Monthly Archives: December 2019

30 year Anniversary of Nikkei Crash

   The Nikkei index in Tokyo peaked 12-29-89 at 38,915. Now it’s 23,837 (a 38% loss) despite massive stimulus, gigantic government debt of 600% of GDP (double the US percentage), Quantitative Easing, negative interest rates, and outright purchase of equities by the central bank. Much of the last 30 years it traded near 10,000, a 75% drop. Some real estate in Japan dropped 90% after the 1989 crash and some Japanese mortgages were sold with a 95% drop in price below par. It seems a lot of bubbles result in a long term drop of 75%. The U.S. NiftyFifty stocks of the 1970’s dropped about that much (and never fully recovered when adjusting for inflation, despite the huge 1999 boom).

2019-12-30T18:17:55-08:00December 30th, 2019|mayflowercapital blog|Comments Off on 30 year Anniversary of Nikkei Crash

Huge Increase in Jobs: Are Bonds Doomed?

   Today’s monthly BLS employment report had a huge surprise 266k increase in jobs. Normally this would be inflationary, thus ruining the value of bonds. Yet the yield on the ten year Treasury rose only 3 basis points (that’s 3/100ths of a percent) to 1.83%. Gold went down 1%, indicating the market doesn’t believe the jobs increase is inflationary.     The key to inflation is when banks lend money that increases the money supply, causing inflation. (Also it can be caused by the central bank monetizing the debt, which is not the case right now, although it could be in future decades. QE as done by most countries is not true “spendable” debt monetization.) To lend money the bank examines

2019-12-06T09:03:40-08:00December 6th, 2019|mayflowercapital blog|Comments Off on Huge Increase in Jobs: Are Bonds Doomed?