Which One has the Correct Macro View?

Bonds or stocks?

One of these is going to have egg on its face when this is all over.

Longer-term, the 10 Yr UST is suggesting the fair value on the SPX is < 700.

Is the 10 Yr UST correct or is it the SPX?

Do they never re-couple?

I ultimately think disconnects like this are driven by monetary intervention, specifically the Fed – it tends to work in the short-term but the payback is huge – heightened volatility and systemic risks in the long-term.

The Fed has forced the investment community to stick their head in the sand (and that community obliges) and penalizes them, with low rates, for not doing so, until it’s too late.

In effect, the Fed has ruined what was historically the essence of what makes markets work- price discovery has become an “event”, instead of a “process”.

The adjective that typically best describes financial market “events” in the past is “crash”.

Any wonder why we’ve had back-to-back summers of 20% draw-downs in the SPX book-ended with a Flash Crash and a mini-crash in b/t those draw-downs?  Is that normal.  Healthy?

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