For how long can the stock market be oblivious to higher interest rates? Because not only do higher interest rates dramatically slow the economy, they crush the housing market, but stocks themselves, you value stocks based on interest rates. You discount earnings based on interest rates.
Even if the earnings go up a little bit, you have to discount them by a higher amount and the PEs (price to earnings ratio) are already very high and the justification for the high PEs was not the growth rate, it was the discount rate. (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ))
Nov 25, 2016
The Catalyst For The Next Economic Recession
The same people that believed that there was a real economic recovery now believe it is going to get even better. Why? In fact, this so called recovery is so old that we are overdue for a recession and why would not this big increase in interest rates be the catalyst to cause it?
Nov 24, 2016
Bond Market: Serious Technical Damage Has Been Done
Everybody is ignoring the monetary drag that is already evident from the bloodbath in the bond market and this is going to continue.
In fact if you look at the trend lines, we have broken some serious trend lines now which were down in yield and up in bond prices that have been in existence since 2007. So we have done some serious technical damage in the bond market. (10- year U.S. Treasuries, 30-year U.S. Government Bonds, iShares Barclays 20+ Year Treasury Bond ETF (TLT))
In fact if you look at the trend lines, we have broken some serious trend lines now which were down in yield and up in bond prices that have been in existence since 2007. So we have done some serious technical damage in the bond market. (10- year U.S. Treasuries, 30-year U.S. Government Bonds, iShares Barclays 20+ Year Treasury Bond ETF (TLT))
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