.  Of course there comes the realization that the ECB now has the biggest balance sheet in the world, loaded up with Euro Sovereign debt and an unknown amount of unknown corporate fixed rate.  The best line I've heard is, "if everything goes right we are going to be great!"  Ooooooook.

This does bring up an interesting point to wit what happens when the central banks of the world begin to lighten up on their holdings in light of perceived improved economic conditions.  If interest rates are anticipated to rise surely the lightening of balance sheets will have a knock-on effect which leads to the further question of did they wait too long?  Probably if not undoubtably and has been argued here the continued outpouring of liquidity kept the boat afloat and created false readings in a myriad of areas.  There is an extraordinary around of debt out there and the spread between the best rated and the somewhat questionable continues to close or to put it another way a lot of risk is being taken for not much reward...a condition not unlike what led to the great collapse; the mispricing of risk. But as the guy said, "If everything goes right we are going to be great!"  There is no graveyard anywhere in sight but don't stop whistling.