The Depressing Effect Of QE: "We Are Wandering in the Desert. There Is No Moses in Sight."

Via Mark J. Grant, author of Out of the Box *  ZeroHedge

Sitting In The Middle Of The Desert

It is rather like sitting in the middle of the desert. Nothing but sand. You can hope for rain and you can wander around aimlessly looking for an oasis but you are pretty much stuck with sand. This would be a fairly accurate description of the bond markets these days. Nothing but sand.
 
We are a scant 40 bps off the low yield for the ten tear Treasury. We have $100 billion of new sand being pumped in by the Fed each month. Our desert doesn’t get much wider as defined by new issuance and so one dune is heaped on another, the compression continues and yields, even from here, will decline. As equity prices are forced up; yields and spreads are forced down. Then any “event,” which would be negative for equities would be a positive for Treasuries and so the unrelenting pressure continues unabated and could grow far worse if something happens.
 
Our sand trap is a fabulous world for borrowers and issuers and a miserable world for investors. The general thinking usually stops here but there is more to this story than that. Over a period of time wealth declines as the bonds markets hold five times the assets of the equity markets and so the lack of yield, of income, begins to take its toll on consumer spending, on corporate revenues and then on profits and on the ability of those dependent of savings to maintain their standard of living. The continual flow of money has helped the banks and helped corporate borrowers but it has not filtered down to the savers and, in fact, their position has been lessened by what the Fed has done.

continue article at ZeroHedge:

http://www.zerohedge.com/news/2013-05-09/depressing-effect-qe