HOLY RISK MISPRICING

 
First there was ZIRPS--sounds like something to pour over your morning hotcakes--and now there's NIRPS.

Gotta love those acronym folks.

It's been six months, as the Financial Times reports today, since the ECB coughed up "negative rates for deposits by commercial banks."

If anyone approached you a few yesteryears back and tried to sell you a five or six year zero or negative yield savings bond, can you give us what most likely would've been your succinct, decisive two-word response?

How about, screw you?
Finland yesterday provided worrying evidence of the lack of hope for economic growth and inflation when it sold one billion euros of five-year government bonds with a negative yield. 

Well, the people getting screwed today by all those wonderful QE programs and their derivatives of such are the people. Yield starved or otherwise, unless you're a savvy speculator well anointed in the foibles and follies of central bankers and their ignorance, anyone dumb enough to purchase one of these suckers is a sucker.

Unless anyone has forgot, when you buy a bond you're the lender and the entity, corporate, government or whatever, is the borrower. Anyone love their efficient governments enough to lend them free money?

Or to be more exact, pay them to lend them your money. It's deals like this that make gold glitter.

Two things we know of have zero yields at the moment--only one of which regularly catches hell from the MSM punditry--cash and gold.

In some fundamental churches when the preacher lays a cool one on the congregation, usually someone will stand up and shout out a big "Hallelujah!" Well, you should forget that. Just stand up and shout out a robust--"Mispricing of risk!"

C'mon now! Let's hear another one of those, this time with some real feeling,"Mispricing of risk!"

In next year's Super Bowl, instead of the Patriots and Seahawks, maybe we can have the ZIRPS versus the NIRPS. It just might set a new viewer record.

Instead of a trophy at the end of the game, however, the winner will be presented with a Big Bag.