Taps Coogan – June 30th, 2023
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The following chart highlights that the S&P 500 forward yield, relative to the 10-year treasury yield, is the lowest it has been since right before the Global Financial Crisis. From the Daily Shot via Win Smart:
What a great bargain pic.twitter.com/lniVguoWlo
— Win Smart, CFA (@WinfieldSmart) June 30, 2023
The value proposition of this market is a genuine mystery to yours truly. The market now seems to have eliminated even the sort of discounting that would be associated a 5%+ risk free rate, to say nothing of the discounting you’d expect when the odds of recession were so elevated. As we’ve noted before, there is essentially no implied premium for taking on quite a bit of risk in stocks or, for that matter, bonds.
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In a normal world, the klaxon would be sounding “Danger!, Run Away!”
I guess the question is, “Has the Fed, Central bank, and propaganda apparatus of the cultural/media/academic/government elite finally achieved that magical nirvana of at will manipulation and control?”. Can they string this out into an infinity of “boot in the face” dystopia?
Reason tells me No. Fear and emotion tell me, God help us.
It’s almost enough to get me to start buying stocks…..crazy, I know.