Wednesday, July 20, 2016

Record Bond & Stock Prices 
NOSEBLEED TERRITORY?
Michael Pento sees the financial markets as being more overvalued than ever before .. points out various measures like the cyclically adjusted price to earnings ratio & the Q ratio as indicating the over-valuation .."All these indicators demonstrate that the S&P 500 is sitting in nosebleed territory. However, while the market marches to ten-year highs, the Ten-year Note yield is hitting historic lows. Bonds and stocks historically have an inverse relationship. This is leading investors to question what the bond market knows that equity investors do not and vice versa. But the correct answer to this seeming conundrum is that both stocks and bonds are in a bubble, which is the direct result of unprecedented central bank credit creation .. Low bond yields are all about central bank manipulation of bond prices.  But the longer Central Banks stay in the game of thwarting market prices the greater the divergence between economic growth, equity markets, and bond yields will become. This game can last a lot longer than most believe. However, reality will eventually take hold and cause a cataclysmic global bond market collapse."
LINK HERE to the essay

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