America’s best days are in the past. Specifically, about twenty-six years in the past. The world is starting to clue in to the fact that America is a failing power, and an increasingly poor credit risk. Thus, U.S. bonds, formerly the pristine gold-standard of safety and security, continue to show signs of weakness.
Longer-term, as I’ve mentioned many times already, a completion of the most recent rounded top should send out a five-station fire alarm to anyone paying attention. For a nation helplessly $40 trillion in debt, such a move would only accelerate its demise.
Even the modest diminishment in bond values (and, thus, increase in interest rates) is suffocating all things related to housing, from Home Depot to Lennar. Looking at the homebuilding ETF, symbol XHB, you can see how it has lost almost 20% of its value in the past three months. How many items can make that claim in this ridiculous new-highs-every-day market we’re cursed with?
