John Rubino – Falling Bond Prices and Rising Inflation Put Pressure On The Consumers Wealth Effect

John Rubino, Founder and Editor of The Dollar Collapse website, joins us to discuss the falling bond prices causing rising interest rates, and paired with rising inflation and market volatility that are putting a dent in the “wealth effect” that consumers feel during boom periods.  We explore that despite the Fed policy of hiking rates to try and combat persistent and high inflation, that rising interest will eventually impact the general equities markets and real estate markets in a corrective fashion.   The discussion then leads into the many data points, including rising energy costs and food costs, that are tapping out consumers discretionary spending, and starting to add up to slowing growth estimates and a potential recession about a year out.  We wrap up with the key factors John will be watching as things continue to unfold.



Click here to visit John’s site, The Dollar Collapse.

    Apr 11, 2022 11:58 PM

    John’s a really nice guy,but it always sound’s like the least likely scenario’s are his most likely scenario’s.

    Who seriously has a 60/40 portfolio anymore? I’ve been 100% equities (etf) as long as I can remember. Right now long-term treasury bond etf like TLT (or ZTL in Canada) are looking extremely tempting now that they are at 52week lows and priced as if the fed will get all the rate hikes in before breaking something. IMO they probably won’t.. If they reverse course, these bond etfs will have some serious capital gains…

    I also had to laugh how you didn’t discuss the dollar. I believe DXY hit 100 today.

      Apr 11, 2022 11:22 PM

      Hi Mike. The vast majority of company retirement plans and financial planning advice is still based on the 60/40 allocation (60% stocks / 40% bonds). It is very out of date and the bursting of the bond bubble over the last 2 years will have people rethinking this allocation. Remember that the vast majority of people do not manage their own investments nor do they speculate in individual stocks, and simply contribute to their 401K, 403B, or Pension fund, which are mostly mutual funds but still heavily steeped in bonds exposure for “safety.”

      Keep in This may have made sense in the last 3-4 decades as bonds gradually climbed higher as interest rates were coming down from very high period of the 1980’s through 2020 where the 10 year bottom at around 0.44%. That trend is now over. Sure, in the short term, bonds or vehicles like TLT may be oversold and have a bounce for a bit, but the longer term trajectory is pretty clear.

      When I was in insurance, banking, and financial planning during the early 2000’s to a few years after the Great Financial Crisis, the rule of thumb they advised proposing to clients was to increase someone’s bond allocation later in life to their actual age. So at 50 years old a 50/50 split, at age 65 (35% equities / 65% bonds), and at 75 (25% equities, 75% bonds), etc…

      Obviously that kind of approach in an environment where bonds topped out nearly 2 years ago is going to be terrible advice for financial planning, and the whole industry is going to rethink how “safe” bonds really are. Also with inflation running at near 8% then who in the world would want a coupon rate of 2.5%-3% anyway? It’s being totally eroded by inflationary forces, and people need an investment yield of near 8% to just break even.

      As for the US Dollar, we covered it in detail on the Ed Moya interview earlier today. Yes, the greenback was at 100 today, because the Euro and other currencies in the DXY basket are even uglier, but again, the “strong” dollar is an illusion, because what is really important is purchasing power, and again, it is also being eroded by 8% inflation, so whether it is 100 or 98 or 102 is really not that important.

      What is important is the consumer buying power, and it is clearly diminishing, and that is why the cost of everything is going up. There was too much liquidity pumped into the system, and this is what leads to inflation in everything. The supply chain issues and Ukraine war are convenient scapegoats, but the real issue driving up prices in all areas of life (not effected by supply chains or Ukraine/Russia) has been the reckless monetary policy of the central banks and the fiscal policy of already over-indebted nations.

      Apr 12, 2022 12:37 AM

      I agree with your comments on TLT but personally, waiting for some lower prices. JMO

    Apr 11, 2022 11:03 PM

    (EXK) (EDR) Endeavour Silver reports 25% rise in Q1 silver production

    Apr. 11, 2022

      Apr 11, 2022 11:48 PM

      (FSM) (FVI) Fortuna Silver Mines Reports Production of 103,098 Gold Equivalent Ounces for the First Quarter of 2022

      April 11, 2022

        Apr 12, 2022 12:15 AM

        Good, thanks for FSM coverage. My calls in the money on the way to deep in the money

          Apr 12, 2022 12:06 AM

          I’ve got a small Fortuna position, and was debating making it a larger position at the depressed prices but wanted to see more evidence that they are getting things going on a better track and that update showed that things are moving along better for them.

    Apr 11, 2022 11:46 PM

    (AMX) (AMXEF) Amex Drilling Expands Denise Zone by Additional 450 M to the East – Denise Zone Now Traced over ~1 Km of Strike and Remains Open

    April 11, 2022

    Apr 12, 2022 12:05 AM

    Zinc prices continue to ratchet higher and higher, currently at levels not seen since the peak in early 2006, and overall higher than it’s been on average for 2 decades.

    While commodities like Zinc and Lead don’t get as much fanfare as metals like Copper or Nickel, they are a big part of the cost inputs for the majority of polymetallic Silver producers, and this should be a big boon to the Silver producers or developers with significant exposure to Zinc (which is most of them).

    Apr 12, 2022 12:11 AM

    Gold and Silver gradually moving higher Monday into Monday evening.

    Gold @ $1957

    Silver @ $25.35

    Those are still very good prices for the Precious Metals producers and developers, and historically, still solid levels to be at.

    Apr 12, 2022 12:13 AM

    If this works, this is a very important interview with Grant Williams and Luke Gromen. It is over an hour, but it contains some rational arguments about why Gold is going to be in the center of things in the near future. It also goes a long way to explain intervention in markets. Well worth a listen.

      Apr 12, 2022 12:35 AM

      Thank you for posting. They’re two of my favorites. Luke always adds a degree of depth on his subject of discussion that many analysts don’t even mention.

    Apr 12, 2022 12:14 AM

    Price Quality:
    Likely NatGas Top. No MaxSat(7).