Chinook Arch

The US stock markets have been moving sideways since the beginning of the month while bond yields have been rising (rather spectacularly in the case of the 2 yr US Treasury).  So what is happening?  The bond traders are skittish while the stock market traders are still buying the BS about "green shoots" sprouting up all over the economic landscape.  So who is right?  My money is on the bond traders.  I predict that we will see a fairly drastic fall in stock prices soon ... certainly before the end of the summer.  If stock traders don't come to the realization on their own that stock prices are overvalued the higher rates in the bond market and mortgage market will do it for them.  Corporate earnings will fall due to the rising rates and stock prices are ultimately based on earnings expectations which are set to fall.  This recession is still far from over.

Stay vigilant and be wary of stock brokers and financial media types talking their book.

Gerry