The constant time constraints of live TV push most discussions to sound bites. Today, we started to get into the dirt on the EZ situation and the "hard break" to advertisers abruptly ended the fun. Here's what we couldn't cover: The second largest economic monetary regime in the world is splintering; and most TV pundits are somehow telling you to go buy something. (And now a word from Thigh Master!) Amazingly, we have heard NO ONE but ourselves say that "thing" should be a US T-Bill (1 year to be exact). The confidence with which others purchase long dated fiat backed debt and growth uncertain equity is astonishing to us.
The money market is essentially in a medically induced coma. LIBOR refuses to move and submissions are unchanged for record stretches. Euribor also has no pulse. The system seems content to keep the monster strapped down rather than re-animate and risk it scaring the villagers and tossing little girls in wishing wells. As a mentor said to me yesterday, "The term structure is no longer a reflection of financial or economic reality." I would go further, it is a Lake Waubegon fun house mirror, where banks see themselves as solvent and "above average" players. Nothing could be further from the truth.
We advise hitting and running and ducking and covering. Be wary of people telling you what's in store.