Why Robert Shiller Is Wrong About The Bond Market Crash

2/17/2015 – A positive day with the Dow Jones up 26 points (+0.15%) and the Nasdaq up 5 points (+0.11%)

On January 31st I told my subscribers that the market might bottom and turn around at the Dow 17,050 (+/- 50 points) on February 3rd (+/- 1 trading day). The Dow hit an Intraday bottom of 17,038 on February 2nd and we are up a little over 1,000 points thus far. If you would like to find out what happens next, please Click Here.

I tend to find myself agreeing with Robert Shiller, more or less, about 50% of the time. For instance, I couldn’t agree more with his overall view on the stock market and today’s valuation levels Shiller’s back, and he has more depressing news Basically, the stock market is an overvalued and highly speculative mess driven by massive capital infusion by the FED. And investors who believe that this upside trajectory can continue for the foreseeable future are deluding themselves. Just as they did at 2000 and 2007 tops.

With that in mind, I believe Mr.Shiller is dead wrong on his view in terms of bonds. Shiller warns bond investors: Beware of ‘crash’! At least for the time being.

Here is why yields will continue to decline as the yield curve flattens further.

The bond market is starting to see a severe recession and a bear market within the US Economy. Our mathematical and timing work confirms the same. Showing a significant recession and a bear market between 2014/15-2017.
Typically, 30-year bear markets in yield do not end in a V shape form. When such long moves complete they often set a secondary bottom (at least). This fits well within our overall economic forecast as we anticipate yields to set a secondary bottom over the next 2-3 years. In 2016 to be exact.
There are a number of open gaps leading all the way down to 1.4-1.6% on a 10-Year Note. Again, it is highly probable yields will go there over the next 2-3 years.

In other words, our work suggests that bond yields are acting rational and will not crash over the next few years. The same cannot be said about the stock market. In fact, when we put all of the above together, it becomes evident that the US Economy and the US Stock Market are in real trouble going forward.

BTW: GARY SHILLING (not to be mistaken with Robert Shiller) AGREES: Buy bonds because deflation is here

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2014/15-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. February 17th, 2015 InvestWithAlex.com

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