well- if 30 year interest rates drop to 0%, will that be enough to prop up the housing market and get consumers spending again? Will it be enough to prevent people with underwater mortgages to avoid bankruptcy?
bullshit. there is large short interest. there is no such thing as rotation anymore.. it's gunning for the weak open interest.
If real asset prices are deflating at around 4% per year, then a 2% return is really 6% without the associated risk of holding stock. Bond holders are not stupid. They are smart. You may get a 6% yield on a good stock, but you have to risk 100% of your capital to do so and in this market people are not willing to take that risk. The low premium is telling us that deflation is real and upon us. The bond market drives the share market, not the other way around. Investment banks are pointing to the bond yield and screaming 'stocks are cheap' but what they are not saying is that they are very risky right now also. Runningbear
So, how much do have bond holders to risk for a 6 % yield from this very moment on or with other words : what´s the risk / reward for them now that T Bond Futures are passing almost 134.00 ???
Has there ever been a time when Blackrock was not bullish on equities.? Does a week ever go by w/o them trotting Bob Dahl onto CNBC to pimp stocks? I mean they are they largest long-only asset manager on the planet. Why is it news that they see stocks as being undervalued? Its their job to be long stocks. They make money when they can convince others to be long stocks.
Well, if he was looking at real estate property, we're talking about -10% a year. His point is valid whether the deflation rate is 1%, 2%, or 4%. The fed is pumping cash into the economy, but that can't last too long. It's going to get ugly.