ACTV - Running Bulls Need No Thinking

2024-05-30 11:37:00 ET

Summary

• For a year now, overnight interest rates have been above 5% in Canada and America, while the Consumer Price Index has been falling.
• Over the past year, stock prices have risen four times faster than earnings growth, with the price-to-forward earnings ratio for the S&P 500 leaping from a rich 18x last fall to an eye-watering 21x now.
• An inverted yield curve and Leading Economic Indicators contracting have warned of an incoming recession for months, but the consensus remains sanguine.

For a year now, overnight interest rates have been above 5% in Canada and America, while the Consumer Price Index (CPI) has been falling. This has resulted in the highest real interest rates (overnight rate – CPI) in at least 23 years. While very hard on debtors, it’s favourable for savers, and it’s long overdue....

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