Credibility, Euphoria, & Disaster

Policymakers play a dangerous game. Equity investors are wearing a blindfold. Will they land on bubble wrap or thorn bushes?

Dear readers,

Two-year yields have declined by 45 basis points in a week. Over the same time horizon, the dollar has weakened by 3% and given up all gains of the last 15 months. Major shifts are underway, but there is little coverage on what’s going on under the surface. Why, you might ask? Because stocks are racing to all time highs. Equity investors exhibit euphoria, but we aren’t so sure they should. Let’s see if we can remove their blindfold.

---