Both short-term and long-term, the large liquid US stock market indices have become massively decoupled from the bond and credit markets. Since the former is supposed to discount a combination of the latter (macro growth/de-growth from bonds and micro business-risk/cash-flow-sustainability from credit), one has to wonder which reality will come to pass…
Short-term…
Long-term…
Do either of these charts look ‘normal’? Sustainable?
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Simply put – for American companies, despite the fall in Treasury yields, the cost of borrowing (i.e. interest rates) has already started to increase rather dramatically and that’s not just energy names.
Charts: Bloomberg
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Don’t worry though, it’s different this time…
via Zero Hedge http://ift.tt/1uc7FI2 Tyler Durden