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  • 2 years ago
122 Barron's - Everything Is Awesome!

122 Barron's - Everything Is Awesome!

Overview Bank for International Settlements (central bank for central banks) posed the question, “A paradigm shift in the markets?” US elections have produced big changes in the markets based on expectations of strong growth in economy and corporate profits, and higher inflation Problem, expectations are so strong they border on certainty Assuming Trump platforms will be enacted as he presented them and promptly Most expect: GDP growth of 2% after inflation Interest rates (10-yr Treasury note) to 3% from 2.59% US stocks should return single digit % This tight range in consensus expectations has led two sage market observers (David Rosenberg and Doug Kass) to invoke Rule #9 of Bob Farrell (Merrill Lynch’s legendary former market guru) “When all forecasters and experts agree, something else is going to happen” Especially striking? VIX (measures risk) and hovers near year’s lows This serene confidence is also evident in high-yield bond market where investors are not asking