There is NO Plan B

The terrible jobs report sent capital markets into 2o minutes of frenzy and then silence. The rates complex collapsed on the print - against our view - but in context with renewed growth fears. We see a generational problem in prices. Boomers had designed their retirements around the home. Stock positions were anchored behind the levered real estate play. Since the collapse, equity is a forced position through excessive monetary destruction of the rates complex.

The next 20 years should have been characterized by a systemic demographic shift out of stocks and into bonds. We estimated 6% as the hypothetical desired Boomer switch rate. The 3% US 10 year just doesn't fit the bill. More importantly, the financial repression is creating extra anxiety and volatility in Boomer portfolios. Switching to low yielding safety now means accepting a permanent  growth vacuum or a loss. Amazingly, the government seems to be opting for the vacuum. The jobs number may be a lagging indicator but the markets are pointing to an attenuated period of difficulty.  "Risk on" could go down in history as the worst financial bon mot ever tossed.

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