Doug Noland

Melt-up Vs. Deleveraging

This is such a key Bubble Dynamic. Over time, Bubbles become increasingly vulnerable. Indeed, systemic fragilities stealthily grow exponentially over time – especially during culminating “Terminal Phase Excess”. And the bigger and increasingly vulnerable a Bubble becomes, the more cautious central bankers will be with tightening measures. Worse yet, acute fragility ensures policymakers will act quickly and forcefully to thwart Bubble deflation – ensuring a quick resurgence of speculative impulses.

Doug Noland: China Bubble Deflation Watch

Preparing for trouble, Beijing is now moving aggressively to control the information flow – about the economy, markets and finance – in the name of national security. It wreaks of growing desperation. Beijing tactics are not confidence inspiring.

Perilous “Money”

With options expiration this coming Friday, the market has again worked its magic to ensure a lot of hedges expire worthless. I’m with the bond market for the possibility of an accident this year. I just believe the odds are higher.