The Infamous US Debt and Equity Connection !!
In the words of Sir Ray Dalio,
"Due to the lack of free-market buying of US debt, the central banks had to buy it and had to print a lot of money to buy it with so much so that they drove rates down to “artificially” low levels, which “artificially” supported financial asset prices. Now, there’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money. They’re buying all sorts of things and pushing yields on everything down. Now you have stocks that have gone up, and you have classic bubble dynamics in so many different assets."
Markets are overheated because of the funny money. The rising 10Y yield is not a good sign for equity markets. The majority of the asset classes are overvalued, don't let anyone tell you otherwise. It will take less than a week for FII's to withdraw their money from the markets and DII's won't be able to hold for long.
Even the most progressively optimistic strategy is to plan out a good short trade from here.
"Due to the lack of free-market buying of US debt, the central banks had to buy it and had to print a lot of money to buy it with so much so that they drove rates down to “artificially” low levels, which “artificially” supported financial asset prices. Now, there’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money. They’re buying all sorts of things and pushing yields on everything down. Now you have stocks that have gone up, and you have classic bubble dynamics in so many different assets."
Markets are overheated because of the funny money. The rising 10Y yield is not a good sign for equity markets. The majority of the asset classes are overvalued, don't let anyone tell you otherwise. It will take less than a week for FII's to withdraw their money from the markets and DII's won't be able to hold for long.
Even the most progressively optimistic strategy is to plan out a good short trade from here.
Comment:
The last pointer denotes the 2018 crash where we saw a correction of 20%.
