About Bulls and Bears ...
The US economy seems to be displaying some rather opposing signals at the moment; Felix Salmon who has been admirably covering this sums up about the bullish stocks and bearish bonds.
Is there really a disconnect between the equity markets and bond markets? The former are near all-time highs – clearly expecting a rosy future – even as the US yield curve has inverted, looking very much like it expects recession.
Peter Coy, at Business Week, has the story, quoting David Rosenberg of Merrill Lynch as saying that "it is highly doubtful that both asset classes can be getting the story right," and adding that diminished inflation expectations explain only one-third of the rally in the 10-year Treasury note since the Federal Reserve went on hold with its interest rate hikes this year.
Actually the Dow is seing a rally as no other at the moment. FT's Lex has reported on it, and also Felix Salmon joins in albeit with an ironic but also serious warning. Of course, the RGE boss Roubini is also firmly sitting on his discourse.
Sozzled as we are, we're not going to say anything too intelligent about it, except this: There has never been a better time to sell! Sell it all, now!
So, is this really a last feast before the coming of the bear? Well, the bond market has been telling the story for some time now and so has the housing market. Another analysis however, is the one provided (once again) by Felix Salmon;
'US equity investors, it would seem, consider the US not to be Ground Zero for any coming economic slowdown, but rather a safe haven where they can weather a global storm which could hit foreign markets much more severely than domestic ones.'
As I have expressed a few times lately - interesting times ahead.