The Baltic Dry Index is seeing some really nice strength over the past few weeks. This underpins real economic activity.
Then there is the rise in pretty much all the commodities (except for NatGas, which has been awesomely stable due to new supply). This could be due to true growth, or little growth w/ too many dollars casing few goods (stagflation).
Real economic growth, or stagflation, promote a scenario where rates should be rising. But instead the 10yr is seeing some fairly nice strength here. (which means rates are lower)
Where is this massive deflationary pressure, that all markets can ignore, except for the bond market?
Where and why is there such a huge demand for a bond yielding mid 3% when there are blatantly better returns elsewhere?
So many questions, and no real answers. I am left still wondering.
At the moment, the indicators are sending the signals that do not jive w/me. I fundamentally do not understand, so I have to sit back and observe until there is clarity. (how many times have you seen someone write that they do not know what is going on :)
Don't get me wrong, that will not stop me from trading individual stocks. For instance, GS is looking pretty interesting at the moment. But I am cautious overall until I figure out which market is correct. The lower rate in the 10yr is also taking place with a weaker to flat set of financials as well. (That correlation has not escaped me, and will give me an itchy trigger finger if I take on the 'long' GS trade.)