History repeats - Corporate bond market sending the first signal of liquidity crunch since year 2001 – bearish for stocks, gold commodities and bonds
Peter Oberois
Feb. 5, 2007

The Corporate Bond market is well known for providing the first signal of liquidity crunch in the market place. The stocks, bonds, gold and commodities have all enjoyed the tremendous liquidity bubble since 2001. The Corporate Bond market is sending a chilling signal that can collapse these markets and make the economy gets into a deep recession.

The stalemate between the Bush Administration and the Democrats is the root cause of ‘liquidity worry’. There is a race in Washington to show patriotism through making efforts to cut the budget deficit. That is good for the long term but in can throw the financial markets in a serious doldrums. Something similar happened when in 1987 Greenspan became the new Fed Chairman. He put a lid on liquidity, raised rates and made the stock market to crash. He had the power to lower the rates, bring liquidity back and stabilize the market. The politicians will take the liquidity off and make markets crash but they do not possess the means to stabilize the markets.

The new agenda in Washington is bearish for stocks, gold commodities and bonds. The smart money is moving elsewhere.

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History repeats - Corporate bond market sending the first signal of liquidity crunch since year 2001 – bearish for stocks, gold commodities and bonds
Peter Oberois
Something similar happened when in 1987 Greenspan became the new Fed Chairman. He put a lid on liquidity, raised rates and made the stock market to crash. He had the power to lower the rates, bring liquidity back and stabilize the market.
READ MORE>>

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