This is one of our favorite posts of all-time.
Thought it apropos to re-post given that everyone and their mother is trying to call the top in stocks. It’s all about yield-seeking capital flows, my friends. Tell us what interest rate is the tipping point which thwarts that behavior and we will tell you when the stock and credit markets top and flop.
‘John Bull can stand many things, but he cannot stand 2 , 0, .5 ,1, 1.5 , 2 percent’ – Bagehot
We are still far from the tipping point interest rate that sends the yield seekers back to their caves, in our opinion.
I just borrowed 5-year money for my daughter’s first car at 2.64 percent. That is less than 85 basis points over the 5-year note, for a used car!
Yes, absolutely, all assets are incredibly expensive. But pension funds are not going to make their nut sitting in cash waiting for them to get cheaper. Seniors in Europe can’t eat with their interest earnings from negative rates.
This post was published at Zero Hedge on Jun 29, 2017.