Boston - Negative rates, negative oil prices, and multibillion dollar endowed Ivy League institutions receiving bailout funds from the United States. Boy, what a strange world we live in. With that said, either the taxpayer is going to be on the hook for all of this fiscal extravagance or the fixed-income retiree is going to be on the hook for an unprecedented amount of monetary extravagance.
Looking ahead, we're watching to see if Europe will decide to bail out its more free-spending southern European countries. The result would effectively be a wealth transfer from the Netherlands and Germany to their southern neighbors. In Italy alone, the fiscal deficit is going to approach 10% this year when the Maastricht Treaty requires European members to maintain only a 3% fiscal deficit.
Also on our minds following the conclusion of last week's IMF meetings, are widespread discussions about debt forgiveness amongst the most indebted nations in the country. That number is now reaching more than 70 that are looking to ask for debt forgiveness.
In the US, Eaton Vance is reporting that forbearance numbers in the United States are already higher than that predicted by the Federal Housing Authority, suggesting there is significant stress amongst mortgage payers in the United States.
Bottom line: I suspect market participants will attempt to reconcile the sharp recent market rally with what looks like to be a fairly prolonged extended economic contraction and slow recovery in the United States, so we would expect volatility to continue.