I'm not writing this thread to be all "the market is going to crash", and I hope that the discussion here doesn't go that way either.
I'm curious why events have led us to where we are now. Our economic situation is so curious, and so inexplicable by historical standards, that one has to wonder where we strayed. Student loans, increase in bad credit/loans, huge increase in wealth inequality, Europe on the brink of recession, tax cuts, quantitative easing/tightening, Fed rate policy. We could point fingers all day. I don't want this thread to be about pointing fingers. I instead want to talk about where we go from here.
The German 10 Year Note is no longer negative, but at less than a single basis point, it's basically negative. How much longer until the EU powerhouse finally falls into a recession? How will the rest of the world react? Further, we've been saved from Brexit until the very fitting date of midnight Halloween. Get your stock market related costumes out. What happens then? If you're not following happenings across the pond, I don't blame you. The gist though is that the UK has been denied access to EU elections/votes in exchange for getting a "long" Brexit extension. The UK has now finally become what they only feared they had become before the Brexit vote, which is also very fitting for a nation whose population (technically 51% of the population) is constantly afraid of taxation without representation.
The 3m/10y U.S. curve is no longer inverted, and inversion was short-lived, but it happened. Was that a fluke due to unprecedented QE/QT? Or does current behaviour of the bond market, when juxtaposed with the stock market, hint towards future perverse happenings? How should we react to an all-time high stock market if we're similarly witnessing high demand in the bond market? I truly believe that the US economy will continue to do well, but the stock market has not always followed economic outlook. It is very possible for the market to stagnate or drop whilst the economy prospers.
On the positive side, the U.S. economy basically stands alone compared to the rest of the world here. We're the only ones doing well, and we're doing really well.
Submitted April 29, 2019 at 08:23PM by lulzcakes http://bit.ly/2GRVLTG
