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Wednesday, May 28, 2014

Market Thought... Confused.

The ten year yield is collapsing. (Sign of weak economic growth or flight to safety via geopolitical fear.)

Yet the Vix has approached the levels not seen since 2007. (Or a level of complacency not seen since the great mortgage manipulation.)

The combo is allowing for markets to be at all time highs, while at elevated multiples. 

I wish I was smart enough to understand but I don't. And it scares me. 

The complacency could be a consequence of central bank activity, but the lower rates are coming at a time when the Fed has cut its purchases by quite a bit.  So it may suggest a far more slower US economy, in concert to a slower global economy.  This is in contradiction to what the SP500 earnings estimates (for q2-q4) are projecting. 

So yeah, the equity market is acting pretty healthy, but with complacency and fear at the same time. 

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