Wednesday, May 20, 2015

Davidowitz On Why The American Shopper Has Not Returned

Monday, May 18, 2015

Wall Street Always Anticipates Higher Bond Yields & Money Rotating Into Stocks

The chart below shows the forecast from Wall Street analysts on where they see interest rates on the 10 year treasury yield 12 months into the future (dotted). They have been predicting higher yields since 2003, a forecast which has been almost always incorrect.


The 10 year put in a bottom in the summer of 2012 (so far), so we may finally be at the point when their forecasts begin to move in line with reality. Rising rates mean falling bond prices making these forecasts the opposite of what they continuously see for stock prices (Wall Street almost always projects higher stock prices 12 months out in the future). The theme for the last 12 years (or more) is that money will rotate out of bonds and into stocks. I agree that money will soon be rotating out of bonds, but the jury is still out on where it will end up.