Monday, January 11, 2010

Why Interest Rates Cannot Rise; The Stock Market Has Become A Lagging Indicator

In October 1987 investors were buying stocks when they were 25% overvalued, very much were they are today. They then bought them at even more overvalued prices in 2007.

"The stock market has become a lagging indicator. Tear up the textbooks, says Ambrose Evans-Pritchard in his new article Sunday.

He says, as does David Rosenberg, that the broad U6 category of unemployment rose to 17.3% as the labour force contracted by 661,000, because so many Americans dropped out of the system, which is not showsn on the silly official unemplyment numbers. That is the number that matters.

All you will ned to do is look at tax revenues this year. Only employed people pay full taxes. There is no folling this.

He also mentions that the the next bomb is yet to detonate as $134B "option ARM" contracts will reset quite significantly upwards this year, and next.

Interest rates cannot rise.

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