6/8/2016 – A positive day with the Dow Jones up 68 points (+0.38%) and the Nasdaq up 13 points (+0.26%)
One of the effects of today’s low interest environment is bubble level valuations we see in the stock market. In fact, according to some, zero interest rates mean an infinite valuation range for all stocks. At least in theory.
The sad reality is that until and unless the U.S. posts employment metrics that are consistently strong, or inflation rises significantly and stays elevated, there simply isn’t a case for hiking interest rates this month, this year — and even next year.
Forever is a long time. Many investors also assume, wrongfully I might add, that the Fed can control the entire yield curve.
We have been arguing here for about 2.5 years or since the 10-Year Note hit 3% in early 2014, that the 35 year bull market in bonds will put in a double bottom before surging higher. Well, we are nearly there.
Sure, the Fed will attempt to keep interest rates low, flooding the market with excess cash at onset of any trouble, but I still believe in the market. That believe leads me to a simple conclusion. When long side of the yield curve bottoms, and we are nearly there, yields will eventually surge higher.
On their own and no matter what the Fed does. It is at that time that the illusion of “infinite valuations” will come crashing down back to Earth.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 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. June 8th, 2016 InvestWithAlex.com
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