Reflation is a serial hoax foisted on proven dimwits by proven psychopaths. Higher bond yields were the last chance to sell, inconveniently mistaken as the last chance to buy...
"The yield on the two-year Treasury note hit 2.282 percent Tuesday evening, its highest level since Sept. 19, 2008."
Trump represents the vacation from reality at the end of the ten year vacation from reality. A well deserved trip, compliments of mega-buffoonery. Stock gamblers may as well enjoy the vacation, because there is no way back...
"The yield on the two-year Treasury note hit 2.282 percent Tuesday evening, its highest level since Sept. 19, 2008."
Trump represents the vacation from reality at the end of the ten year vacation from reality. A well deserved trip, compliments of mega-buffoonery. Stock gamblers may as well enjoy the vacation, because there is no way back...
Trump's tax cut which drove higher bond yields, combined with the obligatory attendant belief that this expansion will last forever, has meant that not only is a crash inevitable, but it has also meant that buy and holders will be overloaded with the junkiest stocks going into recession.
In other words, this will be a crash, followed by panic, followed by a much bigger crash.
The problem is no longer higher rates, it's lower rates, which will mean recession...
"U.S. stocks briefly entered correction territory earlier this month after concerns of rising inflation sent interest rates surging."
"On Wednesday, the benchmark 10-year U.S. note yield and the short-term two-year yield traded near multiyear highs."
"While rising long-term rates will ultimately become a negative for profits and multiples, we do not see current levels as a reason to de-risk and sell equities"
The problem is no longer higher rates, it's lower rates, which will mean recession...
"U.S. stocks briefly entered correction territory earlier this month after concerns of rising inflation sent interest rates surging."
"On Wednesday, the benchmark 10-year U.S. note yield and the short-term two-year yield traded near multiyear highs."
"While rising long-term rates will ultimately become a negative for profits and multiples, we do not see current levels as a reason to de-risk and sell equities"
"Lower rates will just mean that profits are returning to zero. So don't worry yet, you have time to bid up your stocks"
Here we see forward reflation expectations (red), and the stock/bond ratio (black). U.S. reflation expectations have been falling since 2008, due to imported poverty. This current reflationary bounce is a farce relative to the last three. Meanwhile, now the stock/bond ratio is stratospheric meaning there is no way that reflation can roll over here, without exploding the stock market. Because it would mean that bonds are massively underpriced and stocks are massively overpriced. The rebalancing will make two weeks ago seem like a picnic.
Notice the difference now versus 2008 when the stock/bond ratio had already priced in recession ahead of time:
While we wait for the FOMC meeeting minutes, I will put up this bonus chart showing the big three Central Bank meeting dates for 2017-now:
When was the last time the S&P failed at the 50 day?
August 16th, 2017:
