Come good news or bad, the U.S. treasury market is taking a sell now and wait for inflation later strategy.
Sure, seeing your economy shrink at a 15 percent annual clip is depressing, quite literally, but if you believe in even a tepid global economic recovery in the second half, then Japan is actually attractive.
If anyone has reason to pray that the current equity rally holds, it is the world’s active fund managers who need investors to return to the folly of betting on outperforming the markets rather than the uninspiring but reliable business of cutting costs.
The most revealing verdict on the results of the U.S. banking stress test was delivered not by shareholders but by the vigilantes of the bond market, who shunned an auction of 30-year government debt.
from Neil Collins:
Once upon a time, when the problems in the credit markets were little more than an awkward lump in the inter-bank rates, and Northern Rock looked like a bizarre aberration, Royal Bank of Scotland shares cost over four pounds apiece. Today, even after the rush for rubbish that has characterised the current share rally, they cost just 50p. Surely they must be cheap?