Outlook for May 2018

One third of 2018 is done and the markets just keep getting more and more interesting by the day. The stock market is rallying hard and billions are added to individual networths (Jeff Bezos) overnight as if the numbers mean nothing. This is the reality that we live in when your cost of capital is zero for a decade. Capital has concentrated to an extremely small segment of the population, who control immense amount of wealth and continues to divide the nation/world more deeply. However, with the yield curve getting close to the 3% mark provides an interesting inflection point as investors watch it closely.

The smarter of the two, bond market, is signaling a coming recession (possibly in 2019), while the equity market keeps shrugging things off. It’s all well and dandy until it isn’t. The central bankers have painted themselves into a corner and will trigger the next economic crisis, as the end of the 30-yr bond bull market nears.

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