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January 3, 2017 | Evans-Pritchard: Why Euphoria Could Turn to Credit Crunch in 2017

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Good New Year look ahead piece yesterday from the UK Telegraph’s Ambrose Evans-Pritchard. See: Trump, interest rates and Chinese panic: Why euphoria could turn to credit crunch in 2017.  Here is a taste, but worth reading the whole thing:

Donald Trump’s reflation rally will short-circuit.  Rising borrowing costs will blow fuses across the world before fiscal stimulus arrives, if it in fact arrives. By the end of 2017 it will be clear that nothing has changed for the better.

Powerful deflationary forces retain an invisible grip over the global Bond yields will ratchet up further and then come clattering down again – ultimately driving 10-year US yields below zero before the decade is over…

Once markets accept that Trump is not bluffing – that he really does intend to smash globalism – euphoria will give way to alarm. For now Wall Street remains drunk on wishful thinking. The longer the delusion lasts, the stronger the dollar, and the greater the trouble in Asia and Latin America.

(For those who do not subscribe to the Telegraph and cannot view the story directly, a copy is available here through John Mauldin’s site today.)

2017 is set up to be a breathtaking year to be sure.  Political risks are one thing, but more importantly at this point, capital/financial downside risks have rarely ever been higher.  Happy New Year!

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January 3rd, 2017

Posted In: Juggling Dynamite

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