Chart stolen from ZeroHedge |
What is the danger?
The QE will run out, and that means treasury will be on the market to fund its deficit and to fund Obamacare. Rates go up and all hell breaks loose. But rates are not likely to rise all that much with Obamacare slowing growth to below 2% and inflation dropping by a half point. Most of these corporations earn half their money overseas, so their earnings may not drop as fast as rates in a mild US recession. The investor is still stuck, no better investment. It all depends on the global balance at the start of the treasury borrowing binge.
Domestic producers are less profitable. The blue line, producer prices, are about even with consumer prices. This is likely the Obamacare effect, and it is priced in. It is the slowdown.
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