Wednesday, October 3, 2007
The Double Failure of the So-Called Fed Model
A technical article (based on K-theory) that says since 1997 the correlation between IRs and stocks has reversed. Fallings IRs now result in falling stocks (since 1997).
The outlook is for 10-year T-bond yields to go below 3%, if not below 2%, and the stock market's P/E ratio to continue its seven year decline to below 10.
If lower IRs cannot hold stocks up, they wont hold property up either.