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How This Bull Market Will End

Worthwhile discussion of promise and peril in a low interest rate world.
Some say the world will end in fire,
Some say in ice.

...rising life expectancy increases desired savings, Fels continues. People may no longer value present consumption over future consumption, as in past generations, when they often died before they retired and struggled to meet current needs. To transfer purchasing power to the future, they may accept a negative interest rate and save more. New technologies also reduce the need for capital and are becoming cheaper, cutting the demand for investment, he adds, which also lowers the floor on interest rates.

The question is whether such a collapse toward the zero bound would occur in a recessionary plunge in markets for stocks and other risk assets—in an economic and financial Ice Age, as Société Générale’s Albert Edwards has long predicted. Grant, by contrast, expects that a drop in U.S. interest rates to new lows will light a fire under prices of assets from stocks to corporate bonds to real estate. capital still is continuing to provide funding to money-losing companies with dubious chances for profitability. And while various economic indicators denote a slowing, new claims for unemployment insurance—a leading indicator of the labor market—remain at a historic low. That feels more toasty than chilly.

Here is the direct Barron's link which I accessed in incognito mode:

I initially accessed the article via this indirect yahoo teaser link:


  • Thanks for pointing us to this article. I found it on Apple News (free). I like Mr Forsyth’s stuff. I found this last sentence intriguing.
    Another thing to ponder: For the first time in history, gold actually provides a better yield than currencies that sport negative interest rates.”
    Although I’m not a gold bug - I find it contradictory that some say they will never buy gold because it doesn’t pay a dividend but don’t give the same dismissal to stocks that don’t pay a dividend.
  • Forsyth wrote this last week in Barron’s:
    To Julian Emmanuel, BTIG’s chief strategist, this suggests perhaps the biggest bubble in history. German 10-year bund yields at minus 0.40%, 100-year Austrian bond yields at 1%, 10-year Italian bonds at 1.60%, and equivalent U.K. gilts at 0.60% recall some of history’s great investment bubbles. Among those of recent memory: the Japanese stock market in the 1980s, the dot-com bubble of the 1990s, and U.S. residential real estate in the previous decade.
  • All of this makes me itch. Yes. But my 57% bonds and 35% stocks portfolio continues to rise--- albeit not in step with the SP500 or Nasdaq. The rest is cash and "other." Thanks for the link. I tried something new: I COPIED the link in Firefox, then PASTED it and opened it in the Brave browser.:)
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