Mark Cuban just conceded to me that Central Banks have cornered the bond market.
Cuban is a billionaire investor, owner of the Dallas Mavericks, and reality TV star from Shark Tank.
He’s also begun making a series of strange media appearances in which he claims that if Donald Trump wins the US Presidency in November, “I have no doubt in my mind that the market tanks.”
Professionally speaking, I don’t have a horse in the race regarding the current US election. But regardless of who wins in November, the US and the rest of the world are primed for a massive Crisis (more on this shortly).
The issue is math, not politics.
However, I couldn’t pass up a chance to respond to Cuban’s tweet…
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Seriously, let’s cut the crap. Politics are irrelevant here.
The Central banks have set the stage for a massive market meltdown. Globally over $13 trillion in bonds have negative yields. Some sovereign yields are negative out as far as 5, 10, even 30 years.
This has NEVER happened before in the history of humanity.
Sovereign bonds are the senior most assets in the financial system. If they are in a bubble, EVERYTHING is in a bubble.
In this context, there is literally no such thing as real price discovery anywhere in the markets anymore. There are simply dozens of smaller bubbles all created by investors reacting to the bond bubble.
Let me give you an example…
In Europe, we’re about to see our first corporate bond issuance with negative yields. Yes, companies in Europe can now CHARGE you for the right to lend to them. As a result, there is now a bubble in European corporate bonds.
The bond bubble is the mother of all bubbles created by Central Banks. And billionaires like Cuban must know it. But getting him to concede it?
He did in his response…
Note that Cuban doesn’t even try to debate my claim that Central Banks have cornered the bond market. He completely concedes the point and moves on to assert that he is worried that if Trump wins, Central Banks “may find other bonds” (which I take to mean that they won’t buy US Treasuries anymore).
Folks, we are witnessing the single biggest financial experiment in history.
Central Bankers have literally bet the financial system that their theories are correct. They believe that by cornering the bond market they can prop up asset prices forever.
Market corners never ever end well And billionaires like Cuban know it. He’s right to worry, but it’s a matter of math, not politics.
Chief Market Strategist
Phoenix Capital Research